Everyone has heard stories about the shale-oil boom towns that are transforming North Dakota, for better and worse. "Man camps" for oil-field workers, jobs for anyone who can work a rig or drive a truck, social distortions like those of the Klondike. You know the stories, and the town of Williston ND (where we've not yet visited, but plan to), with the orange dot in the upper left-hand corner of the map above, is a frequent dateline for them.
Have you ever stopped to wonder why you don't hear these stories about South Dakota? The map at the top offers a clue. It shows "shale plays," or active and prospective shale-gas mining areas, as defined by the U.S. Department of Energy. A little tongue of the Gammon Play laps into South Dakota, versus the huge Bakken Play that is spread over North Dakota. The map below shows a larger view of shale basins, with potentially exploitable reserves, in the plains states. South Dakota includes almost none of the Williston Basin (pink) to the north, the Powder River Basin (tan) to the west, or the Denver Basin (a poppyish color) to the south.
So how, then, can South Dakota be any kind of boom state on a par with North Dakota? Especially the state's most populous city, Sioux Falls, which is in the far southeastern corner of the state (green pin) and much closer to Iowa and Minnesota than to any point in North Dakota?
What my wife and I have seen in Sioux Falls this summer, and will try to itemize, is a combination of ingredients that have together produced a genuine economic strength quite different from a shale-oil boom and potentially more instructive for the country as a whole. The unemployment rate in greater Sioux Falls now is around 3.5% -- about the average for the state as a whole. (That give South Dakota overall the second-lowest unemployment rate in the country. For number one, you could go to the BLS site -- or just take a wild guess, based on the maps above.) Our Marketplace partners kicked off a series of coverage of the Sioux Falls economy last week.
Through the ups and downs of the national business cycle, the Sioux Falls area has consistently had a better employment picture than the country as a whole, for reasons that both fit, and confound, normal economic models.
The part that fits: people keep moving to town, drawn by the jobs. Roughly half come from the neighboring Plains area and half from the rest of the U.S. or overseas (as my wife recently described). The part that doesn't: the tight job market hasn't seemed to lift wages. Example of the two together: We heard frequently that South Dakota chronically led the nation in the proportion of married women who worked. Theory A: more women had an opportunity to work. Theory B: more women had to work, because of prevailing low wage levels.
One way or another, it is a city that works, in a state that works. And the great strength of the Sioux Falls region is the breadth and diversity of its economic base. For the rest of today's entry, let's consider one of its high-tech employers, Raven Industries.
One of Raven's divisions produces GPS guidance systems for high-tech farm equipment like the one shown above, with Deborah Fallows there to indicate scale. These (as also explained on the Marketplace report) have been part of a digitized revolution in farming. GPS guidance allows them to plow furrows longer and straighter than had ever before been possible; to apply fertilizer to the exact points where seed had been sown; and in countless other ways to speed the age of "precision agriculture."