Arkansas’ economic divide

by Michael Tilley (mtilley@talkbusiness.net) 735 views 

Historical context is difficult to craft in describing the real and growing economic divide between Arkansas’ rural and urban areas. Solutions to the divide are outside the comforts of simple prescription. Awareness, not clever context or sure solutions, is the purpose of this essay.

Uneven. Unequal. Unsustainable. These are words often used by economists within the overall message that the state’s economy is doing well. Such words are not emitted with the advocacy of political passion. It is purely clinical, as if cold strategy among surgeons prior to removal of a tumor.

There are many examples we could cite to portray the problem, but let’s use job numbers. Arkansas ended November 2017 with 1.321 million jobs, up 2.8%, or 36,308 jobs compared with the same period in 2016 – the latest federal data available. Of the job growth, 9,460, or 26% came from Northwest Arkansas, and 6,915, or 19%, came from central Arkansas. The Jonesboro metro added 1,687 jobs and the Fort Smith metro added 1,557 jobs.

The numbers show that more than 54% of job growth came from less than 10 – arguably less than seven – of the state’s 75 counties. The seven counties are Benton, Craighead, Faulkner, Pulaski, Saline, Sebastian and Washington.

More numbers. About 12.7% of U.S. citizens live in poverty. But in the Mississippi Delta area of Arkansas, the numbers are tragic. In Lee County, the rate is 35.9%, and 32.3% in Phillips County. Poinsett County had the lowest rate in the area with 22.7%.

With respect to healthcare access, criminal justice, education access and equity, broadband, infrastructure, and other critical economic development components, the poverty rates and limited area of job growth are unsustainable if Arkansans are interested in a society with more categories than just “Winners” and “Losers.”

To be sure, the dilemma is that the metro areas with the means to address ever-evolving requirements of the modern economy include the seven to 10 Arkansas counties in which growth is dominant. Even the Fort Smith metro, which suffered economically the most among most metro areas not only in Arkansas, but the U.S. from the manufacturing decline, has found the means to use art and tourism and the benefits of free land from a former military base to reverse its fortunes and begin to grow from within instead of waiting for outside corporate saviors.

Republican Gov. Asa Hutchinson has smartly built upon education system improvements fostered by Democrat Gov. Mike Beebe. Coding, for example, especially at the youngest levels possible is a brilliant move. The next multi-millionaire could be Tisha, a sixth-grader in Jerome who is convinced she has the best app solution for any number of productivity gains for row-crop farmers.

But can we incentivize that? Should we? How would that work? It would be a helluva policy magnet to find and fund the profitable needle in the noisy haystack.

Maybe we need programs that are acceptable tangents of existing incentive programs. We have development incentives for chicken processing facilities, but nothing for a small town that has shown potential for a profitable arts community.

Could the Quick Action Closing Fund be amended to provide funding to innovative efforts in small cities resulting in jobs in the fast growing craft brewing sector? Again, can we incentivize that? And if so, should we?

Fortunately, the Winthrop Rockefeller Institute has for many years been paying attention to this issue.

“Our small towns have assets, history, artists, stories, natural beauty and smart kids. But there has to be a catalyst in the community to capitalize on those assets and grow the town from the inside out. We are trying to nurture that idea with our Uncommon Communities program, but we have a lot of work in front of us,” noted a statement from WRI to Talk Business & Politics.

The institute also calls for programs and policies that seed entrepreneurship and innovation in “dying towns.”

Arkansas Economic Development Commission Director Mike Preston said the agency takes serious its role to help rural areas and small cities.

“While new investments often take the spotlight, growing and expanding current business in Arkansas encompasses the bulk of the efforts of AEDC. In small communities, small businesses are very important. AEDC has several programs that help with improving technology, creating marketing plans, providing loans and grants, and certification for women-owned and minority businesses to provide services to state agencies,” Preston said in a statement.

He also provided data showing that on a per capita basis, the largest job growth is in rural areas “such as Batesville, Hot Springs, Camden, Flippin, Mountain Home and Forrest City.”

And there is a teaser from Preston.

“AEDC is working on a program that will launch later this year in which communities of all sizes in conjunction with AEDC guidance will look to their existing resources, find their strengths and weaknesses, and work toward changes that will make their community more attractive for locating and growing business.”

Let’s hope the new AEDC program, the Winthrop Rockefeller Institute nurturing, and efforts by groups like the East Arkansas Crossroads Coalition are able to push back against what could be a growing jobs divide in Arkansas.

Gov. Hutchinson, legislators, and other state officials are justified in being happy about overall state job growth. But we also need them to move the economic divide issue up the priority list and begin to collectively address the uneven, the unequal and the unsustainable.

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