J.B. Hunt’s job expansion could have $155 million impact on Northwest Arkansas

by Kim Souza (ksouza@talkbusiness.net) 57 views 

Jobs are the key to the ongoing growth in Northwest Arkansas and the recent announcement that J.B. Hunt Transport Services Inc. will expand its local workforce by 1,000 over the next six years could create another 1,180 jobs, according to research from the Northwest Arkansas Council.

Using the standard economic models provided by the U.S. Census Department and the EMSI (Economic Modeling Specialists Inc.) tool, economist Mike Harvey developed a rough estimate for the impact the jobs will have on the local region. Harvey, the chief operating officer at the Northwest Arkansas Council, said the model projected the 1,000 new jobs at J.B. Hunt would produce another 1,180 spinoff jobs, and the total increase in payrolls from all new jobs would be an estimated $155 million.

“This is a fairly conservative model, of course we don’t exactly know what the Hunt jobs will pay, or at what rate the company will ramp up to the 1,000 number. We can figure the jobs will have a salary range between $40,000 and $70,000, but that’s just an estimate given we don’t have any finite details,” Harvey said.

Kathy Deck, director of the Center for Business and Economic Research at the University of Arkansas, has no doubt 1,000 business services jobs will facilitate future growth but without a formal study Deck was not comfortable providing an impact estimate. The growth rate estimate provided by Harvey from the Hunt expansion was 1.18, Deck said anything under 1.5 is pretty conservative and she gets nervous when impact studies come in much higher than that.

“Any time our flagship companies expand that is a bonus to what is already a pretty vibrant economy,” Deck said.

Deck said economists are always looking for where future job growth will originate and in most cases the flagship industries, being mature, are just expected to hold the course and keep a steady payroll.

“We don’t have a large expectation that they will provide the majority job growth, which here (in Northwest Arkansas) comes from service providers, startups and small businesses adding a few people here and there. When we see 1,000 new jobs at a flagship that’s cream on top,” Deck said.

To put the growth in perspective one should also look at the number of jobs the region typically adds each year. Deck said over the past few years the region has added between 5,000 and 10,000 new jobs annually. The 1,000 jobs announced by Hunt are over a six-year period and if they were added equally throughout that period would be 167 jobs a year.

“I never would make light of any job that is added to the economy, they all count. What is important in the case with the Hunt jobs is the fact that these are professional services, full-time jobs. But we don’t know if the jobs themselves support other local business services –vendors and suppliers; or if they support services somewhere else,” Deck added.

Harvey and Deck said the 1,000 new hires will visit restaurants, perhaps use a dry cleaner, wash and service their cars, buy groceries, shop retailers and seek entertainment, all which supports those varied industries.

Both said the tight workforce in the region is a challenge for many employers seeking expansion. Harvey said Hunt conducts much recruiting out the University of Arkansas and this will likely be part of how the company plans to fill the new positions. If that’s the case, the starting wages could be lower given they are more entry level.

“I talk to employers all across the region and many of them are having trouble finding the skilled workers they need. They often recruit from their competitors and other businesses,” Harvey said.

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