UA Economist Says NWA Holding its Own, Compared to Larger Metros

The 450 announced layoffs at the Wal-Mart Stores Inc. home office did not go unmentioned at the Center for Business and Economic Research quarterly business analysis luncheon on Friday at the new Northwest Arkansas Board of Realtors Event Center in Lowell.

Researcher Kathy Deck, director of the University of Arkansas’ CBER in the Sam M. Walton College of Business, shared highlights of the annual State of the Northwest Arkansas Region report, but also commented on the impact to the economy from layoffs at the region’s largest employer.

“Walmart’s restructuring does absolutely nothing to weaken Northwest Arkansas’ potential as a job-creating machine,” she said.

“Real people will be affected, and I never want to forget these are real people’s lives,” she said, adding that the overall economy should not be negatively affected and that those employees should be able to find other work in the region.

“In fact, we want Walmart to run right, to try to pursue its own strategic visions and have the right resources in place to be a successful company over the long-term,” she said.

The annual State of the Northwest Arkansas Region report, commissioned by the Northwest Arkansas Council and conducted by CBER, showed the region is doing well in some areas, and has room to improve in others.

The entire report is available at the CBER and NWA Council websites.   

 

New Benchmarks

The report has been published annually since 2011. However, this year, for the report and for its latest three-year strategic plan, the NWA Council opted to change its benchmark regions.

The new peer metro areas the researchers and planners consider in comparison to Northwest Arkansas are Austin, Texas; Des Moines, Iowa; Madison, Wisconsin; and the Raleigh-Durham region of North Carolina, known as the Research Triangle.

“We decided to move from comparing the region to areas that are demographically similar and have a lot of the same industrial structure to comparing ourselves to kind of the greatest of the great,” Deck said, noting her initial skepticism of the change.

Challenges in comparing NWA with these regions include the fact that NWA is smaller. “Northwest Arkansas, although we live big, we’re not the same size as Austin; we’re not the same size as the Research Triangle,” Deck said.

However, Deck said the NWA is holding its own against these regions in some important metrics. “Not only are we doing as well as some of these fantastic places to live, we are in fact beating them in so many places.

“I think that just grows to reiterate what a great value Northwest Arkansas is as a place to do business and a place to live,” she said.

 

By the Numbers

Deck said the region is doing well in two metrics that make it more attractive, homeownership cost and commute time.

Home ownership costs in NWA were the lowest among all the peer regions, accounting for 18.7 percent of household income in 2010, dropping to 17.4 percent in 2012 and decreasing again to 16.3 percent in 2014.

NWA had the second-shortest commute time in its peer group in 2014, with 75 percent of local workers spending fewer than 30 minutes in commute to work.

Des Moines had the shortest, according to the report.

In addition, the metro GDP grew 4.4 percent in 2014, higher than each of the peer metro areas, except for Austin, according to the report.

While some of the region’s other numbers do not look as good, the rate at which they are improving does.

The 2014 unemployment rate, at 4.6, was the highest in the peer metros, but it was better than the state and the nation.

However, Deck said the latest unemployment rate, as of August 2015, is 3.6, and also employment grew at an average annual rate of 2.9 percent between 2010 and 2014, slower than Austin and the Research Triangle, but faster than the others.   

Per capita income and wages both are lower than the peer metros and the nation, but higher than the rest of Arkansas, and the wages growth rate from 2010 to 2014 was significantly higher in NWA than its peer regions.

The poverty rate was the second highest in the peer group in 2014, at 16.2, but it showed a 0.6-percent decrease from the previous year.

Two points of concern for the region are educational attainment establishment growth.

The percent of the adults (age 25-plus) with college degrees still lags behind the nation and its peer groups, but it is higher than the state overall.

Deck said that this data has helped the NWA Council implement programs to address the issues.

“Establishment growth is the thing we need to keep our eye on most closely,” Deck said.

While the area sees plenty of new businesses open, others are closing at the same time.

The number of business establishments in NWA increased at an average rate of 0.9 percent, to a total of 11,998. The growth rate was the slowest among the peer regions, slower than the nation as a whole, but faster than the rest of the state, according to the report.

Another area were NWA is lagging is in research spending.

Spending on academic research and development at the University of Arkansas in Fayetteville, at $125,501, was dwarfed in comparison to the spending at schools in the other metro areas: the University of Texas, the University of Iowa, the University of Wisconsin, the University of North Carolina and Duke University.

The University of Iowa, at $435,377 was the second lowest after UA, and the University of Wisconsin showed the highest spending at $1.1 million.