CENTER
FOR BUSINESS RESEARCH AND ECONOMIC DEVELOPMENT
College of Business
UAFS.edu
CBRED Special Report December 2012
A S ector
A nalysis of the F ort S mith
MSA E conomy 2007 & 2010
uafs.edu/cob/cbred
Van Buren Visitors Center
Table of Contents Overview of Sector Contributions in the Fort Smith MSA........................................2 Impact of Top Three MSA Sectors: Manufacturing, Service, and Trade....................6 Breakdown of Government, Construction, and Mining into Subsectors...................14 Sector Analysis of the Counties Comprising the Fort Smith MSA...........................16 Discussion and Commentary............................................................................22
UNIVERSITY OF ARKANSAS - FORT SMITH COLLEGE OF BUSINESS
CENTER
A Sector Analysis of the Fort Smith MSA Economy: 2007 & 2010 The Fort Smith economy has endured significant pressure
the pre-recession (2007) and post-recession (2010) economy.
Whirlpool. While these high profile events garner all the
economy by taking a look at the economic impact of these
in recent years, culminating recently in the departure of
attention, the makeup of the Fort Smith regional economy has been changing for well over a decade. This report examines
some of these changes and discusses some of the implications of this changing structure on our local economy.
Using IMPLAN software and datasets, we examined the 1
structure of the regional economy in 2007 and 2010 (the most recent data available). We first provide an overview of the
economic sector contributions and note what has changed in
We then drill deeper into key sectors that comprise our
sectors, as well as their respective contributions in terms of jobs, compensation, and output/GDP.
We break down the data further to take a brief look at the
respective counties that comprise the Fort Smith Metropolitan Statistical Area (MSA). In addition to the discussion of the results throughout, the report concludes with additional
commentary on observations and implications noted from the analysis.
IMPLAN software was used for this analysis. BLS Covered Employment and Wages (CEW) data, BEA Regional Economic Accounts (REA) data, and County Business Patterns (CBP) data are used in conjunction to create IMPLAN data because no one dataset provides enough information to create a complete IMPLAN database. 1
DR. LATISHA SETTLAGE is an associate professor of economics in the UAFS College of Business and a research associate in the Center for Business Research and Economic Development, also located in the College of Business. She holds a ANALYST Hill Williams Endowed Chair of Business. Dr. Settlage received her B.S. and M.S. from the University of Arkansas, Fayetteville and her Ph.D. from Purdue University in West Lafayette, Indiana. Her research interests are in the areas of economic impact analysis, government-sponsored credit programs, and economic perceptions among undergraduate students. She teaches courses in macro- and microeconomics as well as banking and finance. Dr. Settlage is an Arkansas native. She and her husband, Dr. Daniel Settlage, also an economics professor at UAFS, have lived in Fort Smith for nine years and have two daughters, ages 5 and 11.
THE CENTER FOR BUSINESS RESEARCH AND ECONOMIC DEVELOPMENT (CBRED) seeks to be the primary source of Fort Smith regional economic information, a catalyst for bold, innovative ideas and strategies for economic development in the area, and an active partner in the execution of sound, integrative solutions for regional prosperity and health. For more information on CBRED, contact center director, Dr. Kermit W. Kuehn, at:
CENTER FOR BUSINESS RESEARCH AND ECONOMIC DEVELOPMENT UAFS College of Business 5210 Grand Avenue, BI 218 P.O. Box 3649 Fort Smith, AR 72913-3649 Phone: (479) 788-7938 E-mail: CBRED@uafs.edu Website: uafs.edu/cob/cbred
CENTER FOR BUSINESS RESEARCH AND ECONOMIC DEVELOPMENT
1
Overview of Sector Contributions in the Fort Smith MSA As of 2010 (the most current year of full data), just over
Somewhat surprisingly, the government sector ranked third in
to the 117 individual industries that comprise the Fort
the trade sector was third most important in jobs provided, but
14% of total full-time equivalent positions can be attributed Smith MSA’s manufacturing sector (Table 1). In 2007,
manufacturing jobs accounted for almost 16% of total jobs in the MSA, illustrating the decline in manufacturing in
recent years. Similar to the U.S. economy, the largest share of jobs in the Fort Smith MSA in both 2007 and 2010 was provided by the services sector, with almost 41% in 2007 and just over 42% in 2010.
most jobs provided in 2010 with a share of 13.4%. In 2007, due to slow growth in retail jobs, the sector’s overall share remained constant between 2007 and 2010 at 13.2%, thus
allowing government to ascend to the top three. However, even though retail job growth slowed between 2007 and
2010 due to the recession, we can note that this subsector still comprises the majority of trade sector jobs (as opposed to wholesale subsector).
Table 1. S ector Contributions by Employment, Compensation, and Output – Fort Smith MSA, 2007 and 2010 Employment
Output
2007
2010
2007
2010
2007
2010
Ag, Forestry, Fish & Hunting
3.3%
3.1%
0.4%
0.7%
2.7%
2.5%
Construction
6.2%
5.5%
5.0%
4.3%
5.5%
4.5%
Government
12.3%
13.4%
18.9%
19.8%
5.6%
6.9%
Manufacturing
15.9%
14.1%
23.1%
20.3%
38.6%
37.4%
2.5%
3.1%
4.1%
3.6%
7.1%
4.5%
All Services
40.8%
42.3%
30.7%
33.2%
26.8%
30.2%
Information
1.0%
0.8%
1.4%
1.3%
1.7%
1.5%
Finance & insurance
2.5%
4.1%
2.7%
4.2%
2.8%
5.0%
Real estate & rental
3.1%
2.9%
0.9%
1.0%
5.7%
6.6%
Professional - scientific & tech
5.8%
3.3%
2.4%
2.4%
3.6%
2.5%
Management of companies
1.2%
1.3%
3.2%
3.4%
1.7%
1.7%
Administrative & waste
6.3%
6.4%
3.1%
3.2%
1.5%
1.6%
Mining
Educational
0.4%
0.4%
0.1%
0.2%
0.1%
0.1%
10.2%
11.7%
11.9%
13.4%
5.8%
6.8%
Arts- entertainment & recreation
0.6%
0.7%
0.3%
0.2%
0.2%
0.2%
Accommodation & food services
5.4%
5.8%
2.4%
2.6%
1.9%
2.1%
Other services
4.2%
4.8%
2.3%
3.0%
1.7%
2.2%
13.2%
13.2%
10.4%
10.9%
6.9%
7.3%
Health & social
All Trade Wholesale
2.6%
2.8%
3.9%
4.2%
2.6%
2.9%
10.6%
10.3%
6.5%
6.7%
4.3%
4.4%
Transportation & Warehousing
5.2%
4.7%
6.3%
6.1%
4.9%
4.3%
Utilities
0.5%
0.5%
1.1%
1.2%
2.0%
2.4%
Retail
2
Employee Compensation
Sector
UNIVERSITY OF ARKANSAS - FORT SMITH COLLEGE OF BUSINESS
When examining the services subsectors, we see that health
Agai,n when looking at the subsector detail for the services
jobs in the MSA in 2010 (11.7%) followed by administrative
the largest share of production followed by real estate and
and social services represented the highest proportion of total and waste services (6.4%) and then accommodation and food services (5.8%).
sector, we see health and social services accounting for
rental (driven largely by the imputed service value of home ownership) as well as finance and insurance.
Despite accounting for only 14% of the jobs in the MSA in
Further evidence of the shift in structure of our local economy
of the region. Between 2007 and 2010, the sector remained
compensation. In contrast to number of jobs or economic
2010, manufacturing contributed 37% of the economic output the largest contributor of economic output, outpacing the
services sector by 7%. However, the percentage of economic output attributable to manufacturing has decreased relative
to 2007 when the sector produced 39% of total output. While being the largest sector in terms of number of employees, the services sector comprised the second largest share of output
(30% in 2010). The trade sector held firm to its third position
in MSA production in 2010 contributing just over 7% of total
can be found in the sector shares comprising total employee output, employment compensation relates the amount of
income that the employees in that sector earned. In 2007,
manufacturing paid 23% of labor income, with this figure
shrinking to 20% in 2010. The government sector now pays the same amount of employee compensation in the MSA as manufacturing with the services sector leading the way at 33%.
output.
