Since 2018, South Dakota ranks 2nd nationally for Median Household Income growth, Minnesota ranks 24th
Whenever I point out that Minnesota is losing residents, on net, to places like Florida, one of the standard responses is that they’re only moving for the weather. But, if that is the case, explain how, while Minnesota lost 19,400 residents to other parts of the United States in 2021-2022, South Dakota gained 8,424? I’ve been to Sioux Falls, and the weather isn’t better there than it is in the Twin Cities.
One reason might be that South Dakota’s economy is booming. As Figure 1 shows, while Minnesota’s economy has grown by 4.0% in real terms since 2018 ranking it 37th out of the fifty states and District of Columbia, South Dakota’s economy has grown by 7.6%, the 19th fastest rate in the United States. Not stellar, but better than its neighbors.
Figure 1: Real change in real Gross Domestic Product, 2018 to2022
This growth has solid foundations. As Table 1 shows, South Dakota saw growth in seven out of the fourteen sectors of its private sector between 2018 and 2022, better than the number for the United States and Minnesota, five. South Dakota has a diverse economy, with six sectors accounting for at least 5% of state GDP in 2018, compared to seven for the United States.
Table 1: Real change in GDP by sector, 2018-2022, and share of sector in 2018
This has been good news for the average South Dakotan. As Figure 2 shows, while Median Household Incomes rose by just 3.8% in real terms in Minnesota between 2018 and 2021, in South Dakota they rose by 15.2%, the second highest increase in the United States.
Figure 2: Real change in Median Household Income, 2018 to 2021
In its drive to attract residents, South Dakota has the same struggles with weather as we do here in Minnesota. It does not have Minnesota’s lure of professional sports, although our experience suggests that might be a blessing in disguise. What it does have is a vibrant economy that is delivering some of the strongest income gains in the United States. That is what attracts people and what Minnesota needs to be able to offer.