Officials including former state attorney general and current Lt. Gov. Leslie Rutledge (far left) and former AEDC director Mike Preston (third from left) broke ground on a Tractor Supply Co. distribution center in Maumelle. (KUAR)
The table is being set for Arkansas to experience a nice little economic-development run, says the head of the state’s largest business advocacy group.
Randy Zook
Not that growth has been missing. Northwest Arkansas remains one of the fastest growing regions in the country. Randy Zook, president and CEO of the Arkansas State Chamber of Commerce and Associated Industries of Arkansas, noted Walmart’s giant new corporate campus to rival Google’s digs in Silicon Valley, under construction in Bentonville; Tyson Foods expanding its corporate footprint in Springdale and relocating as many as 1,000 corporate employees to the region; not to mention continued growth from J.B. Hunt, George’s and Simmons Foods.
And, of course, the cache of Walmart vendors in the region continues to snatch up supply chain and logistics graduates as fast as the University of Arkansas can produce them.
“Northwest obviously has all the momentum it can handle,” Zook said.
Indeed, in vibrant northwest Arkansas, the song remains the same. But momentum isn’t exclusive to Benton and Washington counties. Central Arkansas has landed some big fish in the form of multiple Amazon distribution centers and another for Tractor Supply Co. And the Port of Little Rock has been on a good run.
Zook also notes all those steel mills hugging the river in Mississippi County, the burgeoning chemical manufacturing and lithium extraction industries through LSB and Standard Lithium in El Dorado, and business has been good of late for the aerospace and defense industry in Camden.
Plus, “There’s been some impressive investments in timber in south Arkansas,” Zook said. “Lots of action going on.”
But the state can’t fully realize this potential until it has the workforce in place necessary to meet the market’s demand for workers. As Zook noted, “The challenge is the workforce. That’s the headline all over the state.”
As an aging workforce clocks out, there aren’t as many fresh bodies waiting in line to clock in and replace them. This is the case in Arkansas and across the country.
Thus, the issue with the workforce in Arkansas is one of quantity, not quality. Arkansas is known for the latter. But the state’s current labor force participation rate is down to 56.5 percent, almost six points below the national rate, per the U.S. Chamber. Arkansas has 64 available workers for every 100 open jobs, its latest data reveals.
And the state lags behind the national average in percentage of the population in the age groups 25 to 44 and 45 to 64, the two that make up most of the workforce. Based on the 2020 census, 25.5 percent of the Arkansas population falls between the ages of 25 and 44, compared to the national average of 26.8 percent. And 24.6 percent of Arkansans were between the ages of 45 and 64, compared to 25.1 percent of the U.S. headcount.
The state is ahead of the national average in the under 18 group and one-tenth of a percentage point ahead in the 18 to 24 group. But workers are needed now. Many of the jobs coming open in the state’s new mills and distribution centers are demanding ones, but they’re high paying as well with great benefits.
It’s simple math, Zook said. More people are retiring than are entering the workforce, and the gap is exasperated by a U.S. birth rate that continues to drop. Other reasons for the gap include pandemic aggravation and dependency on federal pandemic relief, a lack of child-care options and a weakened flow of immigrants into the workforce — “We desperately need sensible, legalized immigration reform,” Zook noted.
He called it the defining issue for economic development in Arkansas for the next 10 to 15 years and maybe longer. “Smart business owners and managers recognize they have to make jobs attractive enough to keep folks. They’ve got to figure out a different strategy and approach to workforce recruitment and retention. Companies have to add value in the work setting.”
Clint O’Neal
Clint O’Neal, the state’s new director of the Arkansas Economic Development Commission, said companies investing in Arkansas are adding that value. Expansion projects have been announced by Apptegy (technology), Camden Timbers (timber and forest products), Owens Corning (building and construction materials) and RelateCare (health care), each of which will add hundreds of jobs with competitive pay and benefits across several industries, he added.
O’Neal said workforce development and education are two of the top priorities in the new administration, noting the launch of a new “workforce cabinet” and the “Career Ready Diplomas” program, part of Gov. Sarah Sanders’ recently passed LEARNS education package.
“When we have workforce education programs that can increase wages and family incomes, that leads to solid economic development,” O’Neal said. “At AEDC, we stay focused on championing businesses so that Arkansans have an opportunity to work. The new administration is making connections between our workforce development and economic development initiatives.”
Mervin Jebaraj
Mervin Jebaraj, director of the Center for Business and Economic Research at the University of Arkansas Walton College of Business, said businesses in Arkansas should expect a prolonged workforce shortage. To keep them, workers will have to be incentivized, he said.
“Businesses will have to focus on the people they have. That’s going to be a huge part of it.”
The worker shortage in Arkansas is particularly acute in health care, mostly in rural areas where doctors and nurses are needed the most.
Troy Wells
Baptist Health CEO Troy Wells calls it one of the state’s greatest challenges.
“Access to health care providers is very low in Arkansas relative to other states, and our rates of chronic disease are as high as anywhere in the country,” he said. “This puts stress on our existing health care providers and frequently prevents Arkansans from getting the care they need.”
The impact on a community not properly served through health care is obvious in terms of health outcomes. But there’s an economic component as well. Wells said providing health care to a community is a labor-intensive proposition, and when the economy is doing well, labor costs in health care tend to inflate faster than they do in other industries.
In other words, it’s an economic Catch-22.
“So, while we have disproportionate rates of cost increases, there is pressure to reduce the cost of care and to lower overall health care spending,” Wells said. “A large percentage of the cost and spend is in the hospital setting. While costs continue to rise, payment rates continue to fall behind. This means we have to adapt new payment models, and to do that we must be able to change how we deliver care.”
And to change the mode of delivery, an industry can’t be shackled by a workforce shortage. The Baptist Health network entails more than 250 locations across the state and eastern Oklahoma with 11 hospitals and more than 100 clinics and includes Baptist Health College Little Rock. Originally a nursing school, BHC is sending out an average of 360 graduates from nine distinct programs into the health care workforce.
Those programs include medical laboratory science, nuclear medicine technology, traditional nursing, practical nursing, occupational therapy assistant, patient care technician, radiography, sleep technology and surgical technology.
Wells lauds the influx of BHC grads into the workforce but knows it’s not enough to fill, for example, a 20 percent vacancy rate for bedside nurses.
“Despite all these challenges, we are constantly evaluating how to expand access to care and opportunities to partner with other providers,” he said.
Baptist’s partnership with the University of Arkansas for Medical Sciences aims to create more in-state physicians through a competitive residency program at Baptist Health Medical Center-North Little Rock. It currently offers residencies in psychiatry, internal medicine, family practice and obstetrics.
Baptist has also partnered with the Little Rock School District and Southwest High School through the Baptist Health Academy, which aims to attract high school students to the medical profession.
Zook stressed that Arkansas — and the nation — can’t afford to let kids drop out of school without being trained or equipped for a job.
“We can’t afford to indulge in that any longer,” he said. “We need to have kids coming out of school equipped to join the workforce.”
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