South Dakota leads the nation in lowest unemployment

 Over the summer, the U.S. Bureau of Labor Statistics released the unemployment rates for each state, and South Dakota had the lowest unemployment rate.

Mike Allgrun, a professor of economics at USD, said this statistic isn’t an anomaly.

“South Dakota’s relatively low unemployment rate is not a new development. We have consistently been a low unemployment state for decades,” Allgrun said.

The national unemployment rate this year is 4.2%, while South Dakota’s is 2.0%. Despite low unemployment’s positive effect on workers, it can pose a problem for employers.

Robert Winslow, an assistant professor of economics at USD who specializes in research regarding unemployment, said employers can struggle to fill positions when unemployment is low.

“Something important to keep in mind is that there can be economic downsides to having a very low unemployment rate. When a labor market is tight, it can be difficult for employers to fill job openings. South Dakota has a pretty typical job opening rate, but when combined with our very low unemployment rate, we lead the nation in terms of the number of job openings per unemployed worker,” Winslow said.

Despite the low unemployment rate now, just a few years ago economists were unsure whether South Dakota and the nation at large would be able to recover from the effects of COVID-19 on the employment market.

“The biggest story of unemployment in the last decade is, of course, COVID, where unemployment soared as various government policies shut down opportunities for work and encouraged some people to stay unemployed even when jobs were available again.  South Dakota’s unemployment rate spiked at this time, while still staying far lower than the U.S. average.  We also recovered quite quickly compared with the national average,” Allgrun said.

Fortunately for South Dakota, the recovery from COVID went relatively smoothly, compared with the predicted rate of recovery.

“The biggest story of the last decade when it comes to unemployment is, of course, the effect of the COVID-19 pandemic. But one of the most remarkable things there was how quickly the labor market recovered. Within a few years, the employment situation had largely returned to normal,” Winslow said.

Now that the effects of COVID-19 are largely behind us, economists are looking to the future to predict what new developments could shake up the job market. Winslow believes the answer lies in Artificial Intelligence (AI).

“Looking ahead, the main thing to watch for is the effect of AI. It’s only this year that we’re really starting to get AI systems that are potentially disruptive to certain occupations, so the statistics are still fresh and the effects of AI on the workforce are still uncertain, Winslow said.”

Although low unemployment rates may give students the impression that finding jobs will be easy after college, Allgrun urges students to look early and diligently at what opportunities are available to them.

“Students should realize that even in a favorable job market like South Dakota, finding a good match is not automatic. I strongly recommend students be thinking about a career plan early in their college experience. Certainly by your junior year you should treat the job search like an additional course you work on regularly. We have great resources for all USD students like the Center for Career Design and discipline-specific help like the Student Success Center at the business school,” Allgrun said.

Students looking to get their foot in the job market can utilize the services at the Center for Career Design located in MUC Room 101.