It’s a pillar of Sioux Falls’ economy, but over the past three years the financial industry has shed hundreds of workers.
Finance and insurance companies employed almost 14,000 people in the metropolitan region at the end of 2016. That was more than 14,700 at its peak at the end of 2013.
As health and retail companies continue to grow their workforce in Sioux Falls, what is wrong with employers in the financial sector?
A large financial services company has left town. The city lost a major employer in 2015 when Capital One Financial Corp., the commercial banking and credit card company, announced it was Sioux Falls office closes. The Fortune 500 company was the city’s tenth largest employer with an estimated 850 employees.
State job data submitted monthly by employers shows a gradual decline in the financial services sector workforce, stemming from Capital One’s decision to leave the company.
The payday loan law probably doesn’t matter – yet. Voters agreed to cap interest rates on payday loans. Reaction was immediate. Almost half didn’t bother renew their licenses in January. The law change took place at the end of the year, so it is possible that the impact on local jobs will be felt more in 2017.
“We have seen the majority, if not all, of the lenders who chose not to use the new business model,” said Marcia Hultman, who heads the South Dakota Department of Labor and Regulation.
Finance remains one of the city’s largest employers. The sector was instrumental in the economic reinvention of the subway in the 1980s and its continued urbanization, all of which was boosted by Citibank’s decision in 1981 to open an office in South Dakota.
Economic development officials target financial firms when it comes to recruiting new businesses for South Dakota, said Jim Terwilliger, the state economist.
“Sioux Falls has a locally grown economy,” said Terwilliger. “It has good diversity and attracts from a large area.”
Despite job cuts, experts remain positive. A company closing its Sioux Falls offices is not trending, said Slater Barr, president of the Sioux Falls Development Foundation. The strength in other industries has created far more new job openings than those that were lost between 2015 and 2016.
“The majority of these employees have found jobs in other companies,” said Barr. “Either in the financial services sector or outside the sector.”
As for payday loans, it’s too early to see how the 2016 law will affect the workforce, Barr said. Some payday lenders are returning to the state, opening offices that they closed after the November vote.