Northwest Arkansas’ economic growth is amazing. But it’s not without problems.
For example, the region is growing jobs faster than the workforce is expanding. And a 2.8 percent unemployment rate is problematic when the regional healthcare sector alone is slated to add 1,500 new jobs in the next two years.
Mike Harvey, chief operating officer of the Northwest Arkansas Council, said roughly a half billion dollars in investment and 1,500 new jobs in the healthcare sector of Northwest Arkansas have been announced, and there is not one single health care position in the market now that is already fully staffed.
He said the council continues to work on systems that will help fill the workforce gaps which are going to widen in the near-future when Arkansas Children’s Hospital opens and the expansion of Mercy and Northwest Health are completed.
Dr. Pearl McElfish, associate vice chancellor for the University of Arkansas Medical Sciences in Northwest Arkansas, has taken on this issue for the council. She said in the coming weeks there will be three working groups formed to examine the areas of economic development relative to healthcare, workforce development and community health.
McElfish said business leaders will be called on to take part in the working groups and help craft solutions that can help elevate Northwest Arkansas into a healthcare destination.
Harvey and McElfish spoke at the State of Region luncheon on Sept. 30 at the NWA Board of Realtors offices in Lowell. Kathy Deck, director for the Center for Business & Economic Research at the University of Arkansas, was the keynote speaker and provided a look back at how the region has compared against peer cities by examining economic data from 2010 to 2015.
Deck said there are many things going right in Benton and Washington counties when comparing against peer cities of Austin, Texas; Raleigh, North Carolina; Madison, Wisconsin; Des Moines, Iowa, and Durham-Chapel Hill, North Carolina.
The peer cities were chosen by the council in its 2015 Regional Agenda. Deck said the cities are where Northwest Arkansas would like to be in terms of economic output. While Northwest Arkansas has a smaller population than those regions, the economy outperforms on some metrics.
The Gross Domestic Product for Northwest Arkansas between 2014 and 2015 grew at a 4.4 percent annualized rate, below the 5 percent in Austin and 7 percent in Raleigh, but better than the 3.4 percent reported for Madison, 0.2 percent in Durham and 3 percent in Des Moines. Statewide GDP growth was 1.5 percent, well below the national rate of 2.4 percent
Since 2015, GDP at the national level has been well below the 2 percent range which is deemed a benchmark economists expect the nation to perform. Deck said the lull in GDP growth is projected to abate in 2017 returning to a more normal level of 2 percent to 2.5 percent.
When asked to elaborate on improved consumer confidence in September, but lower-than-expected consumer spending, Deck said consumer spending has pulled back in part because there has been a lull in income growth. While fuel and food prices have remained low, the cost of services, health care, education and utilities has increased.
“Consumers have also paid down some of their debt, and they have saved a little more,” Deck said. “We are about to release our next Consumer Sentiment report for the local region, and I can tell you consumers in Arkansas are feeling better about the economy than they have in the past.”
Deck said job growth over the past several years is outpacing the local workforce capacity. She said one regional group that is underemployed are young women with children at home. She said this highlights perhaps a need for more early childhood education and childcare intervention programs that are lacking in the region.
“Our labor participation rate is well below that of our peer regions, and it’s young women who have left the workforce most often,” Deck said. “Employment growth increased 4.9 percent between 2014 and 2015. At this level, job growth is taxing to our infrastructure.”
The peer cities averaged job growth rates of 3.2 percent. The U.S. rate was 2.1 percent and statewide the jobs growth number was a mere 1.8 percent.
Summing up the local economy, Deck said there really isn’t anything standing in the way of continued growth, so long as the national economy can achieve a 2 percent to 2.5 percent annual growth rate. She said the workforce shortage is problematic and is the one thing that could dampen regional economic growth.