State Chamber Chief Says Education System Needs Work

Arkansas State Chamber of Commerce President and CEO Randy Zook said Friday (Nov. 1) that 98,000 Arkansans are unemployed and about 100,000 Arkansans are underemployed – in jobs that do not meet the worker’s needs either by not providing enough work hours or other circumstances.

Zook’s remarks, part of the Fort Smith Chamber of Commerce’s First Friday Breakfast, also included how to return the state’s unemployed back onto payrolls and how to address the state’s need for skilled workers in the future through education and tax incentives.

Due to the high numbers of unemployed and underemployed, Zook said the state was faced with a dilemma.

“We need to create, in Arkansas, about 200,000 jobs right now,” he said.

Zook, who is also head of the Associated Industries of Arkansas, added that it would “take careful decision making (and) deliberate action. It will take a lot of work, but it’s going to be a gradual thing. The conversation today is about the pace of that process. We need to be in the process of creating about 200,000 good jobs in Arkansas.”

To highlight the work that needs to be done to foster a business-friendly environment that could put Arkansans back to work, he compared Arkansas to the rest of the nation in various areas including GDP, average personal income, domestic migration and economic performance.

In the area of GDP, Arkansas has the 34th largest GDP in the nation. In comparison, the neighboring state of Oklahoma has the 29th large GDP in the nation while fellow neighbor Texas has the 2nd largest GDP in the nation, trailing the national leader of California.

In the area of personal income, Arkansas has an average of $34,723 compared to a national average of $42,700. That is a 19% difference between the state and national figures, Zook said.

In the area of domestic migration, the number of people who move from one part of the country to Arkansas, the state has added 80,000 people since the turn of the century in 2000.

In the area of economic performance, Arkansas is ranked as the 22nd best in the nation.

“That’s pretty good, top 25,” Zook said. “The problem is a year ago, we were 11th. Which drives the point that this is always – all of these measures are moving parts. You can’t sit still. You can’t just rely on what we’ve done so far to carry us through. You’ve got to be constantly investing in our policies and our practices.”

As for what the state can do to invest in jobs, Zook pointed to the already high amount that is spent on education in the state. Of the tax revenue the state receives, 47% goes to K-12 education, while another 17% is directed to higher education, meaning 64% of the state’s tax revenues go to education. But he said the results seen by the state have not met expectations based on the amount of money spent.

“We have got to get better results without a lot of extra money because frankly we don’t have a lot of extra money unless we figure out how to do some smart things around our taxes.”

He praised the Marketplace Fairness Act (MFA), legislation co-sponsored by U.S. Rep. Steve Womack, R-Rogers, which would enforce laws already in place which place a sales and use tax on online purchases, as a way to raise much-needed revenues for the state. Womack, who was in the audience, did not speak about the MFA.

Zook also spoke about legislative priorities of the Arkansas State Chamber of Commerce, specifically changing the state law regarding reporting of operating losses for businesses. The state only allows a business to roll operating losses over for five years, versus the federal timeframe of 20 years. The state Chamber is advocating changing the Arkansas law to 10 years.

He also said the Chamber would like to eliminate sales tax on repair parts for manufacturers much like the state eliminated sales tax on utility bills for Arkansas manufacturers.

But all of the different ways to bring in revenue already required by state law (through online sales taxes) while cutting taxes for some manufacturers and businesses will not allow those businesses to flourish if the state’s education system does not improve, a point Zook drove home by highlighting the following statistics:

• 63% of 3rd graders cannot read proficiently; and
• 48.7% of students entering college have to take a college remediation class either in reading, writing or math.

Zook said leaders across the state have got to figure out how to intervene before a child becomes a statistic, adding that the state currently spends $43.2 million each year on remediation of students.

Asked by Womack how to fix the system, which would result in workers prepared for a 21st century job environment and lifting Arkansas in the economic performance ranking, Zook said the problem was not the state’s students.

“I’ve got to be careful, I’ll end up in (The) City Wire, which happens pretty frequently,” Zook joked. “I think we’ve got to make sure that K-12 system is focused on the kids and not focused on the system. I want to charter school more. … It ain’t the kids, it’s the system. You’ve got to have a longer school day. It’s no secret in the results it produces. It’s a longer school day. We simply are not doing enough to get enough kids up the curve on time.”