Table 2. Sector Analysis, 2007 and 2010, Fort Smith MSA Employment*
Employee Compensation**
Output**
Sector
2007
2010
% Change
2007
2010
% Change
2007
2010
% Change
Ag, Forestry, Fish & Hunting
5,298
4,835
-8.7%
$20.6
$38.9
88.7%
$590.4
$513.6
-13.0%
Construction
10,061
8,465
-15.9%
$250.5
$225.4
-10.0%
$1,188.1
$905.9
-23.8%
Government
19,906
20,671
3.8%
$948.2
$1,045.2
10.2%
$1,207.7
$1,407.5
16.5%
Manufacturing
25,816
21,626
-16.2%
$1,163.8
$1,067.6
-8.3%
$8,391.2
$7,594.1
-9.5%
4,062
4,840
19.1%
$204.8
$187.4
-8.5%
$1,536.3
$912.9
-40.6%
Mining
65,999
64,987
-1.5%
$1,544.2
$1,749.0
13.3%
$5,815.5
$6,134.7
5.5%
Information
1,685
1,281
-24.0%
$71.7
$65.6
-8.5%
$374.7
$296.5
-20.9%
All services
Finance & insurance
3,968
6,273
58.1%
$137.4
$208.8
52.0%
$604.6
$1,022.4
69.1%
Real estate & rental
5,011
4,469
-10.8%
$47.1
$49.3
4.7%
$1,243.0
$1,330.5
7.0%
Professional-scientific/ technical services
9,422
5,131
-45.5%
$118.6
$118.4
-0.2%
$787.5
$500.7
-36.4%
Management of companies
1,937
2,037
5.2%
$159.4
$171.9
7.8%
$376.8
$336.9
-10.6%
10,190
9,842
-3.4%
$153.6
$161.7
5.3%
$320.7
$333.4
3.9%
657
661
0.5%
$6.7
$9.8
46.8%
$19.9
$23.1
16.1%
16,450
17,954
9.1%
$596.2
$674.3
13.1%
$1,254.2
$1,382.5
10.2% -8.6%
Administrative & waste Educational services Health & social services
999
1,045
4.7%
$14.2
$10.6
-25.1%
$45.1
$41.3
Accomm. & food services
8,801
8,912
1.3%
$122.0
$129.4
6.0%
$417.0
$430.5
3.2%
Other services
6,879
7,380
7.3%
$117.4
$149.2
27.1%
$372.1
$437.0
17.5%
21,427
20,226
-5.6%
$523.6
$572.5
9.3%
$1,488.8
$1,472.5
-1.1%
4,241
4,371
3.0%
$196.6
$219.6
11.7%
$563.8
$583.0
3.4%
17,186
15,856
-7.7%
$327.0
$352.9
7.9%
$925.0
$889.4
-3.8%
8,471
7,290
-13.9%
$317.0
$319.3
0.7%
$1,054.0
$868.8
-17.6%
832
829
-0.4%
$57.1
$63.1
10.5%
$439.2
$483.2
10.0%
161,874
153,769
-5.0%
$5,029.7
$5,268.3
4.7%
$21,711.1
$20,293.2
-6.5%
Arts-entertainment/recreation
All trade Wholesale Retail Transportation/Warehousing Utilities Total
* Measured by number of full-time equivalent positions ** MIllions of dollars
CENTER FOR BUSINESS RESEARCH AND ECONOMIC DEVELOPMENT
3
Once again, note that health and social services represented
experienced increases in employee compensation according to
relative to its counterparts within the services sector in both
logging. The percentage increases in employee compensation
a significantly higher proportion of employee compensation 2007 and 2010. This is not surprising, since this subsector
represents industries such as hospitals, offices of doctors and dentists as well as nursing and residential care facilities.
Table 2 presents an analysis by sector of the Fort Smith MSA.
the data with the exception of timber extraction and commercial in the crop-farming industries were significantly higher than the percentage increases in employee compensation for the livestock industries. This may be attributed to higher grain prices resulting in higher incomes to producers.
The number of full-time equivalent positions, employee
The number of full-time positions decreased between
for both 2007 and 2010. Note that while employment and
government. Manufacturing experienced the highest rate
compensation, and economic outputs are examined by sector output fell for the MSA as a whole between 2007 and 2010, employee compensation increased by 4.7%.
2007 and 2010 for all sectors except mining and
of decline (-16.2%) followed by construction (-15.9%)
and transportation & warehousing (-13.9%). Output also decreased for most sectors between the years considered
The agriculture, trade (wholesale and retail), services, and
in the analysis. Only the services and government sectors
government sectors all experienced increases in employee
compensation, with the largest increase being in the agricultural sector (88.7%). Almost all industries within the agricultural sector (crop farming as well as livestock operations)
experienced increasing output levels.
For the services sector, the increase in output between 2007 and 2010 was led by the finance and insurance subsector
Table 3. Compensation and Output Per Employee, Fort Smith MSA 2010 Industries
Compensation*
Output*
Value Index**
$8,036
$106,224
0.19
Mining
$38,720
$188,626
1.62
Utilities
$76,057
$582,781
9.80
Construction
$26,626
$107,013
0.63
Manufacturing
$49,367
$351,161
3.83
Wholesale Trade
$50,250
$133,404
1.48
Retail trade
$22,258
$56,094
0.28
Transportation & Warehousing
$43,803
$119,181
1.15
Services
$26,913
$94,400
0.56
Information
$51,218
$231,423
2.62
Finance & insurance
$33,288
$162,988
1.20
Real estate & rental
$11,023
$297,684
0.73
Professional, scientific & technical
$23,078
$97,587
0.50
Management of companies
$84,355
$165,365
3.09
Administrative & waste
$16,432
$33,874
0.12
Education
$14,791
$34,949
0.11
Health & social
$37,557
$77,002
0.64
Arts, entertainment & recreation
$10,176
$39,471
0.09
Accommodations & food
$14,517
$48,298
0.16
Other services
$20,212
$59,213
0.26
Government
$50,562
$68,087
0.76
MSA Average
$34,261
$131,972
1.00
Ag, Forestry, Fish & Hunting
*Per full-time equivalent position **Value Index created by multiplying individual sector/ subsector compensation by output, then dividing this product (number) by the product for the MSA Average. MSA Average is benchmark or neutral score.
4
UNIVERSITY OF ARKANSAS - FORT SMITH COLLEGE OF BUSINESS
where the increase in output equaled 69%. The most notable
Compensation per employee was greatest in the utilities
sector where a 40.6% decrease was observed. Construction,
Manufacturing ranked fourth. The sectors with lowest per-
decline in output for the Fort Smith MSA was in the mining
transportation, and agriculture also experienced double-digit declines in output between 2007 and 2010. Construction
output fell 23.8% in the MSA, transportation output decreased by almost 18%, and agricultural output fell by 13%.
SECTOR OUTPUT AND COMPENSATION PER EMPLOYEE
As shown in Table 3, there are wide differences in
compensation and output-per-employee across industries.
In 2010, the utilities sector generated the highest output per
sector in 2010 followed by government and wholesale trade. employee compensation included agriculture, retail trade,
construction, and services. Compensation per employee is a
proxy for annual salary. It should be noted that compensation is measured purely in terms of wages and does not include
proprietor profit. This explains the extremely low value for
agriculture as well as the low ranking for construction. As is
the case with output per employee, there is a wide variability
in compensation per employee across the services sectors with management, information, and health ranking as the highest.
employee followed by manufacturing, and mining. Output
In order to evaluate the relative value of a particular sector
of a sector – it measures the amount of production output
The index seeks to reveal the relative value of each sector
trade, government, and services sectors had the smallest
per employee and comparing that new value with the MSA
sectors do not generate high value output relative to the large
above 1.00) might be categorized as high-value sectors (in
however, that within the services sector, there is disparity in
1.00) as of relatively less value in terms of the combined
For example, information, finance/insurance, real estate, and
metric, mining, utilities, manufacturing, wholesale trade,
employee relative to their counterparts in the sector.
and insurance and management of companies offer the
per employee can be regarded as a proxy for productivity
or subsector to our economy, a Value Index was calculated.
attributable to one full-time equivalent employee. The retail
by combining the value of the compensation and output
output per employee. This is due to the fact that these
average value. Values above the MSA average (index score
numbers of individuals they employ. It should be noted,
green) and those below the MSA average (index score below
outputs per employee among the various services categories.
impact of compensation and output (in red). Based on this
management all generate a much higher value of outputs per
transportation and warehousing, information services, finance strongest value in terms of joint value of compensation paid and estimated output for the sector.
Downtown Van Buren
CENTER FOR BUSINESS RESEARCH AND ECONOMIC DEVELOPMENT
5
Impact of Top Three MSA Sectors: Manufacturing, Service, and Trade Clearly, the sectors of manufacturing, services, and trade
operates independently in the economy. However, within the
in previous analysis, these sectors represent the three largest
local companies purchase inputs from one another and as
are the most significant to the Fort Smith MSA. As shown
regional economy, there are linkages between the sectors as
shares of total regional output. Altogether, in 2010, they
employees spend paychecks. To define the true importance
account for three-quarters of total MSA output. Services and
of a sector and its significance to the regional economy, all
manufacturing also rank as the top two sectors providing
linkages that sector has with others in the economy must be
jobs for the MSA, with trade tying government for the third
spot. Trade also tied the government sector for providing the
examined. These connections are known as multiplier effects
second largest number of jobs to the economy. As a group, the three provided almost 70% of jobs to the MSA in 2010 and about 65% of employee compensation.
The sector analysis previously reported in Tables 1 and 2 addresses the direct economic impacts of each sector
in the Fort Smith regional economy. That is, how many
jobs, how much employee compensation, and how much
total output is attributable to each sector, as if each sector
and must be added to the direct economic activity to gain an estimate of the true importance of a sector to the MSA.
