Editorial: A business lesson in dynamic Dakotas

Not so long ago, an exodus from Great Plains towns generated talk of restoring the region to its original prairie status. National Geographic captured -- and caught flak for -- "The emptied prairie," an article about North Dakotan "ghost towns."

"At the beginning of this decade, there was literally a question nationally if everyone was going to move out of North Dakota. And look what happened," said Tom Gillaspy, Minnesota's state demographer. "My, how things change."

Indeed. North and South Dakota have been arguably the most recession-resistant states, and they have the balanced budgets and low unemployment rates to prove it. North Dakota's 4 percent jobless rate is the country's lowest, followed by South Dakota's 4.8 percent. Minnesota has a 7.4 percent unemployment rate, and the U.S. number rose to 9.9 percent in April, despite 290,000 jobs being created.

The good stats story doesn't end there for the Dakotas. While the lure of bright lights and big cities still pulls prairie kids away, having a job is even cooler. North Dakota kept 63.2 percent of its college graduates in the most recent survey in 2006, up sharply from a 48.4 percent rate five years earlier.

Some of that retention has come at Minnesota's expense. "We didn't get our mojo back after the 2001 recession," Wells Fargo director and senior economist Scott Anderson says of Minnesota. "A lot of the people that were coming were coming from neighboring states."

North Dakota's oil boom created conditions that are the inverse of the national meltdown, including shortages of workers and housing. But public policy played a role as well, including aggressive employment outreach programs like South Dakota's "Dakota Seeds" internship program and "Dakota Roots," a confidential job website that tries to lure natives back to the state, according to Richard Benda, secretary of South Dakota's Department of Tourism and Economic Development. (Benda also happens to be one the voices heard as part of a less subtle economic development pitch -- the seemingly omnipresent radio ads that try to lure Minnesota businesses to relocate or expand in South Dakota.)

The rise of the Dakotas offers both peril and promise for Minnesota. Strong state economies boost the entire region and can at least create more tourism, if not residents, here. But it can no longer be assumed that the Minnesota magnet can automatically attract new residents. "You don't just drive through Kansas and turn right," says Gillaspy. "You have to have a reason for coming here. Jobs are the reason."

"What is Minnesota's reputation?" asks Gillaspy. "It's a state that's not really fancy, but a good place to raise kids. It's clean, and it seems to be well-run. From an employer's standpoint, Minnesota really has a brand recognition for having a very highly qualified, well-educated and very productive workforce." That may be the reputation, but the "well-run" description will take a debilitating beating if the governor and 2010 Legislature don't find a budget solution.

Conversely, South Dakota had to fix a hole of only about $40 million, and North Dakota has a budget surplus. Economic development officials see cultural, as well as commercial, roots in those figures. "The Midwest is going to kick back out of this thing pretty well, and we have pretty resilient folks who never really lived beyond their means to begin with," says Benda.

North Dakota Commerce Commissioner Shane Goettle agrees. "Our secret has to do with sound fiscal management of our state. It's really reflective of the conservative fiscal nature of the people. The same way the state didn't get overextended, neither did the people."