Study shows rural workers make much less than urban counterparts; wage growth flat for decade-plus

Workers that live in rural parts of Arkansas make less than those in urban areas, have a harder time finding better paying jobs, and these are key factors in an eroding tax base in many parts of the state, according to the Rural Profile of Arkansas, a new report produced by the University of Arkansas.

Each county in the state is classified as rural or urban, and those rural counties are then divided into one of three geographic zones – Delta, Coastal Plains and Highlands, for the purposes of the report. In Northeast Arkansas, Craighead and Crittenden are the only two counties classified as urban, while most other counties in the region are classified as in the Delta.

The median household income in Arkansas was $42,336 in 2016, which was approximately 77% of the median household income in the nation, according to the report. Five-year estimates from 2006-2010 to 2012-2016 showed median household income in Arkansas declined 2% during this period.

The average median household income of counties in the Rural region of the state was only 78% of the average median household income of counties in the Urban region and 65% of U.S. median household income. In 2016, the average median household income of counties in the Rural region was approximately $36,000 compared to $46,000 in the Urban region, according to the report.

There were moderate differences in the average median household income of counties among Rural regions of the state, and vast differences within regions of the state. Median household income varied greatly among counties ranging from a low of $25,724 in Lee County to a high of $59,016 in Benton County using the five-year average from 2012 to 2016. There was a $16,000 difference in median household income between the low of $29,982 in Searcy County and a high of $46,074 in Grant County in the Highlands region. Similarly, there was nearly a $23,000 difference between the lowest and highest median household income among the urban counties, ranging from $36,377 in Jefferson County to $59,016 in Benton County, the report states.

From 2006-2016 the median income in Craighead County rose only slightly by 1.6%, to $43,892, and it only rose about $700 per year from 2010-2016. Per job earnings in the county rose 4.9% to $43,386 from 2007-2016.

Although the regional average earnings per job increased from 2010 to 2016, median household income declined for the same period. Median household income declined in both the Rural and Urban regions of the state during this period, 2.9% and 1.5% respectively. The Delta experienced the greatest decline at 5.8%. Of all Arkansas counties, Nevada County experienced the largest decline in median household income (27%), followed by Lee County with a decline of nearly 19%, the report found.

Twenty-nine counties experienced an increase in median household income during this six-year period, and of these, Chicot, Franklin, St. Francis and Searcy had increases over 10%. However, even with the large increase in median household income, all these counties still had median household incomes below the statewide median. Although average earnings per job increased between 2010 and 2016, there were fewer jobs in rural areas of the state and many rural households had low and declining household incomes.

From 2007 to 2016, there was a shift from manufacturing to service sector jobs. This trend disproportionately affected rural areas. Rural areas lost about the same number of manufacturing jobs, but did not gain as many professional and other services sector jobs, as the urban areas. Not only were manufacturing jobs lost, but construction and transportation and utility jobs were also lost in both the Urban and Rural regions during this nine-year period, the report states.

The Urban region added approximately 72,900 professional and other Services sector jobs, approximately six times more than the Rural region. Two-thirds of the new service sector jobs were professional services. The Rural region also lost jobs in the trade and government sectors, whereas the Urban region gained jobs in these sectors. Beginning in 2010, the growing state economy saw an employment increase in many sectors in the Urban and Rural regions of the state.

The Delta experienced an increase in employment in these basic industries during this six-year period. The Highlands lost many jobs in the Construction, Mining and Manufacturing sectors, but added more jobs in Professional and Other Services and Trade sectors than the Delta and Coastal Plains. The Delta region added over 1,000 manufacturing jobs from 2010 to 2016. The changing structure of the Arkansas economy, especially in the rural areas, suggests a need to diversify and invest in economic enterprises that utilize and add value to local resources. The increasing need for skilled technicians in many industries suggests that those regions with a skilled and dependable workforce will be in a better position to grow their regional economies, according to the report.