MANUFACTURING
Manufacturing is a diverse sector represented by over one hundred industries in the Fort Smith MSA. Table 4 lists
the top industries ranked in order of providing jobs. These
are the industries that employ the most full-time equivalent
positions to our region. Poultry processing ranks as not only the most important source of manufacturing jobs to the Fort
Table 4. Top Manufacturing Subsectors in the Fort Smith MSA, 2010 Employment*
Employee Compensation**
Output**
Poultry processing
6,003
$204.6
$1,399.3
Household refrigerator/home freezer manufacturing
1,995
$114.0
$808.5
Motor and generator manufacturing
1,936
$132.7
$623.0
Air conditioning, refrigeration, and warm air heating
1,598
$88.7
$514.1
Paperboard container manufacturing
Industry
1,222
$68.0
$432.0
Fruit and vegetable canning, pickling, and drying
813
$48.1
$426.1
Cookie, cracker, and pasta manufacturing
647
$26.5
$281.0
Other plastics (not packaging, bottles, pipes or fittings)
533
$22.4
$113.9
Printing
523
$23.2
$77.2
Iron and steel mills and ferroalloy manufacturing
452
$45.8
$319.2
Ready-mix concrete manufacturing
325
$17.7
$82.1
Animal food manufacturing
306
$16.5
$364.3
Plate work and fabricated structural product mfg
247
$10.7
$55.6
Motor vehicle parts manufacturing
243
$11.2
$83.8
Snack food manufacturing
196
$11.2
$139.8
48
$3.9
$542.5
Petroleum refineries * Measured by number of full-time equivalent positions ** MIllions of dollars
6
UNIVERSITY OF ARKANSAS - FORT SMITH COLLEGE OF BUSINESS
Employment* Sector
Employee Compensation**
Output**
2007
2010
% Change
2007
2010
% Change
2007
2010
% Change
Direct Effect
25,816
21,626
-16.2%
$1,183.2
$1,079.3
-8.8%
$8,391.2
$7,594.1
-9.5%
Indirect Effect
13,569
10,117
-25.4%
$534.4
$453.9
-15.1%
$1,625.0
$1,238.3
-23.8%
Induced Effect
8,972
9,395
4.7%
$252.6
$292.3
15.7%
$785.8
$893.8
13.8%
48,356
41,138
-14.9%
$1,970.2
$1,825.6
-7.3%
$10,802.0
$9,726.2
-10.0%
Total Effect
* Measured by number of full-time equivalent positions ** MIllions of dollars
Smith MSA but also as the top output producer. While this
firms source inputs), and there are jobs that are supported by
this is due largely to its large number of employees (see per-
manufacturing firms and the supply-chain firms. The supply-
industry also ranks at the top for employee compensation,
employee data in Table 3). Other manufacturing industries
playing significant roles in Fort Smith MSA’s labor market
include household refrigerator/freezer, motor/generator, air
conditioner/refrigeration/warm air heating, and paperboard
container. Petroleum refineries are also important in providing manufacturing output.
Using IMPlan – economic impact modeling software – the full economic impact of manufacturing on the Fort Smith MSA
is listed in Table 5. The manufacturing sector supported more than 41,000 jobs and $9.7 billion in output in our regional
economy in 2010. In addition to the jobs directly affected by
the sector (those that are in the manufacturing industry itself), there are jobs that are supported in this industry’s supply
chain (the firms in the region from which the manufacturing
the spending of income by the people who work both for the
chain effect is known as the indirect effect in economic impact
CONSUMER SENTIMENT
Table 5. Economic Impact of Manufacturing Sector on Fort Smith MSA, 2007 and 2010
terms, and the spending effect is known as the induced effect. Because the number of jobs in manufacturing declined
between 2007 and 2010, the overall economic impact for
the MSA declined as well. However, part of the decline was
offset by a slight increase in economic impact stemming from a positive-induced economic impact in the economy. This is likely due to the 4.7% increase in employee compensation
experienced throughout all sectors of the region between 2007 and 2010.
Table 6 presents the economic impact of manufacturing
on other sectors aggregated by sector. Note manufacturing is not included in this table because the only impact of
manufacturing is of a direct nature, that being the initial
Garrison Pointe Market and Cafe in Fort Smith, AR
CENTER FOR BUSINESS RESEARCH AND ECONOMIC DEVELOPMENT
7
Table 6. Sectors Most Impacted by Manufacturing on Fort Smith MSA Employment* Sector
Output**
2007
2010
% Change
2007
2010
% Change
Ag, Forestry, Fish & Hunting
765
770
0.7%
$111.2
$85.5
-23.1%
Construction
588
497
-15.5%
$50.4
$46.4
-7.9%
Government
357
296
-17.1%
$48.9
$54.6
11.7%
Mining
143
241
68.9%
$37.8
$42.4
12.2%
All Services
13,953
11,841
-15.1%
$1,378.9
$1,221.7
-11.4%
Information
466
303
-35.1%
$98.2
$66.9
-31.9%
Finance & insurance
834
1,331
59.5%
$134.3
$214.2
59.5%
Real estate & rental
1,123
835
-25.7%
$241.8
$243.4
0.7%
Professional- scientific & tech services
2,425
1,068
-56.0%
$219.1
$106.9
-51.2%
Management of companies
1,310
1,038
-20.8%
$254.8
$171.6
-32.7%
Administrative & waste services
2,030
1,556
-23.3%
$78.2
$61.3
-21.6%
113
118
4.8%
$3.4
$4.1
20.6%
2,082
2,319
11.3%
$161.2
$181.7
12.7% -8.0%
Educational services Health & social services Arts- entertainment & recreation
202
205
1.9%
$8.7
$8.0
Accommodation & food services
1,770
1,660
-6.2%
$82.9
$78.3
-5.5%
Other services
1,599
1,408
-11.9%
$96.2
$85.2
-11.4%
4,701
3,901
-17.0%
$419.7
$349.8
-16.7%
Wholesale
2,125
1,700
-20.0%
$282.4
$226.8
-19.7%
Retail
2,576
2,201
-14.6%
$137.3
$123.0
-10.4%
1,779
1,757
-1.3%
$227.6
$211.6
-7.0%
255
209
-18.0%
$136.3
$120.1
-11.9%
All Trade
Transportation & Warehousing Utilities
* Measured by number of full-time equivalent positions ** MIllions of dollars
number of jobs and output presented in Table 5. Table 6 shows
the corresponding totals for employee compensation
of manufacturing, as well as the interconnections between
difference in wages between the two sectors as well as value
which sectors in the MSA are most impacted by the presence industries in the economy, i.e., the indirect and induced effects.
Sectors most negatively impacted by the departure of
manufacturing jobs in recent years include professional services, information, real estate, administration, and wholesale trade.
SERVICE
8
and output are not as great, which reflects the significant of production.
As Table 7 shows, the most important services industries to
the Fort Smith MSA are food/beverage service, employment services, hospitals, physician/dentists’ practices, nursing/
residential care facilities, and real estate. The management and banking industries are also important contributors to services output and employee compensation.
Table 7 supplies a listing of the top industries providing jobs
Table 8 shows the change in economic impact of the services
are fewer specific industries in the services sector, relative
Recall, services jobs comprised a slightly larger proportion
proportion of employment for our MSA (as compared to
as compared to 2007. The result of services jobs becoming
has a much larger number of employees than its counterpart
direct economic impacts for the sector across employment
in the services sector for the Fort Smith MSA. Since there
sector on the Fort Smith MSA between 2007 and 2010.
to manufacturing, and since this sector comprises the largest
of employment, employee compensation, and output in 2010
manufacturing), each industry represented in the services list
a larger part of our economy can be seen as increases in
ranking in the top industries list for manufacturing. However,
and employee compensation as well as output, with the
highest percentage increase being observed in employee
UNIVERSITY OF ARKANSAS - FORT SMITH COLLEGE OF BUSINESS
Table 7. Top Services Industries in the Fort Smith MSA, 2010 Employment*
Employee Compensation**
Output**
Food services and drinking places
8,330
$120.1
$392.1
Employment services
6,805
$99.7
$160.1
Private hospitals
4,285
$197.0
$459.2
Offices of physicians, dentists, and other
3,964
$235.8
$464.1
Nursing and residential care facilities
3,735
$102.6
$185.9
Real estate establishments
3,666
$18.2
$323.5
Home health care services
2,390
$50.1
$104.1
Nondepository credit intermediation and related
2,301
$93.9
$227.7
Civic, social, professional, and similar orgs.
2,217
$65.6
$162.0
Management of companies and enterprises
2,037
$171.9
$336.9
Monetary authorities & depository credit intermed.
