NWADG Progress 2018 - Business & Economy

Business & Economy

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But area boasts lowest unemployment in group Business & Economy RECRUITING TALENT EASY SELL To be one of the best, you have to compete with the best and North- west Arkansas doesn't shy away from comparisons with the coun- try's most successful metro regions, according to those who recruit busi- nesses, employees and leaders to the area. "Normally, you'd say we're com- peting with the metro areas that are close by — Tulsa, Kansas City — but when we do our comparative report, we look at top performing regions that we want to compare ourselves to and aspire to," said Nel- son Peacock, CEO and president of the nonprofit Northwest Arkansas Council. "Those are communities like Austin, Texas, Madison, Wis., Raleigh-Durham, because those have a high quality of life, high in- come rates, good, high-paying jobs." And, Peacock said, Northwest Ar- kansas brings some pretty serious game to the competition because the region can punch above its weight class. Peacock noted the region con- tinues to grow by about 27 people per day. The region has 525,000 res- idents and is projected as a top-five region nationally for growth over the next five years, according to a report by IHS Global Insight for the U.S. Conference of Mayors. Only four U.S. regions — two in Utah and two in Florida — are ex- pected to have economies grow at a faster rate, according to the study. The 3.9 percent annual growth rate predicted for Northwest Arkansas will push the economy past $30 bil- lion. Mervin Jebaraj, director of the University of Arkansas Center for Business and Economic Research, said he expects 10,000 more jobs to be created in the area by the end of this year. The region has about 245,000 employees, according to the 2017 State of the Northwest Arkan- sas Region Report. Peacock said growth continues because the region has so much to offer. "I think we offer quite a lot, ac- tually. First of all, the jobs are the most important thing and we offer high-paying, top-quality jobs in a range of different fields. At the same time we have a low cost of living when you compare it with some of the other metro regions," Peacock said. "And, at the same time you have that, you have everything that you need to live and work." Peacock cited above average schools with more private options becoming available; cultural ameni- ties such as Crystal Bridges Museum of American Art, the Walton Arts Center, Theater Squared, Brightwa- ter Culinary Institute and a host of top-notch restaurants; and outdoor activities such as the Razorback Gre- enway and Beaver Lake. Peacock said the council's re- search shows when you compare the purchasing power of your an- nual salary versus the cost of living in Northwest Arkansas, on average the region ranks much better than pretty much every metro area in the country, meaning a dollar will go a lot further. WHERE THE JOBS ARE Northwest Arkansas has to re- cruit because of how fast things are happening in the region, Peacock said. "I think we need pretty much workers in every field. Not only do Wages rise, lag behind peers still SALARIES In spite of a low unemployment rate, wages in North- west Arkansas are still low compared to peer regions. The average annual salary of $44,980 and 2.9 percent unemployment rate in 2016 were lower than five regions the Northwest Arkansas Council uses as benchmarks, accord- ing to its 2017 State of Northwest Arkansas Region Report. Job and salary data is from the Bureau of Labor Statis- tics' 2016 Occupational Employment and Wage Estimates. The 2017 report is sched- uled to be released Friday. The council, an eco- nomic development orga- nization, in 2015 selected Austin, Texas; Des Moines, Iowa; Madison, Wis.; and Durham-Chapel Hill and Raleigh, N.C., as peers. Low unemployment is typically accompanied by high wages, said Mervin Jebaraj, director for the Center for Business and Economic Research at the University of Arkansas, Fayetteville. But that's not always the case. "That's been a national problem, a statewide prob- lem. It's not just here," Jeb- araj said. From 2012 to 2016, aver- age wages grew 1.9 percent in Northwest Arkansas, "placing the region in the middle of the pack when compared to the peer re- gions," according to the report. Annual wage growth was strongest in the Madison region at 2.5 percent. The local unemployment rate declined 3 percent since 2012, which was the second largest decline among peer regions. LOW-WAGE FACTORS A few factors could be keeping wages from increasing more, Jebaraj said. First, he said, there is a lack of labor force, which means a lot of people could be working but aren't. This might seem counterintuitive when looking at the low unemployment numbers, but unemployment rates don't factor in the long-term unemployed, which hasn't changed in the last year, he said. Long-term unemployment includes those who have not worked for more than 27 weeks. "Employers know there are more workers who could enter the market, so they don't have to raise wages," he said. "Wages are going up, just not significantly." Another issue could be that many Baby Boomers, who generally earn higher wages, are retiring. They are often being replaced by younger, less experienced millennials who would logically make less, Jebaraj said. The genera- tion in the middle is much smaller in size. This is particularly true in Northwest Arkansas where the median age of 28 is younger than many other areas, according to American Community Survey conducted by the U.S. Census Bureau. The median age is 37.8 nationally. The median is the middle number in a list of ordered numbers. Sales tax revenue shows growth. 4V Businesses expand headquarters. 5V Cities busting out of borders. 8V Progress 2018 HEALTHY COMPETITION Sunday, March 25, 2018 1V Growing region attractive to employers, workers NWA Democrat-Gazette/J.T. WAMPLER A former farm supply store in Bentonville was remodeled for RevUnit where employees work. RevUnit is a digital product development firm. NWA Democrat-Gazette/J.T. WAMPLER Recently constructed residential properties are shown in south Fayetteville. RON WOOD NWA DEMOCRAT-GAZETTE ASHTON ELEY NWA DEMOCRAT GAZETTE See RECRUITING, Page 6V See WAGES, Page 2V Home market keeps tightening REAL ESTATE Demand for homes continues to outpace supply and push up prices and rents in Northwest Arkansas, real estate agents and analysts say. In the second half of last year Benton and Washington counties had enough empty residential lots ready for houses to last a little more than two years at the pace they're snapped up, Arvest Bank and the University of Arkansas Center for Business and Economic Research said in the Skyline Re - port released last month. It's the lowest supply since at least 2004 and half of what it was in 2014, putting a limit on home construction in the near term. The shortage and construction costs have pushed average home prices upward, the report found, adding $30,000 to $40,000 since 2014 to an average price of $220,000. The region's homeowners meanwhile are also buying up the supply of existing homes at a fast- er pace than a year ago, according to reports from real estate firm Coldwell Banker Harris McHaney & Faucette. The trends could make hous- ing less affordable for lower-in- come households, a problem the university, the Walton Family Foundation and several homeless service providers and other non- profits are trying to address. Adam Steenken, an agent with Coldwell Banker, said the market's fast pace can affect buyers and renters in several ways. For instance, some investors looking to buy houses for rental property will buy them sight un- seen, elbowing out people want- ing to buy their first house, he said. Rents in desirable areas, like downtown Fayetteville, can be hundreds of dollars higher than the home's mortgage payment would be. Steenken said the same pattern can dissuade owners from selling their homes when they can get more for it as a rental, further tightening the supply. DAN HOLTMEYER NWA DEMOCRAT-GAZETTE "Employers know there are more workers who could enter the market, so they don't have to raise wages. Wages are going up, just not significantly." — Mervin Jebaraj, director for the Center for Business and Economic Research at the University of Arkansas, Fayetteville See HOMES, Page 4V

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