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Business & Economics

Rapid City’s New Development Chief Confronts Low Wages

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Seth Tupper/SDPB
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In a crowd of Rapid City businesspeople, Tom Johnson sticks out. 

He wears vests and paisley shirts. He’s a published poet. He meditates.  

And he was a little worried about all of that several months ago. That's when he moved from Colorado, by way of Wyoming, to run a new economic development partnership called Elevate Rapid City

“I thought they would look at me like maybe I was an alien from another planet, or at least the state over,” Johnson said. 

Since then, he said, he's felt very welcome in the city. And his outsider status has been a benefit, because it's allowed him to see the local economy with a critical eye.  

Last week, Johnson shared some of his first impressions of Rapid City when he spoke to dozens of local leaders during a meeting of the Black Hills Forum and Press Club at the Hilton Garden Inn.  

One of the first problems he discovered in the city is low wages.  

He had noticed that Costco has a store in Bismarck, North Dakota, but not in Rapid City. He called an executive at Costco and said, essentially, “Bismarck? Really? Why not Rapid City?” 

The executive said, “Go check out your incomes.” 

“So I did,” Johnson said. “Whether it’s Cheyenne, Bismarck, Sioux Falls, Billings, Idaho Falls, it doesn’t matter. Our income levels are $5,000 less than everybody around us.” 

In other words, the average Rapid City resident doesn’t have enough disposable income to attract Costco to town. Census Bureau data indicate that most of the cities Johnson mentioned have per capita incomes ranging from about $2,500 to $7,000 more than Rapid City’s.  

One of the reasons for that is location, Johnson said. Rapid City is about five or six hours from every other sizeable city in its region. That means Rapid City employers don’t have competitive pressure from nearby markets to raise wages. The city’s geographic isolation also keeps some businesses – like manufacturers – from locating in Rapid City, Johnson said, because they need closer access to bigger markets. 

To encourage faster wage growth, Johnson is trying several approaches. He's recruiting employers who pay higher wages. He has high hopes for an innovation incubation center that Ascent Innovation (a division of Elevate Rapid City) is building. And he said Elevate is buying sophisticated online data to recruit higher-earning South Dakotans, like nurses, back to Rapid City after they’ve left the state.  

Johnson is also campaigning for the $190 million bond issue that the Rapid City School District is asking voters to approve in a Feb. 25 election. He was especially blunt on that point during his speech to the Forum and Press Club, saying “my career hinges on this vote.” 

“I’ve spoken to many groups and I’ve said, ‘Hey, if you don’t vote for this, you’re going to die,’” Johnson said. “It’s a joke. They laugh. But what I really mean is if you don’t vote for this, doctors are going to leave. They’re not going to come here. I can’t recruit professionals with crumbling schools.” 

Rapid City has other challenges, Johnson said, like a higher crime rate than the national average and a population of Native Americans that’s been left behind economically. 

After assessing the city’s problems during his first 100 days in the job, he’s now working to find and implement solutions. Wage growth will be a major focus. 

“We’re slowly making progress,” Johnson said. “I don’t want to paint the picture that income levels aren’t rising, but we would certainly like to accelerate those numbers and make them better.” 

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