1,905
$69.4
$535.4
Individual and family services
1,805
$43.3
$62.7
Private household operations
1,202
$8.1
$8.1
Industry
* Measured by number of full-time equivalent positions ** MIllions of dollars
Table 8. Economic Impact of Services Sector on Fort Smith MSA, 2007 and 2010 Employment* Sector
Employee Compensation**
2007
2010
% Change
2007
2010
Output**
% Change
2007
2010
% Change
65,999
64,987
-1.5%
$1,983.2
$2,175.0
9.7%
$5,815.5
$6,134.7
5.5%
Indirect Effect
1,610
1,528
-5.0%
$73.2
$69.3
-5.4%
$224.9
$207.2
-7.9%
Induced Effect
3,093
3,430
10.9%
$86.8
$106.2
22.3%
$249.1
$307.8
23.6%
70,702
69,945
-1.1%
$2,143.2
$2,350.5
9.7%
$6,289.5
$6,649.7
5.7%
Direct Effect
Total Effect
* Measured by number of full-time equivalent positions ** MIllions of dollars
14 Flags Museum in Sallisaw, OK
CENTER FOR BUSINESS RESEARCH AND ECONOMIC DEVELOPMENT
9
Table 9. Sectors Most Impacted by Services Sector in Fort Smith MSA Employment* Sector
Employee Compensation**
2007
2010
% Change
2007
2010
% Change
41
65
59.8%
$3.1
$3.0
-4.5%
Construction
283
468
65.5%
$46.3
$38.9
-15.9%
Government
378
333
-11.8%
$47.3
$52.9
12.0%
Manufacturing
211
202
-4.5%
$82.4
$90.5
9.8%
25
30
21.9%
$8.1
$5.2
-36.1%
3,183
3,291
3.4%
$230.9
$225.3
-2.4%
Ag, Forestry, Fish & Hunting
Mining All Trade
512
538
5.1%
$69.9
$71.7
2.6%
2,672
2,754
3.1%
$161.0
$153.6
-4.6%
Transportation & Warehousing
473
469
-0.9%
$54.2
$49.5
-8.5%
Utilities
109
100
-8.0%
$48.7
$49.7
2.1%
Wholesale Retail
* Measured by number of full-time equivalent positions ** MIllions of dollars
compensation. In 2010, the services sector supported almost
Table 9 presents the economic impact of services on other
the indirect and induced economic impacts. However, as the
included in the table because the only economic impacts
70,000 jobs in the MSA with 5,000 of those stemming from
proportion of services jobs in the MSA has increased, this has
not carried a positive change for indirect economic impact for employee compensation and output. Recall, indirect impacts stem from business-to-business transactions. The services
sector is different from manufacturing, which typically has
a fair number of supplier relationships that develop between companies that represent the various industries within the manufacturing sector.
As manufacturing jobs comprise a smaller
proportion of jobs in the MSA and services jobs
comprise a larger share,
it is not surprising to see a trend of diminishing
indirect effect emerge. A
positive trend to note for the
economic impact of services on the Fort Smith MSA is
are the direct effects which are identical to the employment and output figures in Table 8. Table 9 shows that changes in the number of jobs in the services sector has had the
greatest economic impact on job numbers in the agriculture, construction, and mining sectors. However, output in the
mining, construction, and government sectors has seen the
most impact. These changes demonstrate the interrelationships
“In 2010, the service sector supported almost 70,000 jobs in the MSA with 5,000 of those stemming from the indirect and induced economic impacts.�
the significant increase in
10
sectors aggregated by sector. The services sector is not
present in our local economy.
The services sector depends heavily on production of food and fiber as well as
production of natural resources to operate.
In addition, spending by those employed in this sector support jobs in construction and
government (primarily in public education).
RETAIL TRADE
While trade accounts for 13% of total
jobs in the Fort Smith MSA, it is the retail portion that accounts for almost 80% of
that sector. Table 10 presents the economic
induced effect between 2007 and 2010. The induced effect
impact of retail trade for both 2007 and 2010. Note that for
by workers in the services sector as well as any workers in
than the percentage decline in jobs in this sector. This helps
increase in spending, the model estimates the corresponding
sector had on the MSA between 2007 and 2010. Another
traces spending throughout the economy that is performed
the direct effect, the percentage decline in output is smaller
industries that supply services sector companies. From this
to explain the increase in total economic impact that the retail
number of jobs necessary to support this economic activity.
explanation for the increase in economic impact (even in the
UNIVERSITY OF ARKANSAS - FORT SMITH COLLEGE OF BUSINESS
Table 10. Economic Impact of Retail Trade Sector on Fort Smith MSA, 2007 and 2010 Employment* Sector
Employee Compensation**
Output**
2007
2010
% Change
2007
2010
% Change
2007
2010
% Change
17,186
15,856
-7.7%
$399.8
$400.1
0.1%
$925.0
$889.4
-3.8%
Indirect Effect
1,920
1,868
-2.7%
$59.6
$65.6
10.0%
$177.2
$187.3
5.7%
Induced Effect
1,739
2,135
22.8%
$52.5
$70.6
34.5%
$180.1
$237.4
31.8%
20,846
19,859
-4.7%
$511.9
$536.3
4.8%
$1,282.3
$1,314.0
2.5%
Direct Effect
Total Effect
* Measured by number of full-time equivalent positions ** MIllions of dollars
Table 11. Sectors Most Impacted by Retail Trade in Fort Smith MSA Employment* Sector Ag, Forestry, Fish & Hunting
Employee Compensation**
2007
2010
% Change
2007
2010
% Change
8
13
66.1%
$0.5
$0.6
9.9%
Construction
61
78
27.9%
$5.7
$7.1
24.2%
Government
114
108
-5.0%
$13.9
$16.9
21.4%
60
67
11.0%
$14.6
$21.1
44.6%
5
7
39.2%
$1.7
$1.3
-26.1%
All Services
3,060
3,280
7.2%
275
319
16.3%
Information
137
127
-6.9%
$27.5
$25.0
-9.1%
Finance & insurance
198
406
104.6%
$31.9
$64.4
102.1%
Real estate & rental
449
408
-9.1%
$72.4
$83.4
15.1%
Professional - scientific & tech services
405
240
-40.6%
$35.6
$23.6
-33.7%
43
43
-0.9%
$8.4
$7.1
-15.8%
501
480
-4.2%
$18.4
$17.5
-5.1%
Manufacturing Mining
Management of companies Administrative & waste services
34
40
16.8%
$1.1
$1.4
29.7%
546
679
24.4%
$42.2
$53.2
25.8%
Arts - entertainment & recreation
52
64
23.7%
$2.3
$2.5
11.9%
Accommodation & food services
394
445
13.0%
$18.5
$21.0
13.8%
Other services
302
347
15.0%
$16.3
$20.2
24.1%
Wholesale Trade
107
121
13.3%
$14.2
$16.1
13.7%
Transportation & Warehousing
215
301
39.9%
$19.9
$28.1
41.3%
29
29
-1.5%
$12.2
$14.2
16.7%
Educational services Health & social services
Utilities
* Measured by number of full-time equivalent positions ** MIllions of dollars
presence of decreasing jobs and economic output in this sector) is the slight increase in employee compensation. Even a slight
increase in employee compensation has a significant impact on the induced effect in this multiplier model.
Table 11 presents the economic impact of retail trade on other sectors aggregated by sector. The retail trade sector is not
included in the table because the only economic impacts are the direct effects which are identical to the employment and
output figures in Table 10. Table 11 shows that the retail trade
sector has the most significant impact on services job numbers
in the health, administrative, and accommodations/food services
Fort Chaffee Barbershop Museum in Fort Smith, AR
subsectors. There also appear to be significant economic
CENTER FOR BUSINESS RESEARCH AND ECONOMIC DEVELOPMENT
11
Table 12. Economic Impact of Health Care on Fort Smith MSA, 2007 and 2010 Employment* Sector
Employee Compensation**
Output**
2007
2010
% Change
2007
2010
% Change
2007
2010
% Change
14,220
14,892
4.7%
$616.2
$704.8
14.4%
$1,154.2
$1,275.6
10.5%
Indirect Effect
2,711
2,975
9.7%
$73.3
$88.8
21.1%
$210.9
$243.9
15.6%
Induced Effect
2,815
3,552
26.2%
$69.3
$96.1
38.7%
$263.2
$364.9
38.6%
19,746
21,419
8.5%
$758.8
$889.7
17.3%
$1,628.3
$1,884.4
15.7%
Direct Effect
Total Effect
* Measured by number of full-time equivalent positions ** MIllions of dollars
interrelationships between retail trade and finance/insurance, as well as real estate.
A CLOSER LOOK AT HEALTH CARE
Previously, the sectors of manufacturing, services, and trade were identified as the most significant to the Fort Smith
MSA in terms of employment and output. Altogether in
2010, they account for three-quarters of MSA output, 70% of jobs, and 65% of employee
compensation. In addition to the direct amount of output
they produce for the regional economy, they also generate significant additional output in the region through their
supplier relationships as well as the spending that is carried out by their employees.
In 2010, the health care industry in the Fort Smith MSA
supported over 21,000 jobs and $1.8 billion in output. In
addition to the jobs directly affected by the sector (those that are in the health care industry itself), there are jobs that are
supported in this industry’s supply chain (the firms in the region from which the health firms source inputs), and there are jobs
that are supported by the spending of income by the people who work both for the health-care firms and the supply-chain firms.
“[F]irms in health industries are increasing both the number and volume of input-supply transactions with[in]… the MSA.”
One of the largest subsectors in the Fort Smith MSA is health.
