2019 Report State of the Northwest Arkansas Region Northwest Arkansas Overview The State of the Northwest Arkansas Region Report is an annual publication, commissioned by the Northwest Arkansas Council, that serves as a tool for evaluating economic performance. In July 2018, the Northwest Arkansas Council created a new blueprint for development that outlines the peer regions and a strategic action agenda for 2018-2021. In this plan, the performance of Northwest Arkansas is benchmarked with other contemporary, high-performing regions, namely Austin, Des Moines, Madison, Durham-Chapel Hill, Raleigh and Provo-Orem. The 2019 State of the Region Report compares Northwest Arkansas with these geographies in the areas of gross domestic product, employment, unemployment, establishment growth, median household income, average annual wages, poverty, educational attainment, research and development, homeownership costs, commuting time, and average domestic airfares. The table below provides a summary of the performance of the Northwest Arkansas region on these measures. Important indicators such as gross domestic product, business establishment growth, average annual wages, and university R&D expenditures showed strong increases from the previous year, while improvements in metrics such as poverty rate and higher education attainment were more limited.

Northwest Arkansas Economic Indicators Most Recent Percent Change from Indicator Previous Year Annual Data Previous Year Population Estimate, July 2018 549,128 538,412 2.0% p Real GDP (millions of chained 2009 dollars), 2017 $25,341 $24,507 3.4% p Average Annual Unemployment Rate, 2018 2.8% 2.8% 0.0%  Total Nonfarm Employment, 2018 258,100 252,600 2.2% p Median Household Income, 2018 $57,911 $56,038 3.3% p Average Annual Wages, 2018 $46,470 $45,830 1.4% p Business Establishments, 2018 13,412 13,033 2.9% p Percent of Adult Population with a Bachelor’s Degree or Higher, 2018 31.6% 31.8% -0.2% q Poverty Rate, 2018 12.5% 12.1% 0.4% p R&D Expenditures (in thousands), 2017 $157,791 $145,020 8.8% p Average Annual Domestic Airfare, 2018 $536 $538 -0.3% q

2 Peer Region Overview

Des Moines-West Des Moines Madison MSA Durham-Chapel Hill MSA MSA Wisconsin North Carolina Iowa 2018 Population: 660,422 2018 Population: 575,412 2018 Population: 655,409 2017 Population: 654,577 2017 Population: 566,491 2017 Population: 645,100 Growth 2017-2018: 0.9% Growth 2017-2018: 1.6% Growth 2017-2018: 1.6% MSA Growth Rank: 128/383 MSA Growth Rank: 62/383 MSA Growth Rank: 59/383

Fayetteville-Springdale-Rogers MSA Arkansas-Missouri 2018 Population: 549,128 2017 Population: 538,412 Growth 2017-2018: 2.0% MSA Growth Rank: 27/383

Provo-Orem MSA Austin-Round Rock MSA Raleigh MSA Utah Texas North Carolina 2018 Population: 633,768 2018 Population: 2,168,316 2018 Population: 1,362,540 2017 Population: 617,751 2017 Population: 2,115,230 2017 Population: 1,334,342 Growth 2017-2018: 2.6% Growth 2017-2018: 2.5% Growth 2017-2018: 2.1% MSA Growth Rank: 10/383 MSA Growth Rank: 13/383 MSA Growth Rank: 22/383

3 Peer Region Comparisons

Change in Real GDP Metropolitan GDP Source: U.S. Bureau of Economic Analysis Real metropolitan gross domestic product Fayetteville-Springdale-Rogers MSA 4.9% 3.4% (GDP) in the Northwest Arkansas region Austin-Round Rock MSA 6.4% 6.9% increased by 3.4 percent between 2016 and Des Moines-West Des Moines MSA 4.5% 2.9% 2017, bringing the GDP to $25.3 billion. The Madison MSA 3.3% 1.8% 0.8% region’s five-year average annual growth rate Durham-Chapel Hill MSA 0.0%

Raleigh MSA 3.9% from 2012 to 2017 was 4.9 percent, slightly 2.7% Provo-Orem MSA 6.7% higher than the average annual growth rate for 5.6% Peer Average 4.6% peer regions but was more than double that 4.0% Arkansas 1.3% of the nation, and four times higher than the 1.1% US 2.2% average growth rate in the state of Arkansas. 2.2% -1.0% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% The federal government shutdown delayed the 2012-2017 Average Annual Growth 2016-2017 release of 2018 data.

