Mervin Jebaraj, director of the Center for Business and Economic Research at the University of Arkansas
Northwest Arkansas’ strong employment doesn’t yet pose a threat to its economic growth.
That was one of the many positive messages delivered at the seventh annual State of Northwest Arkansas Region Report luncheon Tuesday at the Northwest Arkansas Board of Realtors in Lowell. The report is a collaboration between the Northwest Arkansas Council and the Center for Business and Economic Development at the Sam M. Walton College of Business at the University of Arkansas in Fayetteville.
Center interim Director Mervin Jebaraj said northwest Arkansas achieved record employment in July with more than 274,000. Employment in the area grew from 235,900 in 2015 to 245,400 in 2016, which surpassed the peer regions the council compares northwest Arkansas; the regions include Madison, Wisconsin; Raleigh-Durham, North Carolina; and Austin, Texas.
Unemployment dropped from 3.7 percent in 2015 to 2.9 percent in 2016. Northwest Arkansas — and the state in general — benefitted from simultaneous growth in its labor force so the area’s economic engine has a continual supply of fuel.
“We’ve talked about, ‘Is this kind of low unemployment rate going to choke our expansion if we can’t find people?’ ” Jebaraj said. “If we didn’t have more labor force growth, it would affect us. We can grow our labor force in multiple ways.”
Jebaraj said the two main ways northwest Arkansas maintains its supply of prospective employees are recruiting workers from elsewhere and encouraging non-job seekers in the area to pursue opportunities.
Matt Waller, dean of the university’s business school, said he was “bullish” on the area’s continued growth because 88 percent of its graduates are placed in jobs before or at graduation. Seventy five percent, Waller said, find jobs in the state.
“I’m extremely optimistic about northwest Arkansas,” Waller said.
Jebaraj said other good news for northwest Arkansas is the economic growth is spread over most industries. The area of largest growth in employment is professional and business services, which grew nearly 4 percent from 2015 to 2016, and is an industry that grows to service other industries.
“What that tells us is the growth of the economy is a lot more sustainable,” Jebaraj said. “If the economy wasn’t growing we wouldn’t need as many engineers, lawyers and accountants. That growth rate shows the rest of the economy is growing sustainability as well.”
Jebaraj said the council and center also conducted research on women in the labor force. Northwest Arkansas and Austin had significant drop-offs between the percentage of women and women with children aged 6 or younger in the workforce.
More than 68 percent of women in northwest Arkansas were in the workforce but that percentage dropped to 61.3 percent if the women had young children. The overall participation rate for worker regardless of gender was 77 percent.
Jebaraj said the drop in participation showed that improving access to and the affordability of child care could boost the labor force available to northwest Arkansas employers.
“There is room in here to improve our labor force participation,” Jebaraj said.
Council Co-Chair and Arkansas Chancellor Joseph Steinmetz introduced Nelson Peacock, who was hired as the CEO and president of the council this past summer. Peacock said the council’s top priorities were to find a low-cost airline to serve XNA in Highfill and to attract more federal research grant money to the university.
Peacock said the 700,000-plus travelers who pass through XNA spend between $50 million and $100 million more in airfare because of higher prices.
“The world is an interconnected place, one that grows more connected every year,” Peacock said. “If northwest Arkansas isn’t connected to the world, we aren’t going to be competitive in the world.”
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