This services subsector—comprised of multiple industries
including provider offices, hospitals, home-health care services, nursing/residential care facilities, and medical/diagnostic
laboratories—contributed more jobs and output to the Fort
Smith region in 2010 than the major sectors of agriculture,
construction, mining, transportation, and utilities. Given the
sector’s significance to the MSA, an economic impact analysis was conducted to understand its full economic impact on the
The supply-chain effect is shown as the
indirect effect, while the spending effect is shown as the induced effect.
Note, the induced (spending) effect
increased by a much greater percentage between 2007 and 2010 than did the
direct or indirect effects. This is due to the increase in compensation paid to healthindustry workers in the MSA between 2007 and 2010. It is also important to
note the significant percentage increase in
indirect effects for employment, employee compensation, and
output. This means that firms in health industries are increasing both the number and volume of input-supply transactions with firms located in the MSA. This may be an opportunity for
future job growth in the region. Clearly, health care represents
a set of growing industries. By understanding both future labor
as well as input needs, it will be possible to sustain and perhaps increase this job and output growth.
region. The results of this analysis are presented in Table 12.
12
UNIVERSITY OF ARKANSAS - FORT SMITH COLLEGE OF BUSINESS
Stanley Tubbs Memorial Library in Sallisaw, OK
13
Breakdown of Government, Construction, and Mining into Subsectors In this section we break down key sectors into subsector detail in order to better understand the underlying contributions
within each sector. We will look at government, construction,
went up in both subsectors accounting for the 16.5% overall increase for the government sector.
Note that both federal and state/local government experienced
and mining sectors.
increases in compensation as well as output between 2007 and
GOVERNMENT
2010, but state and local employees saw their pay increase
employee compensation, and output between 2007 and
also much greater for the state/local subsector. One large
The government sector also experienced gains in employment,
at a much greater rate. The contribution to total output was
2010. This is not surprising with spending on government
contributor to this subsector is public education.
programs on the rise during this period in hopes of stimulating
consumer spending during the economic recovery from the recession. The government
sector accounts for spending
on federal as well as state and local programs.
As shown in Table 13,
employment in the government sector rose by 3.8% between 2007 and 2010 in the Fort
Smith MSA with employment
in the state and local subsector
“[C]onstruction was particularly hard hit by the recession. Employment fell by nearly 16%, employee compensation declined by 10%, and output dropped by almost 24%.�
accounting for the entire
increase. Federal government employment actually fell
during the period, perhaps due to cutbacks in programs such as defense. Employee compensation increased by 10.2% at
CONSTRUCTION
While most sectors in the Fort Smith
MSA suffered declines in employment from 2007 to 2010, construction was
particularly hard hit by the recession. Employment fell by nearly 16%,
employee compensation declined by 10%, and output dropped by almost
24%. Table 14 shows that between the
two industry sub-groups comprising this sector, residential and commercial, it
was the residential construction industry that suffered the majority of losses
in terms of employment, employee
compensation, and output. Employee
compensation and output in the commercial construction subsector actually rose slightly between 2007 and 2010.
the federal level, as well as state and local levels. Output also
Table 13. Breakdown of Government Sector Employment* Sector State & Local Federal All Government
Employee Compensation**
Output**
2007
2010
% Change
2007
2010
% Change
2007
2010
% Change
16,201
17,101
5.6%
$699.0
$791.2
13.2%
$878.3
$1,055.4
20.2%
3,706
3,570
-3.7%
$249.2
$254.0
1.9%
$329.4
$352.0
6.9%
19,906
20,671
3.8%
$948.2
$1,045.2
10.2%
$1,207.7
$1,407.5
16.5%
* Measured by number of full-time equivalent positions ** MIllions of dollars
14
UNIVERSITY OF ARKANSAS - FORT SMITH COLLEGE OF BUSINESS
Employment*
Employee Compensation**
Sector
2007
2010
% Change
Residential
2,991
1,765
-41.0%
Commercial
7,070
6,700
-5.2%
10,061
8,465
-15.9%
$250.5
All Construction
2007
Output**
2010
% Change
2007
2010
% Change
$74.0
$38.0
-48.6%
$507.5
$208.8
-58.9%
$176.5
$187.4
6.2%
$680.6
$697.1
2.4%
$225.4
-10.0%
$1,188.1
$905.9
-23.8%
* Measured by number of full-time equivalent positions ** MIllions of dollars
Table 15. Breakdown of Mining Sector Employment* Sector
2007
2010
Oil and Natural Gas
3,525 335
Quarrying Coal and Other All Mining
Employee Compensation**
% Change
2007
2010
4,470
26.8%
$178.7
192
-42.9%
$11.7
202
178
-11.8%
4,062
4,840
19.1%
Output**
% Change
2007
2010
% Change
$168.1
-5.9%
$1,429.4
$821.2
-42.5%
$9.1
-22.1%
$47.4
$40.6
-14.3%
$14.4
$10.2
-29.1%
$59.6
$51.1
-14.3%
$204.8
$187.4
-8.5%
$1,536.3
$912.9
-40.6%
CONSUMER SENTIMENT
Table 14. Breakdown of Construction Sector
* Measured by number of full-time equivalent positions ** MIllions of dollars
While residential construction dropped sharply during the
When deconstructing the increase in employment,
in nature and funding, continued to push projects through
it is noted that the subsector having the greatest increase in
period, commercial projects, which tend to be longer-term to completion. These performance differences between the residential and commercial side of the sector suggests the severity of impact on the consumer during this period.
MINING
Some interesting trends can also be noted for the mining
sector, which is comprised of the following subsectors: oil and natural gas, quarrying, and coal and other mining (Table 15). While this sector emerged as having the highest percentage change in employment between 2007 and 2010, it was also
shown to have the largest percentage drop in output over the same time period.
compensation, and output for each subsector in Table 15,
employment between 2007 and 2010 was oil and natural gas. This sector also experienced the greatest decrease in output. While the exact reasons for these two opposing trends are
not known with certainty, it could point to an investment in human capital that will later translate into increased output
for this sector. A more likely explanation rests on the volatile nature of the energy sector and its pricing structure over
time. The value of oil and gas sector outputs is determined by national and global factors, both cyclical and eventdriven forces.
Figure 1 summarizes results of the analysis of the top sectors in the Fort Smith MSA.
Figure 1. Summary of MSA Top Sector Performance: 2007 & 2010
Arkansas Best Corporation Performing Arts Center in Fort Smith, AR
CENTER FOR BUSINESS RESEARCH AND ECONOMIC DEVELOPMENT
15
Sector Analysis of the Counties Comprising the Fort Smith MSA In order to further understand the sector changes occurring in the Fort Smith MSA, the same breakdown of employment, employee compensation and output is performed for each
of the five counties comprising the overall MSA: Crawford, Franklin, Le Flore, Sebastian, and Sequoyah. Tables 16-20 summarize the sector analyses for these counties.
CRAWFORD COUNTY
For the agricultural and services sectors, Crawford County fared better than the MSA with respect to changes in job numbers and production (Table 16). The overall MSA’s
services sector experienced a decline in jobs between 2007 and 2010 of 1.5%. However, services jobs in Crawford
Caution must be exercised when interpreting these data,
as estimates will be less reliable due to the small numbers involved, particularly at sector and subsector levels.
County increased by nearly 40%, based on the IMPLAN data. Unfortunately, Crawford County’s performance in the
construction and transportation sectors was worse than the
overall MSA. In construction, the MSA experienced a 16%
Table 16. Sector Analysis, 2007 and 2010, Crawford County Employment* Sector
Employee Compensation**
Output**
2007
2010
% Change
2007
2010
% Change
2007
2010
622
682
9.7%
$3.8
$5.6
49.7%
$77.2
$88.6
14.8%
Construction
3,286
2,179
-33.7%
$64.8
$56.2
-13.3%
$372.6
$234.0
-37.2%
Government
2,614
2,697
3.2%
$118.9
$131.2
10.3%
$151.9
$183.1
20.5%
Manufacturing
3,914
4,192
7.1%
$149.0
$158.0
6.0%
$1,140.7
$1,222.5
7.2%
467
479
2.6%
$29.5
$17.7
-39.9%
$121.1
$67.4
-44.4%
Ag, Forestry, Fish & Hunting
Mining
% Change
7,148
9,940
39.1%
$156.0
$199.6
28.0%
$678.2
$862.2
27.1%
Information
170
118
-30.5%
$5.9
$5.1
-13.7%
$43.5
$33.8
-22.4%
All services
Finance & insurance
566
970
71.5%
$15.2
$27.3
79.7%
$87.7
$151.1
72.3%
Real estate & rental
338
729
115.7%
$3.9
$5.2
34.7%
$182.1
$236.2
29.8%
rofessional - scientific & P tech services
760
1,435
88.9%
$23.7
$16.8
-29.1%
$70.2
$78.3
11.5%
Management of companies
1
59
5824.6%
$0.0
$1.1
4399.0%
$0.1
$5.2
4937.7%
962
1,501
56.1%
$17.0
$27.5
62.2%
$45.9
$57.0
24.1%
51
69
34.9%
$0.3
$0.7
114.8%
$1.5
$2.3
53.2%
1,449
1,914
32.1%
$47.9
$61.3
28.1%
$99.4
$125.1
25.9%
169
158
-6.4%
$1.2
$1.3
8.7%
$5.7
$6.1
5.2%
Accomm. & food services
1,548
1,533
-0.9%
$20.3
$21.4
5.4%
$71.5
$73.0
2.1%
Other services
1,135
1,453
28.0%
$20.6
$31.8
54.3%
$70.6
$94.2
33.5%
3,143
3,335
6.1%
$80.8
$92.1
14.0%
$218.1
$240.9
10.4%
dministrative & waste A services Educational services Health & social services rts - entertainment & A recreation
All trade Wholesale Retail Transportation & Warehousing Utilities Total
741
804
8.6%
$33.2
$39.1
17.6%
$93.5
$106.4
13.8%
2,403
2,531
5.3%
$47.5
$53.0
11.4%
$124.6
$134.4
7.9%
4,744
3,775
-20.4%
$186.1
$157.6
-15.3%
$582.7
$410.0
-29.6%
24
30
26.8%
$0.7
$1.0
40.8%
$3.0
$3.9
29.6%
25,962
27,310
5.2%
$789.7
$819.1
3.7%
$3,345.6
$3,312.6
-1.0%
* Measured by number of full-time equivalent positions ** MIllions of dollars
16
UNIVERSITY OF ARKANSAS - FORT SMITH COLLEGE OF BUSINESS
relative to 2007. This is due to the agricultural, services, and
the overall MSA (37% for Crawford versus 24% for the MSA).