Employment Growth Rate Employment Source: U.S. Bureau of Labor Statistics 6.0% From 2013 to 2018, Northwest Arkansas’

5.2% 5.1% employment grew at an average annual rate of 5.0% 3.7 percent. Northwest Arkansas’ annual rate of

3.9% 4.0% 3.7% employment growth during this time period 3.3% 3.2% 3.1% was greater than all but two peer regions, 3.0% 2.6% 2.6% Austin-Round Rock MSA and Provo-Orem 2.2% 2.1% 2.0% MSA. Employment in Northwest Arkansas 2.0% 1.8% 1.8% 1.5% 1.6% 1.7% 1.4% increased 2.2 percent from 252,600 in 2017 to 1.1% 1.0% 0.8% 258,100 in 2018, a pace that was faster than that of Arkansas and of the United States. The 2018 0.0% Fayetteville- Austin- Des Moines- Madison Durham- Raleigh MSA Provo-Orem Peer Average Arkansas US Springdale- Round Rock West Des MSA Chapel Hill MSA growth rate was the slowest experienced by Rogers MSA MSA Moines MSA MSA

2013-2018 Average Annual Growth 2017-2018 Northwest Arkansas since 2011.

Unemployment Rate, Annual Average Unemployment Source: U.S. Bureau of Labor Statistics The unemployment rate for Northwest 4.5% Fayetteville-Springdale-Rogers MSA 2.9% 2.8% Arkansas in 2018 was 2.8 percent, unchanged 4.2% Austin-Round Rock MSA 3.3% 2.9% from 2017. The 2018 unemployment rate in Des Moines-West Des Moines, MSA 3.3% 4.1% 2.4% Northwest Arkansas was the third lowest in 3.9% Madison MSA 3.0% 2.3% all the peer regions, the state, and the nation. 5.1% Durham-Chapel Hill MSA 4.5% 3.4% The lowest was the Madison region with 2.3 Raleigh MSA 5.1% 3.4% 4.4% percent, followed by the Des Moines-West Des 3.5% Provo-Orem MSA 3.1% 2.8% Moines region with 2.4 percent. Since 2014, the Peer Average 4.3% 2.9% 3.6% unemployment rate declined 1.7 percentage 6.0% Arkansas 4.0% 3.7% points in Northwest Arkansas, which was the 6.2% US 4.9% 3.9% second largest decline in the unemployment 0.0% 2.0% 4.0% 6.0% 8.0% 2014 2016 2018 rate among peer regions, but was smaller than the declines in Arkansas and the nation.

4 Business Establishment Growth Business Establishment Growth Source: U.S. Bureau of Labor Statistics 7.0% Northwest Arkansas business establishment 6.2% 6.0% growth from 2017 to 2018 was 2.9 percent, higher than both the state and the nation, but 5.0% 4.7% 4.7% slightly slower than the average growth rate

4.0% 3.7% 3.6% 3.6% in peer regions. The five-year change in the 3.3% 3.4% 2.9% number of establishments from 11,998 in 2013 3.0% 2.7% 2.6% 2.4% 2.6% 2.3% 2.2% to 13,412 in 2018 represents an annual increase 2.0% 1.8% 1.7% 1.8% 1.3% of 2.3 percent, which was the second slowest 1.0% 0.8% growth rate among peer regions. However, it

