Rate of Growth Begins to Slow in Northwest Arkansas

Despite strong economic conditions and rising population, shortage of workers hampers regional growth

Economic development in Northwest Arkansas is continuing but at a slower rate than last year.

Professor Craig Shulman, director of the Bureau of Business and Economic Research at the University of Arkansas, says a labor shortage is one reason for the trend.

He and senior research specialist John Shelnut at the University of Arkansas at Little Rock’s Institute for Economic Advancement cite the Arizona State University Blue Chip Job Growth Update, a ranking of metropolitan area growth based on Labor Department statistics and data.

It shows the Fayetteville-Rogers-Bentonville metropolitan statistical area has had an average of 2,000 fewer jobs during the past four months compared to the same period in 1997.

“Northwest Arkansas has slowed down a lot,” Shulman says. “It’s still above average compared with other MSAs across the nation. But the area has run out of labor and that’s stunted growth.

“There are some high wage jobs coming in to service some of the large corporate accounts here. But overall, the area has slowed down because of labor shortages.”

Northwest Arkansas’ annual population estimate has also slowed down from the boom it saw in the 1980s and early 1990s. The Northwest Arkansas Regional Planning Commission recently released some estimates on the area’s population based on the latest official census and the number of residential permits being issued. Planner Bob Harlan says new permit activity in Benton County is down 23 percent from this time a year ago.

“We’ve had 140 commercial permits in Benton County issued for $47,387,396 in value,” Harlan says. “That’s down quite a bit. It’s usually feast or famine though. Overall, we’ve grown about 38 percent since the 1990 census.

“But with only a 2.7 unemployment rate, there’s concern because the labor market is so tight.”

Northwest Arkansas, with an estimated population now of around 277,000 in Benton and Washington counties, continues to draw on southern Missouri and eastern Oklahoma for population and job growth.

But the largest influx of residents and new jobs is apparently coming in terms of new retail positions being created to service the 120 Fortune 500 companies that are either based or have offices here.

“We’ve seen a major influx on the retail side,” Shulman said. “There are a lot of new national chains coming in with restaurants and retail goods. There’s also a lot of new offices, Hewlett Packard for example, who are moving here to service the big accounts like Wal-Mart in Bentonville.”

He adds, “This means the population gains on the retail side are coming at the above-median level.”

The 1990 per capita personal income for the Fayetteville-Springdale-Rogers MSA was $15,829. The same measure in 1998 is $20,856.

Both ends of the economic spectrum have witnessed large growth. Shulman says, because of the low unemployment rate, companies like Tyson Foods Inc., which depend largely on low-skilled labor, have had to recruit new sources of employment to the area.

The most noticeable result since the 1990 census is an increase in the Hispanic population — up from 1,359 to 3,374 in Benton County and 1,526 to 3,558 in Washington County as of 1997.

Local chamber officials say, despite the current dip in growth, prosperity in Northwest Arkansas is far from over. Bill Rogers, the Springdale Chamber of Commerce economic development director, says two events expected in November — the opening of Interstate 540 from Fort Smith to Fayetteville and the opening of the new Northwest Arkansas Regional Airport at Highfill — will make a difference.

“Maybe the foot’s off the accelerator a little bit, but, when you consider what’s in front of us, I don’t really think you can say we’re slowing down,” Rogers says. “Those events in and of themselves will produce remarkable growth in both business and industry.”

Rogers says a new northern bypass around Springdale, plans for which are still in discussion stages, will also offer a chance for economic development. Developers will likely race both to establish businesses along the bypass that will spur off to the new airport and to fill in underdeveloped areas.

Van Buren is perhaps the city that’s bucking the region’s slowdown trend. Chamber of Commerce president Marjorie Armstrong says the Crawford County city has shown a 5.5 percent net increase in manufacturing and processing employment since last year.

The city’s population is also up around 300 to 18,781 since a 1996 special census.

“Poultry processing and trucking were the largest two areas,” Armstrong said. “Out of 56 manufacturers and processors, 14 gained employment and 38 maintained their status quo. Some of that is attributable to USA Truck undergoing a major expansion.”

Armstrong adds, “Overall, we’ve had the room to grow population-wise and, fortunately, our job growth has mirrored that.”