When asked for their three biggest challenges, the members of South Dakota Retailers Association were quick to respond.
“In order, they were workforce, supply and inflation,” said Nathan Sanderson, president of the organization, who added that’s been the case since 2020. “These are obviously not unique to South Dakota.”
While the challenges may be nationwide, South Dakota is unique in the way they are presented and how grocers are dealing with them.
The state has a 2.3 percent unemployment rate. However, it also has the highest rate of people working multiple jobs, according to Sanderson. Unlike more populous states, there just aren’t enough people to fill the vacancies.
According to 2020 Census Bureau data, South Dakota is the fifth smallest state by population, with about 886,667 residents. Sanderson said the state is among the fastest growing in the country, but the demand for workers far outpaces the ability to adequately staff businesses.
To address the issue, the SDRA in 2021 launched the $1,000 Workforce Initiative, a cash bonus program designed to draw workers from out of state. Those who qualify receive $1,000. The first incentive installment of $500 is paid after 90 consecutive days of employment at a location in South Dakota. Recipients must average at least 30 hours per week at the business, according to the SDRA website. The second $500 is paid after 180 days of employment.
The program’s first full year was 2022. More than 60 people moved into 43 communities across the state.
“In the grand scale of things, bringing in 50 or 60 new people isn’t a lot, but it’s certainly been beneficial to our members,” Sanderson said. “And we have definitely heard from them that this incentive was consideration for [coming to] South Dakota.”
For 2023, the association has set aside $100,000 to continue the program.
Sanderson also is occupied by the state’s 2023 legislative session. Lawmakers are considering a bill that would repeal sales tax on food. Since it doesn’t collect income tax, Sanderson is worried the repeal could cost the state millions of dollars in annual income.
“That’s something the retailers association has historically opposed, and we are opposing again this year,” he said.
“In the last 20 years, we’ve opposed a similar bill 27 different times…our primary revenue generator is the sales tax. And so we believe that by repealing the sales tax on food, that could set us up for having an income tax in future years.”
Conversely, the association is celebrating an early victory at the capitol. The South Dakota Reemployment Assistance Program, formerly known as unemployment insurance, has seen a dramatic decrease which reflects the state’s historically low unemployment rate.
Due to a surplus of state revenue, the South Dakota Department of Labor and Regulation proposed to cut taxes for business owners by $18 million ongoing. In South Dakota, the money that funds the reemployment program comes through business taxes.
“We were actively involved with that effort,” Sanderson said.
The bill made it through in just 12 legislative days and, as of late January, was awaiting Gov. Kristi Noem’s signature.
For more information about the association, visit sdra.org.