0.0% was higher than the growth rate in Arkansas Fayetteville- Austin-Round Des Moines- Madison MSA Durham- Raleigh MSA Provo-Orem Peer Average Arkansas US Springdale- Rock MSA West Des Chapel Hill MSA Rogers MSA Moines MSA MSA and the nation. 2013-2018 2017-2018

Median Household Income Median Household Income The median household income for Northwest Source: U.S. Census Bureau Arkansas grew 3.3 percent to $57,911 from

$80,000 $76,925 $75,344 $75,344 $75,165 $75,165 $71,352 $71,894 $71,685 2017 to 2018. The region’s median household $70,463 $71,000 $71,000 $69,288 $69,288 $68,497 $68,497

$70,000 $67,059 $65,704 $63,603 $63,603 $61,937 $62,114 $62,114 $62,313 $62,313 income was 80.6 percent of the peer region $62,446 $62,446 $60,890 $60,890 $60,903 $60,903 $60,357 $57,911 $57,911 $57,617

$60,000 $56,182

$53,657 $53,657 median income and 93.5 percent of the $51,848 $51,848 $51,988 $51,988 $50,128 $50,128 $50,000 $47,062 national median household income. The $44,334 $44,334 $41,262 $41,262 $40,000 median household incomes in Austin-Round

$30,000 Rock MSA and Provo-Orem MSA were the highest among the peer regions, and were $20,000 32.8 and 30.1 percent higher than Northwest $10,000 Arkansas, respectively. From 2014 to 2018, $- Fayetteville- Austin- Des Moines- Madison Durham- Raleigh MSA Provo-Orem Peer Arkansas US Northwest Arkansas’ average annual rate of Springdale- Round Rock West Des MSA Chapel Hill MSA Average Rogers MSA MSA Moines MSA MSA change was 3.7 percent, which was below 2014 2016 2018 the average growth rate in the peer regions.

Average Annual Wages Source: U.S. Bureau of Labor Statistics Annual Wages $70,000 In spite of having a low uenmployment rate, $59,940

$60,000 $57,850 $55,840 $55,840 the average annual wage in Northwest Arkansas $53,810 $53,175 $53,175 $52,890 $52,890 $52,580 $52,580 $52,220 $52,220 $51,960 $51,960 $50,830 $50,830 $50,830 $50,590 $50,590 $50,410 $50,410 $49,630 $49,420 $49,420 $48,150 $47,922 $47,922 $47,610

$50,000 $47,490 $47,430 $47,230 $47,230 $46,600 $46,600 $46,470 $46,470 was the lowest among peer regions at $46,470 $44,980 $44,980 $44,200 $44,200 $42,410 $42,410 $42,020 $42,020 $41,540 $41,540

$39,590 in 2018. Annual wages increased 1.4 percent in $40,000 $37,940 2018, although the region’s growth rate was 1.2 $30,000 percentage points less than the peer region’s $20,000 average. From 2014 to 2018, wage growth

$10,000 averaged 2.3 percent per year in Northwest Arkansas, which was the second lowest rate $0 Fayetteville- Austin- Des Moines- Madison Durham- Raleigh MSA Provo-Orem Peer Arkansas US Springdale- Round Rock West Des MSA Chapel Hill MSA Average among peer regions. Annual wage growth was Rogers MSA MSA Moines MSA MSA

2014 2016 2018 strongest in the Provo-Orem region between 2014 and 2018 at 3.2 percent.

