Arkansas' economy is booming -- with an unemployment rate of 4 percent that hasn't been seen in almost 60 years -- but there's some concern about the state's shrinking workforce, an economist said Thursday at an annual meeting of the Arkansas Bankers Association.
The state's potential workforce of those aged 20 to 64 -- the prime age group from which workforce is drawn -- has been decreasing in recent years, William Emmons, an economist with the Federal Reserve Bank of St. Louis, said at the meeting in Little Rock.
"There could be an issue of labor force availability [in the future]," Emmons said.
The 20-64 age group in Arkansas had grown at a 1 percent annual rate for several decades, he said. But the population of that group has been in decline since the 2008-09 recession.
"It looks like the job market is very, very tight," Emmons said in an interview after his speech.
Within that 20-64 age group, there could be some Arkansans who are considered to be out of the labor force -- which includes those who are employed or actively seeking work -- but would re-enter the labor force in the future if they see opportunities, Emmons said.
"We've always thought that when the labor market gets tight that employers may start raising [pay] a little, making the jobs more attractive and bringing in people who are not currently looking for work," Emmons said.
His point, Emmons said, is that even though the labor market is tight, Arkansas still could still see job creation.
Arkansas' economy got off to a slow start after the recession ended in 2009, but in recent years it has been stronger than the national average, Emmons said.
With the unemployment rate at 4 percent, well below the national average of 5 percent, Arkansas is on the leading edge of the national expansion, Emmons said.
But there is reason to be skeptical about the state's unemployment figures, said Michael Pakko, chief economist at the Institute for Economic Advancement at the University of Arkansas at Little Rock.
One of the surveys used to estimate the state's unemployment rate said 30,000 new jobs have been added in the past three months, Pakko said in an interview at the meeting.
"That's 10,000 jobs a month, which is completely unprecedented," Pakko said.
Emmons said that the mining and manufacturing industries are very weak in Arkansas.
"New jobs are going to be primarily service sector jobs," Emmons said. "As usual, some of those jobs are going to be more high-paying and some less."
Pakko said there has been some growth in manufacturing jobs in other parts of the country, but they are relatively flat in Arkansas.
Candace Franks, commissioner of the Arkansas Bank Department, told bankers at the meeting that even with the banking sector performing well, it is wise to avoid complacency.
"I encourage each of you to tender your optimism with a healthy dose of caution and be proactive," Franks said.
Franks said only four of the 82 state-chartered banks in the Arkansas are under sanctions, down from 23 during the height of the recession.
Business on 05/13/2016