Small Town South Arkansas

Arkansas' Rural Regions Fared Better than any Southern State in Recent Recession

By Mike Randle

As a journalist who covers the American South, my first concern in an economic downturn centers on the folks who live in the rural South. They are always the first to be affected and always the last to recover in severely depressed economies. This last recession put a double whammy on the rural South. Shortly after the recession began gas prices rose to $4 a gallon. So as rural South residents lost their jobs as a result of plant closures, they had to drive further into metro areas for work and a tank of gas back then was between $60 and $80. As the old saying goes, tough times never last, but tough people do. You can't find tougher people than the people of the rural South.

Some experts will argue that economic development was invented as a result of extreme poverty in the South. We have heard that the recession of 2008 and 2009 was the worst since The Great Depression. From 1929 to 1933, unemployment in the U.S. increased from 4% to 25%. In the rural South at that time unemployment was as high as 60 percent.

Not unlike The Great Depression, The Great Recession of 2008 and 2009 hammered Small Town South. Particularly hard hit were rural areas in Mississippi, South Carolina, Alabama, Tennessee, Georgia and Florida (see adjoining chart). Collectively, those six Southern states are home to 135 of the South's 176 rural counties that, as of October 2010, had an unemployment rate of 12% or higher. 

There's only one Deep South state that doesn't have a single county with an unemployment rate of over 12% and that state is Arkansas. In fact, Arkansas only has two counties with an unemployment rate that tops 10 percent. As of December 17, when November 2010 unemployment rates were published by The Bureau of Labor Statistics, Arkansas' rate was at 7.9 percent, the fourth-lowest unemployment rate in the South.

Why are Arkansas' rural areas faring so much better than just about all of the states in South? There is no one answer to that question, yet business retention has to be a factor. According to the Bureau of Labor Statistics, Arkansas saw the third-lowest mass layoff events in the South in the first three quarters of 2010. Only Oklahoma and West Virginia had fewer.

Arkansas also has a larger agribusiness sector than any other state per capita in the South. Agribusiness accounts for one quarter of Arkansas' economy, employing over 350,000 workers in a state with less than 3 million in population. 

The fact that Arkansas is not home to a large percentage of financial services firms also helped the state in this last recession since financials bled jobs like no other industry from 2007-2009. In fact, the three industries that have hammered Florida's unemployment rate over the last three years -- financial services, construction and tourism -- are relatively low employers in Arkansas.

It has also helped that some of the state's rural centers, such as Jonesboro and Texarkana, have done well recruiting new industry to the state in the last three years. And then there's Wal-Mart, the world's largest corporation. Wal-Mart is headquartered in Bentonville, Ark. and employs over 50,000 people in the state.

Southern States: Rural Counties with 12%-plus Unemployment Rates

* As of October 2010. Source: Bureau of Labor Statistics

This article is sponsored by the Electric Cooperatives of Arkansas