By SETH TUPPER
Rapid City Journal
RAPID CITY, S.D. (AP) _ The Great Recession was great, in one respect, for some Black Hills employers who netted top-quality hires from an ocean of jobless workers.
But as Labor Day 2014 falls upon Rapid City, those employers no longer have the advantage. Now, it’s a job-seekers market as unemployment has fallen to its lowest point in six years.
Fred Dieken, a manager in the state Department of Labor and Regulation’s Rapid City office, said employers must adjust if they want to hire and retain good people.
“They got kind of spoiled during the recession,” he said of employers, “when they might get somebody with a college degree to be an assistant manager, whereas now you might look for two years of college or an associate’s degree.”
Dieken said only 1,245 of the 37,965 people in the city’s labor force _ only 3.3 percent _ are unemployed right now. The last time the city had so few unemployed workers and such a low unemployment rate was the winter of 2008, just before the Great Recession showed up in the Black Hills labor data.
The new unemployment numbers signal that Rapid City and much of the state have returned to the pre-recession reality of too few workers for available jobs, though many openings are for relatively low-wage jobs.
State leaders are watching the situation closely, in part because it is hard to lure new employers to an area if there aren’t enough workers to fill new jobs.
Gov. Dennis Daugaard will address the issue Tuesday in Rapid City. The local stop is one of six he’ll make across the state Tuesday and Wednesday to unveil a report compiled from an earlier series of Workforce Summits he hosted across South Dakota. The other stops on the governor’s tour are Aberdeen, Watertown, Brookings, Mitchell and Sioux Falls.
Dieken said some of the demand for workers in Rapid City is driven by continued strong local growth, such as the new and expanding commercial developments along Catron Boulevard to the south and at Rushmore Crossing to the northeast. The building boom in those areas has created jobs in construction on the front end, and in retail, food service, lodging and other sectors on the back end.
Duff Kruse, president and general manager of Adams ISC in Rapid City, said another factor is the demand for workers in North Dakota’s booming oil patch. His growing manufacturing and repair firm employs 68 workers, including steel tradespeople such as welders, mechanics and machinists.
“We pretty much run help-wanted ads for welders and other skilled people nonstop,” Kruse said. “The last two years, I don’t think there’s ever been a time when we haven’t had help-wanted ads running.”
While he’s paying skilled tradespeople $35,000 to $60,000 a year, he has heard workers in similar jobs are making up to $30,000 more for the same kinds of jobs in the North Dakota oil patch. The boom is also driving the cost of living higher in North Dakota, but Kruse said workers try to overcome that with long hours.
“The big thing in North Dakota is, you can work pretty much all the overtime you can handle,” he said. “If you want to work 70 or 80 or 90 hours a week, they’ll let you do it.”
The prospect of oil-patch riches enticed 28-year-old Air Force veteran Jonathan Elm after he earned his bachelor’s degree recently. Instead, he is pursuing a master’s degree in mental health at the University Center in Rapid City while also working two part-time jobs.
“If I would not have gotten into my graduate program, I would have went up there,” Elm said, referring to the oil patch, “for a year to make some money.”
Benjamin Snow, president of the Rapid City Economic Development Partnership, also identified the pull of the North Dakota oil boom as a factor in Rapid City’s tightening labor market. Almost anyone who wants a job in the oil patch can have one immediately, he said.
“A lot of times, they’re looking for people who can fog a mirror and pass a drug test, and then they’re hired.”
Snow culls his own set of regional data from state labor statistics. In the six-county Black Hills area, his analysis shows 3,385 unemployed people among a labor force of 97,825. That equates to a Black Hills regional unemployment rate of 3.5 percent.
A healthier unemployment rate, with a better balance of tension between employers and employees, would be in the 4.5 to 5 percent range, Snow said. He estimates the Black Hills would need an infusion of 1,500 extra potential workers to reach that level, and he worries that current economic growth trends will not continue if businesses cannot hire sufficient numbers of quality employees.
He’s encouraged, though, that the allure of the Black Hills could give the region a leg-up in the workforce recruitment efforts he hopes to launch soon in cooperation with the governor’s workforce initiatives, known as South Dakota WINS.
“I think this is going to continue to be a challenge for us as companies sniff this area out as an area for growth,” Snow said. “They’ll come in and say, `Where are we going to get good help?’ And we need to have an answer for that.”
Elm, the graduate student, said he sees plenty of people wanting work right now, some just for day-labor type jobs.
What’s needed, Elm said, is more job training for people, like some of his high school friends, who are working the same low-skill jobs they were 10 years ago. That’s likely to be a topic at the governor’s meeting on Tuesday. His workforce initiatives already include training for skilled jobs as a key area of focus, with one early success being the creation of a welding program at Mitchell Technical Institute to help address the state’s shortage of welders.
Meanwhile, Dieken said employers can try to lure quality job candidates by offering more flexibility, better benefits or higher pay. Employers should also take care of their own top employees, he said, to avoid losing them.
“We work with a lot of people who already have jobs. That usually means they’re not happy with their current work situation,” Dieken said. “The better you can make the work environment and make people feel valued, the less chance there is that you’ll have to replace them.”
If higher pay can lure better workers, as Dieken said, why don’t employers in South Dakota pay better? According to the national Bureau of Labor Statistics’ most recent wage data from May 2013, South Dakota ranks second-to-last in average hourly wages, ahead of only Mississippi.
A debate over wages in South Dakota is looming. In November, voters will consider a ballot initiative seeking to raise the state’s minimum wage from $7.25 an hour to $8.50 plus annual cost-of-living increases.
Snow’s local development organization has not taken an official position on the ballot issue.
“I’m not out there lobbying for a minimum wage raise,” he said. “We just feel it’s more powerful to lobby for focusing on higher-wage industries.”
Wage debates sometimes ignore the positive impact of South Dakota’s low cost of living, Snow said. Earlier this month, the nonpartisan Tax Foundation in Washington, D.C., published an analysis of the relative value of $100 in each state. The relative value in South Dakota is $113.38, which is fifth-highest in the nation. Conversely, the relative value is lowest in the District of Columbia at $84.60. The District of Columbia also has the highest average hourly wages in the nation.
Snow does not think a minimum wage increase alone would draw more workers to South Dakota to fill workforce needs.
“You don’t see there being an employee shortage at the lower end of the wage scale,” he said. “It’s happening at the mid-scale trades level.”
Zach Crago, executive director of the South Dakota Democratic Party, supports increasing the minimum wage.
“I think raising the minimum wage is part of building an economy in South Dakota that works for everyone,” Crago said. “Right now we’re seeing an economy that doesn’t work for everyone; not for businesses struggling to find workers, and not for South Dakotans having to hold two or three jobs just to pay the bills. Raising the minimum wage would be one step in the right direction.”
Information from: Rapid City Journal, http://www.rapidcityjournal.com