Tuesday, July 9, 2013

Great, South Dakota is #1 for Businesses, But What About People?

Today CNBC released that South Dakota is number one for businesses in 2013.  So how did South Dakota move to the number one spot?  Well part of the reason is simple.  We work really hard to make sure that it is cheap for businesses to be here. In 2011 South Dakota tied for 13 and in 2012 we moved up to 7.  Why?  Were there major changes in how South Dakota operated?  Nope.  There was a major change in what the focus os the survey was based.  You see the survey changes every year.  This is how CNBC explains it:

We assign a point weighting to each category based on how frequently it is used as a selling point in state economic development marketing materials. That way, our study ranks the states based on the criteria they use to sell themselves.

Okay... so as long as states focus on racing to the bottom in wages and taxes, then South Dakota is going to be in good shape.  That is part of the problem with this survey, if states started to focus on other things like education, technology, or cost of living, SD would be much lower.  

There is a problem when you focus on keeping things cheap for businesses is that the people working for the businesses are the ones being used to benefit those companies.  CNBC states that the following criteria used in the "Cost of Business" category:

Cost is a major consideration when a company chooses a state. We looked at the state and local tax burden in each state, including individual income and property taxes, as well as business taxes and gasoline taxes. Utility costs can add up to a huge expense for business, and they vary widely by state. We also looked at the cost of wages, as well as rental costs for office, commercial and industrial space.

So it may be great for businesses to not pay any taxes and not pay people a living wage, but what about the people that live in that state.  I think some more disturbing numbers are that South Dakota has gone from 20 in 2010 to 30 rank for education.  South Dakota ranks 48 in technology and innovation (we have been constantly low in that category) and the cost of living was 26 (another category that is constant).

If you look to other studies, you will see the human impact of low wage businesses in South Dakota.  South Dakota is in the top 5 for states that have the working poor.  It seems that nearly 32% of jobs in South Dakota are low wage jobs.  We have a high percentage of working families that rely on Medicaid.  Education, Medicaid, and Technology require funding to supply those businesses with what they need.  SD should not look at this report. pat themselves on the back, and ignore the actual people of SD.

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