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Job Growth Continues In Recession And Despite High State Tax Rates On Capital Investment

Little Rock - (April 4, 2002) Northwest Arkansas is the economic engine driving the stateís economy.

The Fayetteville-Springdale-Rogers area (Northwest Metropolitan Statistical Area) is the most jobs-friendly region of Arkansas. More non-farm payroll jobs have been created in the Northwest MSA than any other state region despite the U.S. recession that began in March 2001 and Arkansas' high state tax rates on capital investment.

The Policy Foundation believes the U.S. recession ended in January 2002. Between March 2001 and January 2002 there were 1,300 new jobs created in the Northwest MSA as the following chart illustrates:

March 2001
January 2002
Net Employment Gain or Loss


Pine Bluff MSA

Fort Smith MSA

Little Rock MSA

State of Arkansas (Total)

(Source: Arkansas Employment Security Department)

Various Policy Foundation research memos have discussed job losses in Arkansasí Manufacturing industry sector. These totaled 13,000 between March 2001 (244,600) and January 2002 (231,600). But three private industry sectors created more employment statewide in the period, largely as a result of Northwest Arkansas jobs creation:

The Construction sector created 300 jobs statewide, increasing from 51,600 in March 2001 to 51,900 in January 2002.

The Mining sector created 400 jobs statewide, increasing from 3,600 to 4,000 in the period. Oil and Gas Extraction accounted for 200 of these new positions. Northwest Arkansasí Construction & Mining component created 300 of these jobs in the period, increasing from 7,000 to 7,300.

The Transportation & Public Utilities sector created 2,300 jobs statewide, increasing from 71,600 to 73,900 in the period. Northwest Arkansasí Transportation & Public Utilities component created 1,900 of these jobs, increasing from 12,000 to13,900 in the period. All 1,900 jobs were created within the Transportation subcomponent, which includes Trucking & Warehousing.

Private Sector Job Gains Weak Statewide Versus Northwest Arkansas

Northwest Arkansasí Finance, Insurance & Real Estate sector created 300 jobs in the period, increasing from 5,400 to 5,700. Three private industry sectors (Wholesale Trade; Finance, Insurance & Real Estate; and Services) created 100 jobs apiece in the Pine Bluff MSA. One private sector (Construction) and the Government Sector increased employment by 100 jobs apiece in the Fort Smith MSA. No private industry sector in metropolitan Little Rock registered employment gains in the period.

Job Gains Greater Than In Oklahoma

The Fayetteville-Springdale-Rogers MSA created private sector jobs in the March 2001-January 2002 period while the two largest Oklahoma MSA's lost employment:

Tulsa: A decline from 405,400 (March 2001) to 402,700 (January 2002).

Oklahoma City: A decline from 542,500 to 534,000.

(Source: U.S. Bureau of Labor Statistics)

High State Tax Rates On Capital Investment

Arkansas levies a seven percent income tax and a state capital gains tax on investment. These combined state tax rates are higher than any of the six states (Texas, Tennessee, Mississippi, Missouri, Louisiana and Oklahoma) that border Arkansas and are a disincentive to capital investment and jobs creation.

--Greg Kaza