South Dakota has an enviable problem, at least for workers: The state has a consistently low unemployment rate, typically about half the national average. This spring it dropped to 2.5 percent, the lowest in the country. For businesses, however—which are drawn to the state for its friendly tax policies and low utility costs—the view translates into one of worker scarcity. And it poses a critical problem: Who will staff their hotels and restaurants? Who will make the products they manufacture?
This is the dilemma David Giovannini faced when he arrived in Aberdeen, South Dakota in 2010 to run a new plant for Molded Fiber Glass, an Ohio-based manufacturer of composite material systems and processes. The Aberdeen facility makes blades for wind turbines. Given the rapidly expanding wind-energy market, the firm was perfectly poised for expansion – but it couldn’t find enough employees.
“South Dakota is a great place for companies to be, but the available workforce has been a little bit of an issue for us,” Giovannini says. “So for us to be able to handle our business levels we had to look at alternatives.”
Fortunately, Giovannini had a good place to look. Ninety miles away, in Huron, South Dakota, a hiring manager at a turkey processing plant had taken an innovative approach to finding labor. Frustrated with the diminishing number of Latino immigrant workers holding legal work documents—and unable to rely on American-born workers to apply for the grueling jobs—Mark “Smoky” Heuston of Dakota Provisions had decided to recruit refugees, traveling 300 miles to do so.
Heuston had gone to St. Paul, Minnesota, to meet Hmong, a Christian minority group subjected to religious persecution in Southeast Asia. He ended up meeting some other refugees, members of the Karen people from Myanmar (Burma), an ethnic minority persecuted and interned by a military dictatorship. He offered several of the Karens jobs, and more followed, from communities around the country. “They came here just as fast as we could possibly hire them,” he told a writer for the FedGazette, a publication of the Minneapolis Fed.
Refugee workers have been critical to our success as a company.
Giovannini liked what he saw, gained an introduction to Karen community leaders, and slowly started hiring them. That was in 2011, when his Aberdeen plant employed 150 people. Today it employs 600, half of whom are American-born. “If we had not been able to tap into that reservoir of people, we would have had difficulty,” he says. “Quite frankly, the refugee workers have been critical to our success as a company.”
Molded Fiber Glass pays above-average wages and offers benefits that rank in the top quartile for the area. It gives employees tuition-assistance for related college coursework and pays its immigrant workers to take English-language classes. In addition, human resources staff help refugees navigate life outside of work, assisting them in finding housing, cars, and doctors. They also help them read bills or school forms.
The investment has been well worth it, the company says. Production has more than tripled, and the town has benefited from the influx of young workers and families. With an aging population and young people increasingly moving to urban areas, South Dakota as a whole has been struggling economically. “The refugees have begun to meld into the community, so it’s also an economic boom for Aberdeen,” Giovannini says.
And where the company once had to heavily recruit for labor, it now merely continues to treat workers well and lets word-of-mouth take over. Refugees have traveled from as far as Texas, Alaska, and Georgia to apply for jobs. “We still advertise, but not to the extent that we used to do it,” Giovannini says.
Four years ago, a car pulled up from North Carolina with six Karen refugees and all their worldly possessions inside. “They said, ‘Friends of ours work here and they said it’s a good place to work,’” Giovannini recalls. Like the other refugee workers, they all had legal U.S. resident status and passed a drug test. “We got jobs for all of them.”
“The productivity has been very good. Like many first-generation Americans, they’re here to do a job, make some money, and make things better for their children,” Giovannini says. “I can relate to it because my grandparents came over from Europe, and I can still remember what they did to make things go well for their kids. It’s interesting to see the same philosophy exist.”