sector performed worse. Similar to the previously discussed
resulted in a percentage decline in output that was greater than For transportation, the percentage decline in jobs was just
over 20% compared to a 14% decline for the MSA. This 6%
differential in job loss resulted in a loss of output for Crawford County that was 13% greater than the MSA’s output loss.
Sectors estimated to have experienced the largest gains in jobs were manufacturing, services, and trade. Specific services
subsectors with notable increases included professional and technical, administrative, and health services.
transportation sectors performing better, while its construction situation in Crawford County, Franklin County experienced
a decline of almost 30% in construction jobs compared to the overall MSA’s decrease in this sector of 16%.
Compared to the decline in agricultural jobs for the MSA of
8.7%, Franklin County experienced an increase of 9.8%. The mining sector added jobs during the period as well. While the overall MSA saw a decline in services jobs of 1.5%,
Franklin County experienced an increase of almost 50%.
This large increase was fueled by significant job growth in
FRANKLIN COUNTY
Table 17 presents the sector analysis for Franklin County. As compared to the overall Fort Smith MSA, Franklin County’s employment situation was better than the MSA in 2010
the finance and insurance and health care subsectors. As for
transportation, the MSA experienced a decline of almost 14% in jobs, yet the county experienced a slight increase in this sector of about 9%.
Table 17. Sector Analysis, 2007 and 2010, Franklin County Employment* Sector Ag, Forestry, Fish & Hunting
Employee Compensation**
Output**
2007
2010
% Change
2007
2010
% Change
2007
2010
% Change
448
492
9.8%
$2.2
$11.6
418.1%
$131.7
$111.0
-15.7%
Construction
514
365
-28.9%
$10.7
$5.1
-52.5%
$58.4
$35.1
-39.9%
Government
1270
1239
-2.4%
$73.0
$69.0
-5.5%
$97.2
$92.1
-5.3%
961
841
-12.5%
$41.4
$41.3
-0.1%
$251.4
$247.2
-1.7%
Manufacturing
84
300
257.7%
$3.5
$10.0
183.6%
$16.5
$47.1
185.4%
1375
2052
49.2%
$34.1
$48.4
42.0%
$152.9
$237.2
55.1%
43
34
-21.0%
$1.2
$1.0
-18.3%
$6.9
$6.3
-8.8%
Finance & insurance
220
431
96.0%
$5.9
$12.5
110.7%
$26.2
$73.1
178.8%
Real estate & rental
87
150
71.7%
$1.1
$0.8
-20.2%
$53.1
$68.1
28.4%
rofessional - scientific & P tech services
92
160
73.1%
$2.6
$3.2
22.8%
$7.0
$9.5
35.6%
Management of companies
0
3
$0.0
$0.3
$0.0
$0.5
122
192
56.9%
$0.9
$1.2
29.9%
$3.0
$5.7
92.2%
Mining All services Information
dministrative & waste A services
22
53
143.5%
$0.3
$0.9
227.5%
$0.7
$2.0
173.4%
453
636
40.5%
$13.7
$18.8
37.4%
$25.5
$36.0
41.3%
31
53
71.6%
$0.2
$0.2
14.0%
$1.7
$1.7
2.7%
Accomm. & food services
305
340
11.7%
$3.8
$4.0
4.1%
$14.0
$15.4
9.7%
Other services
321
282
-12.2%
$4.5
$5.5
24.5%
$14.8
$18.8
27.1%
757
764
1.0%
$12.9
$16.4
27.1%
$41.0
$46.4
13.4%
81
95
17.3%
$2.1
$3.8
81.5%
$6.5
$11.7
78.7%
676
669
-1.0%
$10.8
$12.6
16.4%
$34.4
$34.7
0.9%
147
160
8.5%
$2.2
$5.2
140.5%
$13.8
$16.5
20.0%
258
242
-6.0%
$16.8
$18.2
8.4%
$124.7
$135.5
8.6%
6135
6738
9.8%
$196.9
$225.3
14.4%
$887.6
$968.1
9.1%
Educational services Health & social services Arts - entertainment & recreation
All trade Wholesale Retail Transportation & Warehousing Utilities Total
FORT SMITH MSA SECTOR ANALYSIS
loss in jobs, while Crawford County declined almost 34%. This
* Measured by number of full-time equivalent positions ** MIllions of dollars
CENTER FOR BUSINESS RESEARCH AND ECONOMIC DEVELOPMENT
17
Table 18. Sector Analysis, 2007 and 2010, Le Flore County Employment*
Employee Compensation**
Sector
2007
2010
% Change
Ag, Forestry, Fish & Hunting
2409
1266
Construction
1233
912
Government
4431
Manufacturing Mining All services
Output**
2007
2010
% Change
2007
2010
% Change
-47.4%
$7.9
$6.9
-12.5%
$269.4
$62.4
-76.9%
-26.1%
$28.7
$4.7
-83.8%
$144.3
$80.8
-44.0%
3567
-19.5%
$179.4
$153.2
-14.6%
$225.7
$221.0
-2.1%
2417
314
-87.0%
$90.1
$14.1
-84.3%
$787.6
$111.5
-85.8%
694
72
-89.7%
$33.9
$1.0
-97.0%
$255.8
$13.1
-94.9%
5545
6742
21.6%
$92.5
$111.7
20.8%
$441.9
$556.0
25.8%
90
80
-11.8%
$3.0
$2.4
-18.3%
$21.2
$16.5
-22.1%
Finance & insurance
638
613
-3.9%
$13.1
$17.7
35.3%
$77.5
$91.7
18.4%
Real estate & rental
186
348
86.5%
$1.2
$1.0
-16.6%
$125.3
$133.3
6.4%
rofessional - scientific & P tech services
410
382
-6.9%
$9.0
$6.8
-24.0%
$30.9
$51.5
66.6%
Management of companies
27
102
283.7%
$0.7
$6.3
835.7%
$3.1
$14.1
358.5%
871
1017
16.8%
$14.1
$4.6
-67.3%
$28.4
$39.4
39.0%
Information
dministrative & waste A services Educational services Health & social services Arts - entertainment & recreation Accomm. & food services Other services All trade Wholesale Retail Transportation & Warehousing Utilities Total
2
18
616.4%
$0.0
$0.0
67.3%
$0.1
$0.5
503.2%
1265
2436
92.5%
$26.7
$47.0
76.2%
$59.6
$112.0
87.8%
19
180
862.6%
$0.1
$1.1
713.7%
$0.8
$7.1
772.6%
692
819
18.4%
$8.4
$11.2
33.8%
$30.9
$41.1
32.7%
1344
747
-44.4%
$16.2
$13.5
-17.0%
$64.0
$48.7
-23.9%
2324
1766
-24.0%
$42.9
$34.2
-20.2%
$137.8
$110.1
-20.1%
252
130
-48.5%
$8.7
$3.4
-61.0%
$26.5
$13.6
-48.5%
2072
1636
-21.0%
$34.2
$30.9
-9.8%
$111.3
$96.5
-13.4%
627
422
-32.8%
$20.0
$17.9
-10.2%
$100.6
$51.2
-49.1%
151
45
-70.0%
$11.4
$2.7
-75.9%
$57.9
$30.9
-46.6%
19833
15106
-23.8%
$506.7
$346.5
-31.6%
$2,420.8
$1,236.9
-48.9%
* Measured by number of full-time equivalent positions ** MIllions of dollars
Franklin County also saw higher-than-MSA increases in
growth for MSA). Output in the sector also increased at a rate
and transportation sectors. When comparing changes in output
MSA of 5.5%.
employee compensation for the agricultural, services, trade, for the county between 2007 and 2010 to changes in output for the MSA, we see overall output increasing at a slightly
higher rate for the county (9.1% compared to 6.5%). This can be explained by higher-than-MSA output growth rates in the services, trade, and transportation sectors.
