Immigrants in South Dakota bolster the tax base and the workforce, a new report says, and more welcoming laws could help foreign-born workers respond to the state’s labor shortage.
The report on South Dakota is one of 51 on the economic benefits of immigration from the Partnership for a New American Economy, a group headed by former New York Mayor Michael Bloomberg, Fox Corp. CEO Rupert Murdoch and several other mayors and business leaders.
The state-by-state rundowns say immigrants create jobs and wealth through entrepreneurship, boost the housing market, bolster the tax base, save manufacturing jobs and have the potential to solve labor shortages in the health care field as baby boomers age out of the workforce.
Support for immigration reform is support for the economy, the report concludes.
“We feel that there are many reasons for reform, and that a state economic argument is most easily understood,” said Jesse Dougherty, representative for the Partnership for a New American Economy.
South Dakota is not a traditional destination state for immigrants, but immigration has grown in recent years at a slightly faster clip than the national average.
From 2010 and 2014, immigration to South Dakota jumped by 9.4 percent, compared to a 5.3 percent average in the U.S. as a whole. Immigrants in South Dakota earned $430 million in wages, paid $33 million in state and local taxes and $58 million in federal taxes in 2014
The upward trend is positive, the report says, as the state’s manufacturing and agriculture sectors are suffering for workers. So are high-tech and health care jobs.
Because immigrants are more likely to be either highly educated or undereducated, their contributions to the economy are a good fit for the state, the report says.
Walt Bones, a dairy producer and former secretary of agriculture for South Dakota, said Wednesday that the federal government's failure to produce comprehensive immigration reform has hurt the entire state.
“It’s holding back the economy, not only the agriculture economy,” Bones said.
Immigrant contributions broad in S.D.
There are still fewer immigrants in South Dakota than most other states, with 3 percent of the state’s population born abroad, compared to 13 percent nationwide.
The state’s 23,000 immigrants fill more than their share of certain jobs. At 3.2 percent of the workforce, they represent 47.8 percent of butchers and fish processors, 40.4 percent of truck and tractor drivers and 19 percent of first-line supervisors for manufacturing. Supplementing the native workforce with immigrant labor helps keep manufacturing firms from moving overseas, the report says.
Immigrants also are over-represented in highly skilled positions. Seventeen percent of post-secondary educators are immigrants in the state, and 52.5 percent of doctorate-level degrees in science, technology, engineering and mathematics, or STEM, fields are earned by immigrants.
The workforce picture for STEM jobs is fairly bleak for employers in the state: There are 17 jobs open in STEM fields for every one applicant, the report said. The ratio of open jobs to available workers in health care is higher still: 31 to one.
Having the nation’s lowest unemployment rate makes every source of labor important, said Krystil Smit of the South Dakota Farm Bureau.
The Farm Bureau’s members say they can’t find local employees willing to do the work at family-owned livestock operations – even when the pay is above average.
“In order for them to survive, they need a stable and reliable workforce,” Smit said. “The immigrants are really the ones who are interested in those jobs.”
Perhaps more importantly, Smit said, is the contribution immigrant labor makes to the tax base of rural South Dakota. The report also talks about how immigrants’ need for housing can squeeze new life out of older neighborhoods though home purchases and rentals.
“Their children attend schools, they support the tax base — these are important for our small communities,” she said.
Even the 4,000 undocumented workers in South Dakota likely contribute more to the economy than they soak up in services, the report says, as they often pay taxes using the Social Security numbers of others without collecting much in federal health or welfare benefits.
“One paper written by researchers at Arizona State University estimated that undocumented immigrants in Arizona pay $2.4 billion in taxes each year — a figure far eclipsing the $1.4 billion spent on the law enforcement, education and health care resources they use,” the report says, citing 2008 research.
Solutions sought for immigration issues
The report suggests a pathway to citizenship is more realistic than rounding up immigrants who have overstayed visas or crossed the border illegally to work. It also recommends simplifying the visa process and expanding guest-worker programs.
The H-2A visa program is a particular sticking point for Bones. The program is useful for temporary agricultural workers, but livestock operations run year-round. That leaves Bones hunting for employees for his Turner County Dairy.
“There needs to be, in my opinion, a guest-worker program that would be easy to implement,” Bones said.
Bones doesn’t see amnesty as fair, but he doesn’t agree with a border wall, either. Instead, he’d like to see a system that permits states to allow guest-worker visas according to their needs.
“Literally, I just don’t see any value in a wall,” Bones said. “But figuratively, we could build a wall. You could have a number of Ellis Islands, where people could come in, get set up and sent on their way to work.”
U.S. Sen. John Thune, R-S.D., said Wednesday that a program that’s specific and based on labor demand could be helpful for the state.
“Immigrant labor plays an important role in South Dakota’s economy, especially in agriculture and tourism,” Thune said. “To meet the growing labor demand of employers in our state, we need visa and immigration procedures that are more efficient and dependable.”
U.S. Rep. Kristi Noem, R-S.D., said border security must be the priority and changes to the system as a whole need to happen incrementally, but "a better agricultural visa program could help this segment of our economy grow, and as a result, should be one of the first areas considered when looking at updates to the legal immigration process,” Noem said.
U.S. Sen. Mike Rounds, R-S.D., said he supports visa programs for guest workers.
“However, while supportive of legal immigration programs that bring in skilled workers our economy needs, Sen. Rounds believes we should take common-sense steps to reform our immigration system as a whole, such as strengthening border security and enforcing current immigration laws,” said spokeswoman Natalie Krings.
Gov. Dennis Daugaard said he supports legal immigration and strong enforcement but deferred to the state's congressional delegation on federal reforms.
Job creation called for
The report also spends time on the difficulty foreign-born entrepreneurs have when attempting to enter the U.S. legally. South Dakota’s 871 foreign-born business owners generated $7.1 million in income in 2014 and employed almost 12,000 people, but the hurdles and expenses of immigration through investment are high, the report says.
The EB-5 program, which allows investors a chance at a green card in exchange for job-creating investment, was championed by Rounds during his tenure as governor. It became an issue in his Senate campaign after the suicide of former economic development chief Richard Benda, which followed an investigation into some of his dealings in the EB-5 program.
Joop Bollen, once the head of an EB-5 clearinghouse called the South Dakota Regional Center, faces felony charges for allegedly diverting $1.2 million in funding to his own company.
The Senate took up the question of reforming EB-5 in the spring, with many members saying it has been subject to misuse. Noem and Thune have called for reform. Their challengers in the 2016 election, Paula Hawks and Jay Williams, have called for an end to the program.
EB-5 wasn’t mentioned specifically in the immigration report, but Bones said mismanagement of the program shouldn’t detract from its sound underpinnings. Many rural areas that needed an economic boost got it though EB-5.
“It brought some development here,” Bones said. “Was it 100 percent success stories? No. But it did have some positive impacts.”
- South Dakota
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