Unemployment office largest Fort Smith area employer?

The largest employer in the Fort Smith metro area between September 2008 and September 2010 was probably the unemployment compensation system of the Arkansas Department of Workforce Services.

It was a staggering, if not sobering, point made by Randy Zook during the First Friday Breakfast (Nov. 3) conducted by the Fort Smith Regional Chamber of Commerce. Zook is president and CEO of the Arkansas State Chamber of Commerce/Associated Industries of Arkansas.

According to figures Zook gathered from the DWS, $168 million in unemployment benefits was paid out of the Fort Smith DWS (unemployment) office between September 2008 and September 2010. To provide perspective, Zook said the money represents 2,800 jobs per year at an annual salary of $30,000.

“Just think about what that has meant for your economy,” Zook said.

Statewide, more than $1.975 billion was paid out in unemployment benefits in the two year period. That amounts to supporting 32,916 jobs per year at an annual salary of $30,000.

Unfortunately, the $168 million payout in the Fort Smith area is the largest payout in the two year period — even more than in the larger metro areas of Little Rock and Northwest Arkansas.

“The Fort Smith is the largest payment office, because, you know, your unemployment has been pretty substantial. Your economy was hit hardest by the recession,” Zook told The City Wire, adding that Little Rock was the next highest office.

The regional economy and its broad manufacturing base has been hit hard.

The Fort Smith metro jobless rate was 7.7% in September, down from 7.9% in August and up from 7.5% in September 2009. The number of unemployed in the Fort Smith metro area was 10,093 in September, down 0.9% compared to September 2009, but up 62% over the 6,230 unemployed in September 2008.

Fort Smith’s manufacturing sector employed an estimated 21,100 in September, down from 21,300 in August, and down from the 21,600 employed in the sector in September 2009. Employment in the sector is down 31.27% from a decade ago when January 2001 manufacturing employment in the metro area stood at 30,700.

Arkansas’ unemployment compensation fund is broke, with the state likely to soon have a $475 million IOU to the federal government. Part of the debt, according to Zook, is that Arkansas has higher unemployment benefit payouts than neighboring states.

“Our benefits are very generous compared to surrounding states. I don’t want to see us go to the bottom of surrounding states, but we need to be more in the middle of that pack. Our benefits need to be competitive and not setting the pace,” Zook said. “When you are unemployed it’s a lifeline, there is no doubt about it. But, as many conservatives might say, it may be out of whack.”

Zook said proposals to repay up to $475 million in unemployment benefits the state has borrowed from the U.S. government will likely be discussed during the upcoming 88th Arkansas General Assembly. Not only does the $475 million have to be repaid, but a reserve of about $500 million has to be restored, he explained.