LE FLORE COUNTY
As is shown in Table 18, the economic situation between
2007 and 2010 in Le Flore County declined more rapidly
than the overall MSA in every sector except services. Jobs
in the services sector increased at a rate of 21.6% (compared to a decrease of 1.5% for the MSA), while compensation to services-sector employees grew at a pace of 20.8% (13.3%
18
of 25.8% which was well above the rate of growth for the
The positive growth in the sector is associated with significant job creation in three main subsectors: educational services, arts, and management. The Le Flore sectors suffering the greatest job losses between 2007 and 2010 were
manufacturing and mining, with rates of decline near 90%.
SEBASTIAN COUNTY
The rates of change in job numbers for Sebastian County kept
pace fairly well with the overall MSA between 2007 and 2010
in agricultural, construction, mining, and utilities sectors, with the county’s percentage-loss rates being slightly smaller than the MSA’s (Table 19). However, in manufacturing, services,
UNIVERSITY OF ARKANSAS - FORT SMITH COLLEGE OF BUSINESS
Figure 2. Summary Performance of MSA Counties: 2007 & 2010
outpaced the MSA, leading to an overall rate
of job loss during the period of just over 10% as compared to 5% for the MSA.
Overall, employee compensation grew at a pace just slightly less than the MSA (4.4%
compared to the MSA’s 4.7%), while output in Sebastian County declined by 14%.
Double-digit output declines in agriculture, construction, mining, and transportation
largely explain the overall decline in output for the county.
finance and insurance services recorded the largest headcount
Sectors registering the largest increases in
employee headcounts included government and mining, while
increase in the services sector.
Table 19. Sector Analysis, 2007 and 2010, Sebastian County Employment* Sector Ag, Forestry, Fish & Hunting Construction Government Manufacturing
Employee Compensation**
Output**
2007
2010
% Change
2007
2010
% Change
2007
2010
500
474
-5.3%
$3.4
$5.7
65.9%
$72.0
$72.0
% Change 0.0%
4,363
3,753
-14.0%
$140.5
$129.3
-8.0%
$544.4
$422.5
-22.4%
8,165
8,830
8.2%
$433.2
$502.6
16.0%
$556.1
$656.0
18.0%
17,894
14,303
-20.1%
$851.1
$779.5
-8.4%
$5,965.4
$4,730.5
-20.7% -46.6%
2,768
3,255
17.6%
$136.6
$127.5
-6.6%
$1,132.9
$605.3
44,984
39,184
-12.9%
$1,171.2
$1,275.3
8.9%
$4,059.1
$3,886.9
-4.2%
Information
1,295
965
-25.5%
$58.6
$54.7
-6.8%
$287.7
$223.2
-22.4%
Mining All services
Finance & insurance
2,102
3,414
62.4%
$87.7
$127.4
45.3%
$355.0
$568.8
60.2%
Real estate & rental
4,244
2,861
-32.6%
$39.9
$40.9
2.5%
$784.3
$738.0
-5.9%
rofessional - scientific & P tech services
6,903
2,330
-66.3%
$76.1
$79.4
4.3%
$584.1
$302.0
-48.3%
Management of companies
1,876
1,838
-2.0%
$156.3
$164.1
5.0%
$367.5
$314.4
-14.4%
dministrative & waste A services
7,623
6,355
-16.6%
$115.8
$116.9
0.9%
$214.5
$200.4
-6.6%
453
443
-2.3%
$6.0
$8.1
34.7%
$15.5
$16.5
6.7%
11,151
11,054
-0.9%
$473.3
$516.0
9.0%
$978.0
$1,028.2
5.1%
535
599
12.0%
$8.6
$7.7
-11.2%
$24.0
$24.3
1.5%
Accomm. & food services
5,159
5,396
4.6%
$76.0
$82.3
8.3%
$251.4
$262.2
4.3%
Other services
3,643
3,928
7.8%
$72.8
$77.8
6.9%
$197.2
$208.8
5.9%
12,912
12,103
-6.3%
$357.5
$383.0
7.1%
$970.3
$930.5
-4.1%
Wholesale
3,039
3,057
0.6%
$149.1
$163.8
9.8%
$425.8
$419.5
-1.5%
Retail
9,873
9,047
-8.4%
$208.4
$219.3
5.2%
$544.6
$511.1
-6.2%
2,460
2,464
0.2%
$92.8
$122.5
32.1%
$298.2
$317.1
6.3%
Educational services Health & social services rts - entertainment & A recreation
All trade
Transportation & Warehousing Utilities Total
363
370
2.0%
$25.9
$27.9
7.7%
$235.3
$243.4
3.4%
94,409
84,738
-10.2%
$3,212.2
$3,353.4
4.4%
$13,833.8
$11,864.3
-14.2%
FORT SMITH MSA SECTOR ANALYSIS
trade, and transportation, percentages
* Measured by number of full-time equivalent positions ** MIllions of dollars
CENTER FOR BUSINESS RESEARCH AND ECONOMIC DEVELOPMENT
19
seen that the county experienced above-MSA growth in the
SEQUOYAH COUNTY
As illustrated in Table 20, Sequoyah County experienced
better-than-MSA performance in job creation between 2007 and 2010 for all sectors except manufacturing, trade, and
transportation. For example, Sequoyah County’s employment
in the agriculture sector fell by only 4% relative to the overall MSA’s decline of 8.7%. However, the county experienced a 50% decline in manufacturing jobs, while the rate of
decline for the MSA was 16%. When comparing the county’s employee-compensation changes to the MSA, it can be
agriculture, services, trade, transportation, and utilities sectors. Sequoyah County also saw economic production increase at rates higher than its peer counties in the MSA for all sectors
except manufacturing and trade. The larger-than-MSA decline in trade production is largely due to the county’s double-digit decline in the retail side of the sector.
Figure 2 on page 19 summarizes performance results for the respective counties in the Fort Smith MSA.
Table 20. Sector Analysis, 2007 and 2010, Sequoyah County Employment*
Employee Compensation**
Output**
Sector
2007
2010
% Change
2007
2010
% Change
2007
2010
% Change
Ag, Forestry, Fish & Hunting
1,319
1,266
-4.0%
$3.3
$6.9
111.6%
$40.2
$62.4
55.2%
Construction
665
912
37.0%
$5.8
$4.7
-19.0%
$68.4
$80.8
18.1%
Government
3,426
3,567
4.1%
$143.7
$153.2
6.6%
$176.7
$221.0
25.0%
630
314
-50.1%
$32.2
$14.1
-56.1%
$246.2
$111.5
-54.7%
49
72
44.9%
$1.2
$1.0
-18.6%
$10.0
$13.1
30.3%
6,626
6,742
1.7%
$90.3
$111.7
23.7%
$483.3
$556.0
15.0%
86
80
-7.5%
$3.0
$2.4
-18.8%
$15.3
$16.5
8.4%
Finance & insurance
442
613
38.6%
$15.5
$17.7
14.4%
$58.2
$91.7
57.5%
Real estate & rental
156
348
123.0%
$0.9
$1.0
8.6%
$98.3
$133.3
35.7%
rofessional - scientific & P tech services
1,257
382
-69.6%
$7.2
$6.8
-4.7%
$95.3
$51.5
-45.9%
Management of companies
33
102
213.3%
$2.5
$6.3
153.7%
$6.1
$14.1
133.5%
dministrative & waste A services
612
1,017
66.4%
$5.8
$4.6
-20.3%
$29.0
$39.4
36.1%
Educational services
128
18
-86.2%
$0.0
$0.0
32.3%
$2.1
$0.5
-78.4%
2,133
2,436
14.2%
$34.7
$47.0
35.4%
$91.7
$112.0
22.1%
245
180
-26.6%
$4.0
$1.1
-71.8%
$12.9
$7.1
-45.1%
1,098
819
-25.4%
$13.5
$11.2
-16.8%
$49.2
$41.1
-16.5%
436
747
71.3%
$3.3
$13.5
314.5%
$25.4
$48.7
91.7%
2,291
1,766
-22.9%
$29.5
$34.2
16.0%
$121.5
$110.1
-9.4%
129
130
1.2%
$3.5
$3.4
-2.7%
$11.5
$13.6
18.4%
2,163
1,636
-24.3%
$26.0
$30.9
18.5%
$110.0
$96.5
-12.3%
491
422
-14.1%
$16.0
$17.9
12.2%
$58.7
$51.2
-12.8%
37
45
22.4%
$2.2
$2.7
23.9%
$18.2
$30.9
69.2%
15,536
15,106
-2.8%
$324.2
$346.5
6.9%
$1,223.4
$1,236.9
1.1%
Manufacturing Mining All services Information
Health & social services rts - entertainment & A recreation Accomm. & food services Other services All trade Wholesale Retail Transportation & Warehousing Utilities Total
* Measured by number of full-time equivalent positions ** MIllions of dollars
20
UNIVERSITY OF ARKANSAS - FORT SMITH COLLEGE OF BUSINESS
Ozark Courthouse in Ozark, AR
21
Summary and Conclusions The economy of the Fort Smith MSA is changing. Like the
service-sector job growth, just as some counties shouldered
of jobs in the manufacturing sector is shrinking, while the
transportation job loss.
composition of the national labor market, the proportion
services sector continues to serve as the dominant sector for jobs. In 2010, the manufacturing sector in the Fort Smith
MSA provided over 20,000 jobs, produced $7.6 in output, and paid over $1.1 billion in employee compensation. Relative
to other sectors in the MSA, it contributed the largest share
of output as well as the second largest shares of employment and employee compensation. Since 2007, the number of
employees in this sector has declined by more than 15%,
while employee compensation and output has dropped by about 8% and 9.5%, respectively.