5 Poverty Rates: All Ages Poverty Source: U.S. Census Bureau 25.0% In 2018, the poverty rate for Northwest Arkansas was 12.5 percent, a 0.4 percent increase from 20.0% 18.9% 2017. Only the Durham-Chapel Hill region had 17.2% 17.2% 16.3% 16.2%

15.5% a higher poverty rate at 12.8 percent. The large 15.1% 15.0% 14.9% 14.0% 13.2% 13.1%

12.8% proportion of college students in these regions 12.7% 12.5% 12.5% 12.2% 12.0% 11.6% 11.2% 10.9% 10.6% 10.4% drives the higher poverty rates. Since 2014, 10.0% 9.5%

10.0% 9.3% 9.3% 8.9% the poverty rate in Northwest Arkansas fell 3.7 percentage points which was the second 5.0% largest decline among peer regions, after the

0.0% Austin-Round Rock MSA. The 2018 poverty Fayetteville- Austin- Des Moines- Madison Durham- Raleigh MSA Provo-Orem Arkansas US Springdale- Round Rock West Des MSA Chapel Hill MSA rate in Northwest Arkansas was significantly Rogers MSA MSA Moines MSA MSA 2014 2016 2018 lower than the 17.2 percent poverty rate for the state of Arkansas.

Bachelor's Degree or Higher in Adult Population Educational Attainment Source: U.S. Census Bureau 50.0% The percent of adults 25 years or older with 48.1% 47.2% 48.0% 46.6% 47.0% 46.6% 45.7% 44.8% 44.8% 44.7%

45.0% 43.4% 43.1%

42.8% a bachelor’s degree or higher in Northwest 41.5% 41.4% 41.3%

40.0% 38.9% 38.2% Arkansas decreased by 0.2 percent to 31.6 37.1% 36.7% 36.1% 35.0%

32.6% percent between 2017 and 2018. On average, 31.6% 31.3% 30.9% 30.0% 30.1% 27.9% 44.8 percent of adults 25 years or older had

25.0% 23.3%

22.4% a bachelor’s degree or higher in peer regions. 21.4% 20.0% Over the years, Northwest Arkansas has been 15.0% gradually catching up to the national higher 10.0% education attainment level (32.6 percent in 5.0% 2018). Since 2014, higher education attainment 0.0% Fayetteville- Austin- Des Moines- Madison Durham- Raleigh MSA Provo-Orem Peer Arkansas US grew 3.7 percentage points in Northwest Springdale- Round Rock West Des MSA Chapel Hill MSA Average Rogers MSA MSA Moines MSA MSA 2014 2016 2018 Arkansas, more rapidly than the 3.5 percent average change among peer regions.

R&D Expenditures 2017 Academic Research and Development Source: National Science Foundation $1,400 The University of Arkansas had almost

$1,193.4 $158 million in research and development $1,200 $1,126.9 $1,102.1 expenditures in 2017, up 8.8 percent from 2016. $1,000 The additional funds improved the University $800 of Arkansas’ ranking from No. 130 in 2016 to No. $652.2

Millions $600 128 in 2017 among all universities in the United States. Northwest Arkansas’ peer regions $380.3 $400 $323.6 include some of the nation’s top universities $200 $157.8 for academic research and development

$0 spending, as is evidenced by their high rankings. University University Iowa State University University Duke University of Arkansas, of Texas, University, of of North University, of Utah, In addition, the University of Arkansas, in 2018, Rank 128 Rank 35 Rank 73 Wisconsin, Carolina, Rank 8 Rank 61 Rank 6 Rank 11 received 43 invention disclosures (down from 54 in 2017), filed 27 new patent applications (up from 8 in 2017), and saw 18 patents issued (up from 13 in 2017).

