Northwest Arkansas Shows State How It’s Done

The Northwest Arkansas metropolitan statistical area, including Fayetteville, Springdale and Rogers, features some of Arkansas’ largest public companies: Walmart, Tyson Foods, J.B. Hunt, and America’s Car-Mart.

Northwest Arkansas’ entrepreneurial culture has erected a jobs machine that routinely exceeds national and state averages while providing most of Arkansas’ private sector employment growth. This fact is not recognized by enough policymakers in Little Rock.

Payroll employment, the broadest economic indicator, is an important metric. A healthy economy creates new jobs at percentage rates greater than nationalor state averages. An ailing economy consistently trails these averages in periods of expansion, determined by economists aft liated with the National Bureau of Economic Research in Cambridge, Mass.

Northwest Arkansas payroll employment exceeded the U.S. in the last two expansions (1991-2001, 2001-2007), recording 55 and 22 percent growth rates versus the national averages (22 and 5 percent). Northwest Arkansas is also leading the U.S. in the current expansion, which began in June 2009, recording 9.2 percent growth, nearly three timesthe national average (3.6 percent) through March.

No other Arkansas region has such a stellar record of long-term jobs creation.

Fort Smith (30 percent), Jonesboro (29 percent), Hot Springs (27 percent) and Central Arkansas (26 percent) exceeded the U.S. in the record 10-year expansion (March 1991 to March 2001). Hot Springs (11.2 percent), Central Arkansas (8.4 percent), Fort Smith (8.1 percent) surpassed the U.S. in the subsequent expansion (November 2001 to December 2007).

But Fort Smith, Hot Springs and Pine Bluff have lost jobs in the current expansion, while Central Arkansas (Little Rock, North Little Rock and Conway) has grown less than the U.S., according to recordsfrom the state Department of Workforce Services.

Northwest Arkansas is the only area to deliver aboveaverage jobs creation in all three expansions.

Northwest Arkansas delivers above-average jobs growth while statewide employment growth currently trails the U.S., Bureau of Labor Statistics data show.

Arkansas’ modest private-sector jobs growth in this expansion is largely attributable to Northwest Arkansas. Arkansas private jobs have increased by 12,800, from 949,200 (June 2009) to 962,000 (March 2013). Northwest Arkansas, by contrast, has created 15,100 jobs, from 171,100 (June 2009) to 186,200 (March 2013). Central Arkansas (3,700) and Jonesboro(3,500) created far fewer private sector jobs. Private employment contracted in Fort Smith, Hot Springs, and Pine Bluff .

Northwest Arkansas’ labor market, in sum, is like a six-cylinder engine fi ring on all cylinders. Arkansas’ statewide economy, by contrast, is like a fourcylinder engine fi ring on only two cylinders. The engine needs a tune-up.

There is little to suggest that Little Rock policymakers are ready to acknowledge Arkansas’ weak statewide jobs growth.

The 89th General Assembly recently concluded without a serious examination of this problem.

The most popular metric in Little Rock remains state revenue, not private jobs creation.

This is unfortunate because Little Rock policymakers could learn a great deal from Northwest Arkansas’ entrepreneurial culture. One lesson is that some of the area’s biggest enterprises were founded in the depths of recessions. Another is that these enterprises relied on private capital markets, not government in their inception.

The Northwest Arkansas jobs machine is a success story Arkansans can be proud of. Policymakers can learn a great deal if they are willing to examine it.

ECONOMIST GREG KAZA IS EXECUTIVE DIRECTOR OF THE ARKANSAS POLICY FOUNDATION, A NONPARTISAN THINK-TANK FOUNDED IN 1995 IN LITTLE ROCK.