State's jobless rate in March drops to all-time low of 3%

Employment in Arkansas improved for the sixth consecutive month in March and the state's monthly unemployment rate fell to an all-time low of 3%, state officials said Friday.

Unemployment was down from 3.2% in February, according to a report from the Arkansas Division of Workforce Services. The previous record low unemployment rate was 3.1%, set a year ago in both March and April.

"This is the lowest we've seen since measurements started in 1976," said Michael Pakko, chief economist at the Arkansas Economic Development Institute. "There's no sign of any looming recession or spike in unemployment or anything like that."

The U.S. joblessness rate also improved in March, dropping to 3.5% from 3.6% in February.

Growth in employment in Arkansas has outpaced the United States over the past two years. Payroll employment peaked in February 2020 and the state added another 58,700 jobs, according to an analysis by Pakko. Employment is up by 4.6% in Arkansas compared with a 2.1% rise in the United States overall in that period.

"That's very strong growth in employment in Arkansas," Pakko said. "For two months in a row we've seen lows in the number of unemployed."

In March, Arkansas' civilian labor force increased by 1,828 workers from February, with 4,661 more employed Arkansans and 2,833 fewer unemployed. Compared with March 2022, there were 10,118 additional workers employed in Arkansas last month.

Robust job growth is putting stress on companies, which are struggling to recruit and hire appropriately skilled workers. State officials say they have intensified training initiatives that connect directly with hiring needs.

"It's always encouraging to see that we have more Arkansans employed ... but we're also seeing a reduction in the number of individuals who are unemployed in our state," Charisse Childers, director of the workforce development department, said Friday.

"What this tells me is that companies are strong in Arkansas, which is encouraging," she said. "However, we do know there is a need for more employees. That's where the Department of Commerce and the governor's office are really focusing their efforts."

The Arkansas labor market is tighter than in the United States overall, according to an economic analysis the Federal Reserve Bank of St. Louis released this week. At the end of 2022, Arkansas' labor demand exceeded supply by 3.3%, an indication that there are roughly 103 job openings for every 100 workers in the labor force. By comparison, the United States overall was at 2.9% at year's end.

"We're hearing reports of really tight labor markets and that was the case even more so in Arkansas than the rest of the district," Nathan Jefferson, a regional economist with the Fed, said in an interview this week. Arkansas is part of a seven-state district covered by the Fed's St. Louis office.

A separate analysis conducted by Pakko notes there are 2.5 job openings in Arkansas for every person who is unemployed. That compares with 1.5 job openings in the nation.

States, educational institutions and businesses have increased training programs to find workers to fill jobs, the Fed noted.

In Arkansas, employers are being more aggressive in job recruitment, Childers said. "We are seeing more engagement from employers in terms of how they can attract employees, engage them in training programs and especially in apprenticeships," Childers said.

In February, Gov. Sarah Huckabee Sanders established the state's first-ever Workforce Cabinet to coordinate job training and development efforts of six state agencies so they can collaborate with businesses to build a pipeline of skilled workers to meet employment needs.

Mike Rogers was appointed chief workforce officer to lead the effort.

Industry-led training efforts, including apprenticeships and internships that extend to high-school students, are key to strengthening the labor pool, according to Rogers.

The state labor force participation rate, which measures the percentage of population that is either working or actively looking for work, has remained at 57.4% for the past two months. Labor force participation was 57.6% a year ago.

"Employers are seeking a lot of creative solutions to identify talent," Rogers said Friday. "Many of those solutions exist through internships, apprenticeships and reaching out to high school graduates or students even before they graduate to develop relationships that are core to their business needs."

The Workforce Cabinet's industry-led strategy is to "listen to the voice of the customer and to understand what skills, trades and abilities that Arkansas workers need to have," Rogers added. "Our response is to develop automation-ready kids."

The initiative aims to develop workers with knowledge of electrical implementation and computer science to fill jobs that require advanced skills. "That is typically done at the adult level and the concept is to move it down to high schools and career centers," Rogers said.

Listening and adapting to the needs of businesses is crucial to building a work-ready labor force, Rogers said.

"Up until this role, there was more of a push-work flow where state agencies were telling businesses what they can get," he said. "Now we're trying to start with the end in mind, so businesses and industries are telling us what the requirements are so we can almost reverse engineer training opportunities for the job seeker."

In the March unemployment report, jobs expansions were strongest in service-related industries, such as accommodations, health, restaurants, retail trade and transportation, which together added 2,900 jobs from February. The construction sector delivered 1,000 new jobs.

"It's taken some time but health services and leisure and hospitality, which were really hard hit during the pandemic, have been coming back pretty strong," Pakko said. "The construction growth has been driven by expansions particularly in Northwest Arkansas."

Year over year, the service-oriented trade, transportation and utilities sector gained 7,300 jobs; education and health services added 6,800 jobs; and leisure and hospitality expanded by 5,900 jobs.

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