While there were ups and downs along the way, 2019 finished as a banner year for the Arkansas economy. Both nationally and in the state, the job market continued its hot streak from beginning to end.
In Arkansas, our state unemployment rate sat at 3.6% at the end of November, buoyed by 10.3% job growth over the past decade. At the national level, employment grew by 145,000 in December, according to the national Bureau of Labor Statistics, while unemployment remained at a near historic 50-year low of 3.5%.
The strength of the job market is even more significant given the uncertainty and instability created by a long and messy fight with several of our international trading partners.
• United States-Mexico-Canada Agreement
Passing the US Mexico Canada Agreement (USMCA) was of critical importance for Arkansas businesses and farmers. Canada and Mexico are our state’s biggest trading partners, purchasing nearly one-third of Arkansas’s total manufacturing exports, equaling more than $2 billion. From agricultural product like eggs, poultry, and rice to manufactured goods including paper, construction, and aero defense products, this agreement brings certainty back to our state’s job creators and re-establish a framework with our neighbors to enable future economic growth.
The more than 21-month trade war with China neared its end in 2019, with a Phase One agreement expected later this month. In mid-2018, the United States began collecting tariffs of 25% on a variety of Chinese imports, most notably steel and aluminum, but also plastics, batteries, chemicals and electronic parts. China responded in-kind with counter tariffs on American goods including agricultural, chemical, industrial, paper, and automotive products.
While the U.S. tariffs were advantageous to a handful of Arkansas businesses, our steel producers in particular, the counter tariffs by China have had a significant negative impact on our state’s agricultural sector. Resolution and de-escalation of this trade war are positive steps forward that will be yet another shot in the arm for Arkansas businesses in 2020.
• 2020 Challenges and Opportunities
With continued job growth, low unemployment, and rebounding international trade, the Arkansas economy is primed for success in 2020. But there are forks in the road ahead that will determine whether we can stay on the right path.
The first challenge is our aging and shrinking skilled workforce. With low unemployment, one of the biggest challenges Arkansas employers face is finding qualified skilled workers to fill available jobs. In 2009 there were fewer than five available workers for every job opening in Arkansas; today that number is one. When you account for whether available workers have the necessary skills and qualifications to actually fill those open positions, like manufacturing, technology, and trade jobs, the available pool of workers shrinks even more.
As worker availability meets or drops below the number of available jobs it will undoubtedly put a significant strain on our economy, and on employers in particular, to maintain continued growth and economic expansion. Identifying and implementing successful workforce training and skills development initiatives has to be a priority for our state, and we must change how Arkansans think about the job opportunities provided by skilled professions, so we can inspire today’s youth and lead them, and our state, down the path to prosperity.
The second challenge before us is what to do about our aging infrastructure. Highway accessibility is one of the top factors that businesses consider when expanding or moving to an area. Arkansas businesses rely on our roads and bridges to deliver their products, and a robust infrastructure enables them to compete in this global economy. This fall, voters will have the opportunity to invest in our state’s infrastructure raising more than $200 million for highway improvements by voting for Issue 1. Passage of this important amendment would help build, repair, and replace thousands of miles of roads and bridges across our state, from interstate highways to rural county roads.
In 2019, Arkansas businesses took on a number of challenges head on and ended the year on the rise. 2020 will offer a new set of obstacles. The question is, will we rise to the challenge once again? The future is bright if the answer is yes.
Editor’s note: Randy Zook is CEO of the Arkansas State Chamber and Associated Industries of Arkansas. The opinions expressed are those of the author.