By contrast, the services sector in the Fort Smith MSA
provided almost 65,000 jobs in 2010, produced $6.1 billion in output, and paid over $1.7 billion in employee compensation. Between 2007 and 2010, service-sector jobs in the MSA
declined by a modest 1.5%, while employee compensation and output both rose by 13.3% and 5.5%, respectively.
Clearly, with job numbers dropping only modestly, and compensation and output both increasing, the services
sector outperformed manufacturing in the Fort Smith MSA
during the beginning stages of the recovery. However, when examining growth or decline in job numbers, employee compensation, and output across the five counties that
the majority of the burden of manufacturing as well as
Since jobs in manufacturing declined between 2007 and 2010, the total economic impact of the sector declined as well,
while the opposite was true for the service sector and retail
trade. The majority of the increase in economic impact for the service and trade sector was due to the increase in employee compensation in these sectors, and the additional consumer spending (multiplier effects) that resulted.
As mentioned in the introduction to this report, the Fort Smith MSA experienced a significant hit mid-year 2012 with the
departure of Whirlpool, a company that had once employed more than 4,000 in the region. The Center for Business
Research and Economic Development has estimated that the economic impact of Whirlpool’s loss to the region is severe.
The most recent data for this analysis do not reflect this recent event.
The Fort Smith MSA economy reflects a broad shift to
services-sector jobs, a trend that has been evident in national data for decades. However, unlike the national economy,
the regional economy continues to rely more heavily on the
contributions of the manufacturing sector. This is not likely to change any time soon.
comprise the MSA, not all counties experienced increases in
22
UNIVERSITY OF ARKANSAS - FORT SMITH COLLEGE OF BUSINESS
As we conclude this report, several things were noted from
the second largest subsector within the manufacturing sector
data examined here is from the years 2007 and 2010 -- nearly
around $800 million in GDP in 2010 and nearly 2,000
this analysis. First, it is important to keep in mind that the
two years ago. Like snapshots taken from a moving train, the scenery has continued to change since then. However, the
broader shifts in the economy observed in these data have
been going on for some time, and, to some degree, the recent recession accelerated these underlying trends.
1) While Fort Smith-MSA manufacturing has certainly taken a hit during the 2007-2010 period, it was during
2010 when the contraction began in earnest in the sector. This makes the contrast of the pre-recession boom of 2007 and the rapid decline seen in 2010 so sharp and startling.
This partially reflects the sector’s leading-indicator status
– predicting improving and declining performances for the economy before many other sectors, such as services.
The services sector trailed manufacturing during this period in terms of rate of decline, as did the government sector (always slower to react than the private sector to economic setbacks). We might expect the reverse to be true in manufacturing
were we to see 2011 data or even 2012 data, except for the “Whirlpool effect.”
is household refrigerators and home freezers, contributing
jobs. While one cannot say from these data that Whirlpool comprises all these outputs, it certainly makes up a large proportion of it. These evaporate by the end of 2012.
3) Not all manufacturing jobs are created equal, even if we replace jobs. We see that poultry processing is the
largest segment of the MSA manufacturing sector in terms of jobs, compensation, and GDP output. It is by far the largest segment of the sector. Yet, on a per-job basis the sector
is one of the weakest in the top ten listed here in terms of
compensation and GDP per employee. In contrast, number ten in the sector, iron and steel, rates the highest on both of these factors.
4) We learned from our comparison of industries in terms of per-employee compensation and output (Table 3)
that considerable variability exists among sectors. Some sectors had low per-employee compensation but relatively
high outputs and vice versa. The value index2 is an attempt
to weigh these two values in a way that creates a composite score which could be ranked.
2) The “Whirlpool effect” will rumble through the
As a result of this score, we were able to see which industries
is relatively clear from these data. In Table 4, we see that
output efficiency per employee. Scores above the average
economy for some time to come. Its more immediate impact
FORT SMITH MSA SECTOR ANALYSIS
Further Commentary
had the most valuable combination of compensation and
Components included in an index are selected to reveal relative meaning or significance of data, depending on the goal of the analyst in creating it. What defines a valuable sector? Value of a sector might just as readily include employment totals, employment growth rates, compensation, or future prospects. 2
Downtown Van Buren
CENTER FOR BUSINESS RESEARCH AND ECONOMIC DEVELOPMENT
23
might be viewed as more valuable than those below the
Health care has seen considerable growth during the
sectors with above-average scores three of them (utilities,
experienced this growth even with a recession thrown in
average. From this analysis, we see that from the list of
information services, and management of companies) have some of the strongest scores in the group but involve the
fewest number of employees (ranging from 829 to 2,037).
2007-2010 period. As we saw from Table 2, the sector has the middle. Health services provides an interesting mix of employment opportunities in terms of skill requirements, education, and compensation.
On the other hand, mining, manufacturing, wholesale trade,
It is a growth industry, in general, but prospects for long-term
have weaker index scores but much larger employment
which is dependent upon a growing economy.
transportation and warehousing, and finance and insurance numbers (ranging from 4,300 to 22,000).
A community must determine what defines a valuable job (or sector) and make investment decisions accordingly. If
creating jobs is the goal, then generating small percentage improvements in larger sectors will have greater effect in
terms of numbers of jobs than will small, though attractive, sectors. The sectors with this potential will have higher
value to the economy. If efficiency, as measured by output per employee, is important, then GDP is relevant. Growth rate of sectors is another potential measure of value. Any combination of these could be developed.
5) Health services showed considerable resilience to the downward pressure in the economy during this period.
In fact, four of the top ten services subsectors (Table 7) were from health care-related services.
growth are largely dependent upon a growing community,
While the sector did not rate high in the value index, this is an example of the limitations of the current formulation of the index. Because the health care sector includes “social”
subsector workers, which have generally lower compensation,
for example, the whole sector is pulled down on per-employee compensation.
6) Government sector growth was positive during the
period. Since government jobs are a reflection of income transfers from the private sector to the public sector, the
source of these transfers are important to the local economy.
What we found is that most growth comes from local and state jobs, thus these are more likely based on local tax transfers. If federal jobs had been the source of growth in the government
sector, then this would largely have been made up of “outside” (new) money flowing into the MSA. That wasn’t the case,
however. In essence, then, we robbed our local “Peter” to pay a local “Paul.”
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UNIVERSITY OF ARKANSAS - FORT SMITH COLLEGE OF BUSINESS
Drennen-Scott House in Van Buren, AR 7) The construction sector was not impacted equally by
experienced declines. Overall, it appears that Le Flore and
recession effects, according to these data. This was suspected
2007 and 2010.
the recession. Residential construction bore the brunt of the based on the source of the recession in the first place. Bad
mortgage loans to consumers was a key cause of the recent
recession. The relative impact of the recession on commercial and residential construction, however, was also quite large.
8) As was the case in the construction sector, the mining sector revealed considerable variation in terms of
subsector economic realities pre- and post-recession. The
oil-and-gas subsector experienced solid growth in jobs during the period, unlike quarry and coal mining. The energy sector lives up to its boom-and-bust reputation, however, as the
value of the outputs dropped significantly during the period. This subsector offers growth potential going forward, based on broader national trends in energy development.
9) As would be expected, counties varied considerably in
terms of changes overall during the period and by where
and how much the changes were felt. While these variations
Sebastian Counties were most affected by the events between ____________ The goal of these types of analyses is to unearth the relative strengths and weaknesses of an economy. Ultimately, the objective is to identify pathways to a better future for a
community – our community. This report is the first of a
series of reports which will seek to refine these preliminary
findings in order to recommend sectors and subsectors which would seem to have the greatest potential for growth for our community.
This report will be available in digital format on the CBRED
website under publications at http://uafs.edu/cob/publications. Note: The analyses in this report were done using the IMPLAN software. This well-recognized economic analysis software is proprietary and uses a dataset created and managed by the vendor. The resultant output is an estimate and will not always compare easily with datasets from the Bureau of Labor Statistics or the Bureau of Economic Analysis, though they are incorporated into the IMPLAN dataset.
are expected, the differences are notable. For example, Crawford and Franklin Counties saw a net increase in
employment during the period, while the remaining counties
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