Northwest Arkansas’ robust economy continues to make steady progress, a report published Tuesday by the University of Arkansas shows.
The 2017 State of the Northwest Arkansas Region Report gives an overall view of the region, and it shows the metropolitan area is improving in areas such as educational attainment, annual wages, job creation, unemployment rate and poverty rate. The university’s Center for Business and Economic Research since 2011 has published the report each fall in collaboration with the Northwest Arkansas Council.
Mervin Jebaraj, the center’s interim director, shared the report’s findings at a luncheon attended by more than 250 people. It demonstrates how the region has progressed, comparing Northwest Arkansas to peer regions that include Austin-Round Rock, Des Moines-West Des Moines, Durham-Chapel Hill, Raleigh and Madison.
“Northwest Arkansas as a region is ambitious, which is why we compare ourselves to some of the fastest-growing metro areas around the country," Jebaraj said. "When compared to those peer regions, Northwest Arkansas does really well in key metrics like the growth rate of the regional economy, employment growth and labor force gains, commute times, and housing affordability.
"The region needs to continue investing in entrepreneurship and university research and development to grow new business establishments, and we need to ensure that an adequate mix of housing is available to maintain our housing affordability.”
Nelson Peacock, the president and CEO of the Council, talked about taking advantage of opportunities to increase the pursuit of federal research funding at the University of Arkansas and about the region's need for daily low-cost air service at the Northwest Arkansas Regional Airport to create competition that would drive down the cost of flights. The only area where Northwest Arkansas is not seeing improvement is in airfares, which are more expensive than at most airports across the U.S.
The Northwest Arkansas Council has a long history of using other regions and success elsewhere to provide a roadmap and insight into what can be accomplished in Northwest Arkansas. When the Council announced its new three-year strategic plan in 2015, its leadership purposely chose Austin and the other regions as benchmarks because they were ahead of Northwest Arkansas in many performance areas. The decision to benchmark against excellent regions was intentional.
Metropolitan GDP – Real metropolitan gross domestic product in Northwest Arkansas grew to almost $24 billion, and it was up 3.9 percent. Austin-Round Rock and Raleigh saw real metropolitan GDP grow faster between 2015 and 2016, but Northwest Arkansas outgrew Madison, Des Moines-West Des Moines and Durham-Chapel Hill.
Employment – Employment in Northwest Arkansas grew 4 percent in the most recent year, faster than all peer communities. Only the Austin-Round Rock average growth over five years (4.3 percent) outpaced Northwest Arkansas' five-year growth (3.7 percent).
Unemployment – No peer community had a lower unemployment rate than Northwest Arkansas’ 2.9 percent in 2016. Northwest Arkansas and all of its peer communities saw unemployment decrease by at least 1.5 percent between 2012 and 2016. The decrease in Northwest Arkansas was 3 percent.
Establishment Growth – Northwest Arkansas isn’t increasing its number of businesses as rapidly as its peer communities. The average peer community increased businesses by 4 percent; the increase in Northwest Arkansas was 2.7 percent. The region saw 328 new businesses established in 2016.
Median Household Income – Northwest Arkansas’ median household income increased 2.1 percent in the most recent year, but it remains far behind its peer regions. While Northwest Arkansas income rose to $51,848 last year, five of six peers have household incomes above $65,000 annually.
Annual Wages – Average annual wages in Northwest Arkansas have been consistently lower than in peer regions and the nation as a whole. Wages have increased 1.9 percent since 2012. The rate of growth is similar to peer regions. It's worth noting that Northwest Arkansas' cost of living is less than in peer regions.
Poverty – Northwest Arkansas has reduced its poverty rate to 13.2 percent. The rate was above 17 percent in 2012. Four of the five peer regions have lower poverty rates.
Educational Attainment – The percentage of Northwest Arkansas residents age 25 or older with a bachelor’s degree or higher continues to increase. It reached 30.9 percent in 2016, but Northwest Arkansas still lags behind its peers. At least 36.7 percent of residents in all peer regions have earned a bachelor’s degrees or higher.