Even as the Arkansas and U.S. job market continues to expand with record unemployment, there is still room for the state’s labor pool to grow as temporary and unaccounted workers seek better jobs, experts say.
“We are seeing some impressive growth, specifically in a few … key industries,” said Stephanie Shine, vice president and director of permanent placement service at Robert Half’s Finance and Accounting division in Little Rock.
Last month, Arkansas reported an all-time unemployment rate of 3.5%, down from 3.6% in March and down from 4.1% in the same period a year ago. According to recent data compiled by the U.S. Bureau of Labor Statistics (BLS), there has been a 4% increase in the number of new hires in the professional and business services sector in the same 12 months.
One of the key surprises noted in the U.S. Labor Department data is the state’s manufacturing sector has grown by 2.3% over the last year. In April, the sector employed 157,200, up 3,500 from the same period a year ago. Of that total, the nondurable “soft” goods industry has added a total of 4,500 positions, offsetting the loss of 1,000 jobs in the durable goods industry that manufacture longer lasting products such as home appliances, furniture and tools.
Anecdotally, Shine said the state’s manufacturing sector is attracting new professional candidates to the industry, one of the first signs the industry is recovering and hiring workers at all levels.
“Five or six years ago, we were very strong in manufacturing and I think we kind of died out and we weren’t seeing many professional positions,” Shine said of the state’s post-recession job market. “Over the last year and a half or two years, it has bounced back, which is really exciting.”
ROOM FOR LABOR POOL GROWTH
At the same, two of Arkansas’ top economists said hiring levels among temporary and the so-called “marginally attached” workers could push the state’s unemployment levels beyond the record 3.5% that has brought some 1.35 million workers back to the labor pool.
In his analysis of the state’s leading professional and business services supersector, University of Arkansas at Little Rock economist Michael Pakko said the industry that has seen the most growth has been administration and support services, which includes temporary staffing and permanent placement services such as Robert Half, Accountemps and Staffmark.
“Over the 2013-2016 time span, all of the growth has been in administrative and support services,” said Pakko, chief economist at UALR’s. “So, what this tells us is that about 65% of the job growth in … is in the category of employment services, and most of that has been in temporary help. All in all, temporary help services account for about 38% of the total growth in professional and business services.”
University of Arkansas economic forecaster Mervin Jebaraj said there is still room for reduction in the state’s unemployment due to some “slack’ in the labor market caused by key factors not seen in the BLS data reported monthly by Arkansas and other states. Some economists believe the commonly reported “U-3” rate – which includes the state’s 3.5% estimate in April – does not capture the entire employment picture. The U-6 rate includes the total unemployed “plus all marginally attached workers” and those “employed part time for economic reasons,” according to the BLS. Federal data is not available monthly for a state U-6 rate. On Friday, BLS officials reported that the current U-6 unemployment rate was 8.1% unchanged from April but down from March’s 8.9% and January’s 10.1%.
Jebaraj, interim director for the university’s Center for Business and Economic Research at the Sam Walton School of Business, said he believes the unaccounted and discouraged workers coming back into the labor pool and temporary workers seeking better jobs could propel the state’s unemployment rate even lower.
“There is still a possibility for the unemployment rate to stay low or go a little bit lower while the labor force grows in Arkansas, Northwest Arkansas and the nation as whole if you look at one of the broader measures of unemployment in the (U-6) data that includes the marginally attached,” Jebaraj said.
ROOM FOR WAGE GROWTH
Jebaraj also said there is ample room for wages to grow statewide, which are still well below the national average. In May 2016, the average annual wage for most U.S. workers was $23.86 per hour, or $49,630. Arkansas workers average about $19.03 per hour, or annual salaries of $39,590, BLS data shows.
The lower salaries have not stopped highly-skilled professional workers from coming back to Arkansas seeking good-paying positions in the tight job market. That dynamic is allowing qualified job candidates to ask for salaries “even more so above where they should be,” Shine said.
“We are in a different market that we were even a year ago or two years ago,” she said. “The market is extremely competitive in Arkansas for skilled talent. We are seeing a professional (labor pool) that is really centered around a candidate market, which a few years ago it was more of an employer market – meaning we have many more jobs than we do qualified candidates.”
Shine continued: “We are seeing some salaries ago above the (national) average, and some candidates getting multiple and counter offers, increasing benefits and perks. It is great for the skilled worker and candidate, but it does make it difficult for clients and that is why our business is … booming because that is where we come in and help clients find those people they are looking for.”
Shine also confirmed BLS data that the state’s trade, transportation and utilities sector is experiencing moderate growth. The state’s top sector now has 253,700 workers in the labor pool, a gain of about 200 new positions per month over the past year. Shine said the office is seeing more professional candidates from Arkansas coming back to the state for high-paying jobs, especially among small and medium-sized companies in the technology and finance sectors.
“When I started seven years ago, candidates were leaving for positions outside of Arkansas because they weren’t finding them here,” Shine said. “But now, because we have such a robust market and so many great positions with some good clients, I see candidates coming back to Arkansas, which is a good thing.”
On the negative side, Shine said hiring is down at publicly traded firms and larger corporations in Arkansas are waiting to see if the economy will gain momentum after tepid growth in 2016. She said many of the larger companies have instituted hiring freezes because of flat or declining revenue.