SDGOP Claims EB-5 Created “More Than 5,000 Jobs”; Data Say No

Faced with criticism of GOP Senate candidate Mike Rounds's failed Northern Beef Packers plan and his administration's use and abuse of the federal EB-5 visa investment program, the South Dakota Republican Party responded last week with the claim that "The EB-5 program has brought more than $600 million in private capital investment to South Dakota creating more than 5,000 jobs."

Let's look for those more than 5,000 jobs.

Governor Mike Rounds got South Dakota into EB-5 investor recruitment in 2004. Governor Dennis Daugaard put EB-5 recruitment on hold in South Dakota in 2013, when he canceled the state's contract with Rounds's pal Joop Bollen to run the program. so to get a sense of how many jobs our use of EB-5 may have created, it would seem logical to compare employment figures from 2003 and 2013.

According to the South Dakota Department of Labor, the number of jobs in South Dakota grew from a 2003 average of 408,090 to a 2013 average of 431,260. That's 23,170 more jobs, 5.7% more over 10 years. During that same period, South Dakota's population increased by 10.6%, with 81,148 more South Dakotans.

Of course, by no stretch of the imagination did all of those jobs come from the dairies and other projects funded by EB-5 money. So let's at least try to narrow down the new jobs by the location of EB-5 projects.

To identify businesses funded by EB-5 money, I turn to Emily Arthur-Richardt's seminal 2007 "Green Cards for Sale" article, which lists the big dairies that Rounds and his Governor's Office of Economic Development favored with EB-5 money during the first few years of the program, and GOED's own 2013 EB-5 report, which lists Northern Beef Packers, Dakota Provisions, the Basin Electric Deer Creek station, the NextEra wind farm, and the Deadwood Mountain Grand Casino as EB-5 projects. I'm leaving out the Vendrig Dairy, because that Kingsbury County project appears not to have launched, as well as Jersey Dairy of Union County, which does not appear to exist.

Let's look at the 2003 and 2013 job counts for the counties in which those projects are located. This comparison is far from perfect, because, as with the entire state, it seems unlikely that every new job in, say, Lake County, was created directly or indirectly by the Swier Dairy. But this comparison also leaves out indirect jobs that may have been created in neighboring counties, such as a gas station in Belle Fourche hiring more cashiers to take care of all the gamblers from North Dakota zooming down to Ron Wheeler's big new casino in Deadwood. So those two errors will cancel each other out to some extent.

Wow: Brown County still came out ahead, despite Northern Beef Packers collapsing after just nine months and laying off around 400 people.

I readily acknowledge that I'm offering assumptions on stilts. But I'm still beating the SDGOP, which so far has offered no data to explain where it gets "more than 5,000 jobs" from EB-5 projects.

And if we get up on my stilts, which I say are being pretty generous to the effort to attribute job growth to places where the state used EB-5 to fund business growth, we find 2,755 more jobs after ten years of EB-5 activity. That job growth is 3.1%, less than the contemporaneous statewide job growth rate.

"More than 5,000 jobs"? I don't think so, Mike.