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Northwest Arkansas’ Task? Working on Good ProblemsLock Icon

6 min read

Northwest Arkansas’ economic and population boom shows no signs of ending, area economic development officials say.

Although the area suffered during the Great Recession, it avoided the deep pain felt by other regions, including the rest of the state. The reason? Three Fortune 500 companies — Walmart Inc. of Bentonville, Tyson Foods Inc. of Springdale and J.B. Hunt Transport Services Inc. of Lowell — and the state’s flagship University of Arkansas at Fayetteville are all located within the two most populous counties of northwest Arkansas. (Those would be Washington and Benton counties, but many forget that northwest Arkansas’ metropolitan statistical area also includes lightly populated Madison County in Arkansas and McDonald County in Missouri.)

The numbers for northwest Arkansas were stellar in 2017, according to the Center for Business & Economic Research at the university’s Walton College of Business. The population swelled to nearly 540,000, the unemployment rate fell to 2.9 percent and gross domestic product was more than $23 billion.

“It has been true for a while and it continues to be true: The economic prospects in northwest Arkansas are brighter than most other parts of the state and will probably remain that way,” said Mervin Jebaraj, the director of CBER. “There is a solid base of employers here with J.B. Hunt, Tyson and Walmart and the university, and none of them seem to be going away. Between all of them and all of their suppliers here to do business with them and all the businesses that service them, we continue to see growth rates here in northwest Arkansas that are unmatched in a lot of parts of the country.”

And as the economy has boomed, the region has raised its expectations and goals. A few years ago, CBER and the Northwest Arkansas Council, a nonprofit organization, began to compare the region’s economic statistics to more robust areas of the United States such as Austin, Texas; Madison, Wisconsin; and the Raleigh-Durham-Chapel Hill triangle of North Carolina.

“We compare ourselves to the Austins,” said Nelson Peacock, CEO of the council for the past year. “We have people coming to us wanting to know how we have been able to do what we have done.”

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Not Without Concerns
Peacock and Jebaraj said northwest Arkansas does have issues that need to be addressed for the region to continue to expand, but the issues are the kind that spring from growth.

Jebaraj said studies have shown that about 7,000 people a year are expected to continue to migrate to northwest Arkansas. And those new residents are the fuel for the area’s thriving job market.

But there’s a catch: All those people need someplace to live. And while there’s plenty of space still in the area, not all of that space is ready, or even close to being ready, for development into housing.

A recent Skyline Report by Arvest Bank for 2017 showed that average home prices in Washington County had increased 23 percent since 2014 to $219,000. In Benton County, the average home price increased 12 percent to $223,000 since 2014.

Jebaraj said those home prices may seem ludicrously low to a white-collar executive moving from California, a state where $200,000 might buy a walk-in closet, but the rising prices are a serious consideration to others moving in from other parts of the country. He said as many people move to northwest Arkansas on average from Los Angeles County in California as they do from Pope County in Arkansas.

“Before all the amenities started, what made northwest Arkansas attractive was it was affordable,” Jebaraj said. “It has similar amenities to some of these big cities and it’s affordable. If we don’t pay close enough attention to that, we lose that. We’ll be just another one of those big cities that have these cool amenities but is no longer affordable.

“The way to deal with that is obviously to create more housing for people so that prices stabilize and stop climbing as much as they are.”

Another concern resulting from continuous population growth is ensuring infrastructure can handle the added stress. Jeff Hawkins, the executive director of the Northwest Arkansas Regional Planning Commission, said highways and roads aren’t the only infrastructure that needs to be improved.

The influx of people into new areas — Hawkins said homes are being bought in previously sparsely populated Lowell and Cave Springs as fast as they can be built — means new demand for sewer and sanitation services, electricity and internet service. None of that is cheap or quickly developed.

“The critical issue is to be sure there is adequate infrastructure,” Hawkins said. “We have mobility needs as well. That is a big issue.”

Pulling Together
UA Chancellor Joseph Steinmetz, a former co-chair of the Northwest Arkansas Council, said he has been impressed by the cooperation among competing cities, private businesses and publicly traded companies.

Steinmetz said leaders seem to understand that a rising tide benefits everyone in the region. A new business with 100 jobs in Springdale will certainly spill its benefits over to surrounding cities and towns.

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“I’ve never seen a place where everybody is pulling together for some common goals, even though they are competitors at times,” Steinmetz said. “I think that is put behind [them] when it comes to work that could be done collectively to create a better state and a better region.”

This cooperation gives Peacock confidence that the region will respond positively to changing demographics, which he stressed were more of an opportunity than a problem.

Studies have shown that northwest Arkansas will be nearly one-third minority by the year 2022. Just a few decades ago, northwest Arkansas was almost 96 percent white, but 168,000 minorities have or will have moved into the area between 1990 and 2022.

“We are growing quite substantially in diversity, which is new and different,” Peacock said. “That is reflective of the country. We need to make sure that everyone that comes here feels welcomed and included and are part of the economy. That’s going to change what this region looks like over years.

“How does the business community manage that? That is really important. That’s not only important for the people who live here, but it is for the people who may want to come here in the future. Having the business community out front on this is the way you move the needle.”

Matching Supply to Demand
Peacock said northwest Arkansas needs people to keep moving to the area. The region’s strong economic growth could actually be greater, experts said, but for all the jobs left unfilled. And that’s because the area is lacking the right candidates to fill them.

That’s where cooperation between business leaders and academic leaders, from high school to trade school to community college to university, can help match supply to demand. One example is the expansion of a refrigeration technology program, funded by the state and Tyson Foods among others, at Northwest Technical Institute in Springdale.

“That’s an investment that Tyson Foods and other companies are making because they need that expertise,” Peacock said. “You don’t need a four-year degree to do that. There are jobs that are available that we don’t have the right people for. Holding back [the region] doesn’t seem like the right phrase, but I think you could say it that way.”

Peacock agreed that the population growth that has fueled the economic growth is also putting strains on housing and infrastructure. But Northwest Arkansas’ economy is robust enough that the area’s leadership can take its time to come up with solutions that work best and for everyone.

“It’s hard when you make this area more attractive or downtowns more attractive — that means more people want to come,” Peacock said. “Supply and demand doesn’t match up. Every community that has grown has addressed it or has probably not done a very good job of addressing it. We are trying to get ahead of it. Fortunately, because we have so many things going the right way, we can spend some time.

“We just need to keep the train rolling.”

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