NW income gain tops state, U.S.

But growing low-income populations dilute increase

FAYETTEVILLE -- Northwest Arkansans' real personal income grew faster than in the state or country as a whole from 2013 to 2014, according to a federal report released last week, though area experts said a quickly growing population and other factors somewhat diluted the gain.

The Bureau of Economic Analysis found that residents in the metropolitan statistical area that includes Washington, Benton and Madison counties in Arkansas and McDonald County, Mo., earned roughly $26 billion in 2014 in real personal income, meaning it's adjusted for cost of living in the state and for the changes in the costs of goods and services since 2009. That comes to about $52,000 per capita.

The per-capita figure was up about $1,000 from the year before, or 3.9 percent, compared with an increase of 2.5 percent for all of Arkansas and 2.9 percent for the country. Per-capita income in Arkansas neared $40,000, while goods and services were more affordable in the state than in any other except Mississippi, according to the report.

The data are about 2 years old, but the report fills in another piece of the area's economic health and gives a baseline to compare with other years and states, said Greg Hamilton, senior research economist at the University of Arkansas at Little Rock's Institute for Economic Advancement.

"Arkansas as a state is still a state with low personal income, even in real terms," he said Thursday, referring to the report's adjustments for state rent levels and prices for goods and services. "Within the state, the Northwest corner is the star."

The figures, however, could reflect more low-income people who aren't benefiting as much as others from the area's prosperity. The number of people in poverty in the metropolitan statistical area surpassed 81,000 last year, or about one in six people, according to U.S. census estimates.

"They look at Arkansas and think it's great, and it is, when you look at Mississippi," said Sandy Stout, career specialist in Springdale with Goodwill Industries of Arkansas, which offers job-placement services.

The number of people going to the area steadily rose during the past 20 years to several dozen a week, she said. Many of them have less education, fewer skills or other concerns for employers.

"Those [factors] hinder those people from getting the higher-paying jobs, and we have a huge population of that," Stout said, adding that area chambers of commerce and companies are pumping money into education to get people skilled enough for their jobs.

The region also is home to a large percentage of youths, most of whom earn little or no income, adding to the slower rise in per-capita income.

Almost 30 percent of Washington and Benton county residents last year were 19 years old or younger, according to the census. That proportion is several points higher than the state and nation.

"That's exactly what's driving it," said Mike Harvey, chief operating officer for the Northwest Arkansas Council, adding he prefers to use average pay as a benchmark for the area. "I don't necessarily think lots of young people is a bad thing; it's a fantastic thing for us."

The nonprofit council aims to work with local businesses and governments to encourage infrastructure, education and other aspects of the region's economic development.

Council data show average annual pay in the area grew 2 percent from 2013 to 2014, in line with last week's report, to reach about $47,000 without the adjustments for inflation or cost-of-living.

Personal income growth in 2014 was slower than in previous years, according to past data from the Bureau of Economic Analysis.

It found Northwest Arkansas income shot up roughly 10 percent annually from 2010 to 2012.

Such a rebound is typical after a recession, said Mervin Jebaraj, assistant director for the University of Arkansas Center for Business and Economic Research.

"A lot of economic carnage during the Great Recession wiped out a lot of personal income," he said, and like water after a rock is tossed into it, income splashes back before settling down to normal. "Then you return to regular, slower growth."

Though the bureau's income data have yet to be compiled for last year, Harvey said he believed income has continued ticking up.

The council's annual average wage numbers show a climb of almost 3 percent from 2014 to 2015.

The area's historically low levels of unemployment can put pressure on employers to offer higher pay in order to keep their workers, Harvey said. The major health care providers are all expanding facilities and care, requiring highly skilled professionals. Work continues on new trails and improved roads and highways and other construction as well, sustaining other well-paying jobs.

Kathy Deck, the business and economic center's director, said earlier this year that the wage pressure from low unemployment could take months or years to become apparent, but anecdotally some executives have said they're seeing pay on the rise.

"It's just been fairly across the board," Harvey said of the growth. "And it's been in those areas that pay more."

Metro on 07/11/2016

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