A Farmer, a Nurse, and a Welder Walk into a Bar: Healthcare in the South Dakota Economy

While the title of this article might sound like a setup for a joke, agriculture, healthcare, and manufacturing make up almost 30% of South Dakota’s GDP. If you were surprised to see healthcare on the list, you are not alone.

South Dakota’s economy is often associated with agriculture, however, the healthcare industry is just as large and in some cases larger. Based on annualized data from quarter three of 2025, healthcare accounted for approximately 9.8% of total GDP, compared to 8.1% for agriculture (shown in figure 1). In fact, only the finance and insurance industry has a larger influence on the South Dakota Economy due to friendly regulatory environments within trusts and credit card operations. This level of economic influence has implications for the workforce, rural communities, policy decisions, and the overall stability of the economy. Yet, healthcare remains an under-discussed industry within the state as agriculture dominates discussions and headlines. This article examines the role of healthcare in South Dakota’s economy, including its contribution to GDP, employment within the industry, the factors behind its relative stability, and what its continued growth means for the state moving forward.

Healthcare has quietly maintained a consistent and substantial part of the state’s economy. Over the past 25 years, healthcare’s share of GDP has increased from approximately 8% to nearly 10%, showing that it is not just growing, but firmly established as a core part of the economic base. Since 2015, healthcare has ranged from 9.2%, peaking during the Covid-19 Pandemic in 2020, and then leveling off around 9.6%, as shown in figure 2. This further demonstrates the stability of the industry within South Dakota.

GDP Magnitude / Industry Ranking

Throughout the first three quarters of 2025, the healthcare industry consistently ranked as the second-largest industry within South Dakota. Figure 3 shows how much of the county-level GDP comes from the healthcare industry. Only 28 counties have available data, as reporting data for smaller population counties would reveal confidential information and is therefore not publicly available. Most of these counties rely on rural healthcare facilities, as shown in figure 4.

Labor Force Impact

Data from the third quarter of 2025 shows that, among the 31 counties that show representative data, a large portion of the total employment comes from healthcare. On average, 15.90% of employment in these counties is tied to the healthcare industry. The range spans from 5.01% in Stanley County to 27.65% in Bon Homme County, as shown in figure 5.

Healthcare wages in these counties show a similar pattern, accounting for between 3% and 29% of total wages, as shown in figure 6. These statistics indicate that a substantial portion of economic activity in many counties is driven by the healthcare industry. Additionally, when examining average weekly wages, 18 out of the 31 counties have healthcare wages that exceed the average across all industries combined, shown in figure 7.

Taken together, these findings suggest that many counties in South Dakota rely on the healthcare industry, not only for providing care, but also as a significant economic driver through employment and relatively strong wages. While data are not available for all 66 counties, it is reasonable to infer that similar patterns exist in other counties with healthcare establishments.

Stability

Economic swings occur in many forms, from volatility in agriculture to slowdowns in manufacturing. Figure 8 compares three different industries: healthcare, agriculture, and manufacturing. Together, these industries have made up roughly one-quarter to one-third of the state’s GDP output since 1997.

When looking for a reliable and stable industry in South Dakota, look no further than the healthcare industry. This industry has consistently maintained between 8 and 10% of South Dakota’s GDP without fluctuating very much. However, while healthcare has consistently contributed to GDP, agriculture has varied between 4% and 12% of total GDP. Manufacturing, which accounted for over 12% of GDP in the late 1990s, has declined to less than 8% in 2024. The data in figure 9 shows that the while the percentage of GDP has remained stable, the actual current dollars produced in the healthcare industry has multiplied by almost 5 since 1997 without instability that is found in other industries. These trends suggest that healthcare is one of the most secure contributors to South Dakota’s economy and is continuing to grow.

Why is healthcare such a stable part of the economy? First, healthcare is widely considered an inelastic good, meaning the amount of care demanded is fairly insensitive to changes in the prices. Even if healthcare costs increase, people still go to the doctor when they are sick, pay for medication, and undergo necessary procedures because the alternative carries significant risks to their health.
Second, the government funds a large share of total healthcare spending through programs such as Medicaid and Medicare. According to the Centers for Medicare & Medicaid Services, these programs accounted for 38.8% of total national health expenditures in 2024. Finally, healthcare demand is partially driven by population trends. As the population of South Dakota continues to age, the use of healthcare services is expected to increase, contributing to steady and predictable demand over time.

Demand Drivers

As shown, the healthcare industry has been a stable part of South Dakota’s GDP, but will that continue? The generation known as the “Baby Boomers” is approaching retirement age, and this trend is reflected in the state’s population. The portion of residents age 65 and over has grown from 14.7% in 2014 to 18% in 2024. This trend is also evident at the county level, with 56 out of 66 counties experiencing growth in the population of those over age 65, shown in figure 10.

Figure 10 highlights that South Dakota’s population is aging across nearly the entire state, not just in the more populated areas. This creates a growing need for access to healthcare in low-density regions. While facilities are distributed throughout the state, gaps still exist. For example, Harding County (indicated with a star on the map in figure 10), a 2,678-square-mile region in western South Dakota, does not have a single healthcare facility. As the population continues to age, consumption of healthcare services is only going to increase, requiring the state of South Dakota to address how to provide care for those in “inefficient” parts of the state.

Future Outlook

As shown in this article, the healthcare industry is a core pillar within the South Dakota economy. It is the second largest industry as a part of GDP and has maintained stability while other industries, like agriculture, are more unpredictable. Healthcare is also widely embedded across the state with different types of establishments like the dozens of Rural Health Clinics and Federally Qualified Health Centers.

While healthcare has been stable and slightly growing over the past 25 years, the industry is facing several challenges. Access is one of the principal challenges the industry faces, especially in a state with as much land mass as South Dakota. The rural healthcare establishments have to determine how to serve their populations in a way that is sustainable. Another challenge is a workforce shortage with the South Dakota Department of Labor and Regulation stating that there were almost 3,500 job openings in the Healthcare professions in August 2025. This shortage does not show signs of shrinking as the industry is projected to add close to 8,000 workers by 2032.

Overall, healthcare in South Dakota is one of the strongest and most reliable industries. It will continue to grow in the future, but it will require attention and planning to take care of the current and aging population. Healthcare is a core contributor to the economy and it should not be an afterthought in our economic dialogue.