6 Median Cost of Homeownership as Percent of Income Cost of Homeownership Source: U.S. Census Bureau 25.0% The cost of homeownership as a percentage of monthly household income for Northwest 20.0% 19.7% 20.0% 19.6% 19.0% 18.8% 18.7% 18.7% 18.6% Arkansas continued to be lower than all the 18.3% 18.2% 18.2% 18.1% 18.1% 17.9% 17.9% 17.8% 17.7% 17.7% 17.5% 17.4% 17.3% 16.7% 16.7% 16.6% 16.3% 16.3% peer regions and the nation. In 2018, the median 15.3% 14.9% 14.8% 15.0% 14.7% homeownership costs averaged 14.7 percent of household income, down 0.5 percentage 10.0% points from the previous year. Since 2014, median homeownership cost as a percent of 5.0% household income in Northwest Arkansas has dropped 1.6 percent as a result of improvement 0.0% Fayetteville- Austin- Des Moines- Madison Durham- Raleigh MSA Provo-Orem Peer Average Arkansas US Springdale- Round Rock West Des MSA Chapel Hill MSA Rogers MSA MSA Moines MSA MSA in the region’s household incomes. 2014 2016 2018

Commuting: Percent of Workers Traveling Fewer than 30 Minutes Commuting Source: U.S. Census Bureau In 2018, 74.3 percent of Northwest Arkansas 75.1% Fayetteville-Springdale-Rogers MSA 75.7% 74.3% workers spent fewer than 30 minutes 60.7% Austin-Round Rock MSA 59.3% commuting to work, up from 73.9 percent in 57.8% 79.2% Des Moines-West Des Moines, MSA 78.6% 2017. Only the Des Moines-West Des Moines 76.7% 72.3% Madison MSA 74.2% region had a higher percent of workers who 72.7% 68.5% spent fewer than 30 minutes commuting Durham-Chapel Hill MSA 67.4% 67.2% 64.6% to work in 2018. The percent of workers in Raleigh MSA 60.5% 61.0% 74.6% Northwest Arkansas who used alternative Provo-Orem MSA 74.5% 72.8% 73.6% modes of transportation to get to work, Arkansas 73.9% 72.8% 63.1% including biking, walking, and public transit, US 62.0% 61.1% increased by 0.1 percent from 2017 to 2.3 percent 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% in 2018. Most peer regions had significantly 2014 2016 2018 more workers who used alternative modes of transport.

Average Annual Domestic Airfare Source: U.S. Bureau of Transportation Statistics Average Annual Domestic Airfare $600 Flights from the Northwest Arkansas Regional $536 $509 $505 $505 $489

$500 $477 Airport had an average annual domestic fare of $462 $418

$411 $411 $536 in 2018, marginally lower than $538 in the $394 $391 $394 $379 $391 $372 $373 $400 $386 $368 $377 $377 $359 $355 $355 $342 $350 $350 previous year. The airport continued to have $344 $344

$300 the highest average fare among peer regions. The average fares in Northwest Arkansas $200 were 42.2 percent higher than the peer region

$100 average and were 53.4 percent higher than the national average. From 2014 to 2018, average $- Fayetteville- Austin-Round Des Moines- Madison MSA Durham- Provo-Orem Peer Average US fares in Northwest Arkansas increased by 12.5 Springdale- Rock MSA West Des Chapel Hill MSA* Rogers MSA Moines MSA MSA percent. *Salt Lake City airport was used as 2014 2016 2018 the fare comparison for the Provo-Orem MSA.

7 Information for this report was gathered from the following sources: National Science Foundation, U.S. Bureau of Economic Analysis, U.S. Bureau of Labor Statistics, U.S. Census Bureau, and U.S. Bureau of Transportation Statistics.

Thanks to the Northwest Arkansas Council, Plug and Play Tech Center, the Walton Family Foundation, Startup Junkie and the Springdale Chamber of Commerce for providing the photographs. Brenna Frandson provided research assistance for the report.

The Center for Business and Economic Research would like to give credit to Thrive, an economic development enterprise in Madison, Wisconsin. That organization provided an excellent model for the State of the Northwest Arkansas Region Report.

For questions about this report, contact: Mervin Jebaraj, Director David Sorto, Research Associate Center for Business and Economic Research Sam M. Walton College of Business University of Arkansas Willard J. Walker Hall 538 1 University of Arkansas Fayetteville, AR 72701-1201 (479) 575-4151 http://cber.uark.edu