Board member Tom Tveit of South Dakota Pulse Processors LLC. remembers when those organizing the company started talking about what to pay employees.
One of the figures they tossed around at first, he said, was $8 an hour. Board member Brian Minish recalls suggesting $9 to $10 an hour based on other value-added ag projects he had worked with.
Then reality set in.
Months down the road, the figure Mat Chaudhry, the company’s CEO, tosses out during meetings with potential investors is $14 an hour plus benefits. That’s the hard realism of a company that will have to compete with other ag processing companies in central South Dakota in a tight labor market. Business leaders say it’s at least partly influenced by the tug of North Dakota’s oil industry on some job fields.
“We just think we have to be there to be competitive,” Tveit says. “We’ve got to realistic. We are not far from the North Dakota oilfields and that is a real issue.”
South Dakota Pulse Processors is a start-up company that wants to build a plant to process dry peas, lentils and chickpeas in Harrold, S.D. It’s an ideal location because central South Dakota producers already grow pulse crops and could easily ramp up production to grow more.
But it’s also an area with a very low unemployment rate. The plant would be in the northeast corner of Hughes County, where a scant 3.2 percent of people were without jobs in September, down from 3.5 percent in August, according to U.S. Bureau of Labor Statistics data. The principle of supply and demand suggests the company will have to pay more for employees.
As Tveit said, North Dakota’s booming oil economy is also a factor. But Jim Protexter of the Pierre Economic Development Corp. said the presence of North Dakota’s oil patch may actually work in South Dakota’s favor, in the case of the pulse project.
“This processing plant initially looked at North Dakota and the wage scale there has been greatly inflated because of the oil,” Protexter said. “One of the reasons they looked at South Dakota is because there has been less pressure on wages.”
Minish said North Dakota, though a large pulse-producing region, isn’t ideal for two reasons: availability of rail sidings and availability and price of labor.
Dawn Morris, human resources manager for Morris Inc. of Fort Pierre and a member of the Pierre Economic Development Corp.’s board of directors, said she thinks South Dakota Pulse Processors will be able to find the workers it needs at the pay scale it’s talking about.
“We start our laborers at $9.50 or $10 an hour, depending on their skills,” she said. “Our truck drivers we start at a range of $12 to $14.”
Board members of South Dakota Pulse Processors say they already have a target labor pool in mind – farm and ranch spouses who are already living in the area.
But Morris adds that many companies in the area, including Morris Inc., keep an eye on their respective industries in order to stay competitive and attract employees from elsewhere, if necessary. South Dakota’s lack of an income tax, and what it offers in the way of outdoor recreation opportunities, sweeten the deal for those willing to relocate to the Plains.
“I do feel our wages here are very comparable to other areas,” Morris said. “South Dakota’s a great place to work.”