This section, along with the other 11 chapters on the most important parts of the Arkansas economy, are authored by Jeremy Horpedahl, an ACRE scholar and assistant professor of economics at the University of Central Arkansas; Amy Fontinelle, author and editor of hundreds of public policy works; and Greg Kaza, Executive Director of the Arkansas Policy Foundation.
This section is a chapter in a larger work – The Citizen’s Guide to Understanding Arkansas Economic Data.
What are Arkansas’s Fortune 500 companies?
The Fortune 500 companies are the largest US corporations (measured by total revenue). Collectively, they make up two-thirds of US GDP and they employ more than 28.2 million people around the globe.1 They are incorporated and operate in the United States and file financial statements with a government agency.2 Fortune magazine compiles a list of these companies annually and ranks them by total revenue.
Why are Fortune 500 companies important to Arkansans?
Let’s take one example. Arkansas has the country’s (and the world’s) largest company by revenue: Walmart. With $485.9 billion in global revenues in 2016,3 this Bentonville-based company is a powerhouse in our state. Founded in 1962, Walmart employs 2.3 million people worldwide.4 The company’s stock market capitalization (the total value of the company’s outstanding shares) is $291.3 billion, and its regular, full-time hourly associates’ average wage is $13.38 per hour.5 Here’s what Walmart did for Arkansas in fiscal year 2017:6
• employed more than 52,000 associates in the state
• collected $445.5 million in sales tax for Arkansas
• gave $64.31 million to community organizations
• operated 128 in-state retail stores where Arkansans can shop
Walmart plans to build a new corporate headquarters in Bentonville. A Walmart spokesperson told the Arkansas Democrat-Gazette that the company is making a long-term commitment to staying in the state.7
Other Fortune 500 Companies in Arkansas
Tyson Foods, ranked 82nd in the Fortune 500, brought in $36.9 billion in fiscal year 2016.8 Founded in 1935 and headquartered in Springdale, the company’s 122,000 employees9—22,900 of whom work in Arkansas10—process fresh and frozen chicken. Tyson’s market capitalization is $30.6 billion.11
Murphy USA, a national gas station and convenience store chain headquartered in El Dorado, ranked 291st with $9.6 billion in revenues.12 Founded in 1944, the company now employs 4,100 people in Arkansas and 6,600 overall, and it has a market capitalization of $2.8 billion.13
J.B. Hunt Transportation Services, which helps its customers move their freight via truck, ranked 407th with $6.6 billion in revenues.14 The company’s headquarters is in Lowell, and about 3,600 of J.B. Hunt’s 22,190 employees work in Arkansas.15 Since its founding in 1961, the company’s stock market capitalization has grown to $12.3 billion.16
Next is Dillard’s, the Little Rock-based department-store chain founded in 1938 that earned $6.4 billion in 2016 and ranked 417th.17 With a stock-market capitalization of $1.8 billion, 2,850 of the company’s 21,600 employees work in Arkansas.18
Finally, at No. 485, we have Little Rock-based Windstream Holdings, a voice and data network communications firm that brought in $5.4 billion in revenues.19 Founded in 1943 as Allied Telephone Company,20 its market capitalization is $0.4 billion and it employs 11,870 people.21 The company has undergone many changes over the years and took its current name, Windstream, in 2006, when the spinoff of Alltel’s landline business merged with VALOR Communications Group.22
Looking beyond the Fortune 500 to the Fortune 1,000 gives Arkansas two more standout firms: No. 774 ArcBest, a freight and logistics solutions provider, with $2.7 billion in revenues, and No. 972 Murphy Oil (which spun off Murphy USA in 2013),23 with $1.9 billion in revenues from oil and natural gas exploration and production.24
How does Arkansas’s number of Fortune 500 companies rank nationally?
Texas, California, and New York have the highest concentrations of Fortune 500 companies, but they also have the largest populations.25 Arkansas ranks 11th nationally in number of Fortune 500 companies per person: just above Texas and just behind New York.26 Arkansas is way ahead of California and other states, not to mention the 13 states with no Fortune 500 companies.27
Here’s another way to think of it: while Arkansas often ranks similarly to Mississippi on measures of income and poverty, Mississippi does not have a single Fortune 500 company. Arkansas has six. While neighboring Texas has a lot more at 51, Texas also has a lot more people; on a per capita basis, the states are similar (Arkansas is slightly ahead). While all of Arkansas’s neighbors other than Mississippi have at least one Fortune 500 company, they all have fewer per capita than Arkansas.
What are the trends in Arkansas’s Fortune 500 companies?
The bad news about Arkansas’s Fortune 500 companies is that they’re all old companies. As you can see from the chart on the left, in Arkansas, none of our Fortune 500 companies were founded more recently than 1962. But nationally, almost half of all Fortune 500 companies were founded after 1962. In other words, the rest of the country has been creating new, highly successful companies for the last 55 years—but for some reason, Arkansas stopped.28 Of course, there is nothing wrong with old companies. They employ people and generate income just as much as new companies. But the distant founding dates of Arkansas’s top companies indicate that Arkansas’s historic entrepreneurship may have been stifled in some way. Determining why entrepreneurship has declined is complicated, but it is notable that sales, income, and corporate tax rates have all increased in Arkansas since Walmart’s founding.
Texas, by strong contrast, has no personal income tax and a lower sales tax, and until 2008, no corporate income tax. (That tax, called the Texas margin tax, is often criticized as complex and unfair.) In that state, more than one-third of Fortune 500 companies were founded after Walmart (and that’s still true if we exclude Texas’s unique energy sector.)29 Arkansas’s burdensome occupational licensing laws—the third most burdensome in the country— are another example of policies that could be stifling entrepreneurship.30 While these laws may not harm big companies, they often do harm the smallest entrepreneurs—the companies that could be the Walmarts and Tysons of tomorrow.
Footnotes:
1 Fortune 500, “Arkansas,” http://fortune.com/fortune500/list/ filtered?statename=Arkansas, accessed October 23, 2017.
2 Ibid.; click on “see our methodology.”
3 Fortune 500, “Walmart,” http://fortune.com/fortune500/walmart/, accessed January 22, 2018.
4 Ibid.
5 Ibid; Walmart, “Our Locations,” https://corporate.walmart.com/our-story/ourlocations#/united-states/arkansas, accessed October 23, 2017.
6 Walmart, “Our Locations.”
7 Robbie Neiswanger, “Wal-Mart reveals new headquarter plans,” Arkansas Democrat-Gazette, September 15, 2017, http://www.nwaonline.com/news/2017/sep/15/wal-mart-reveals-new-headquarter-plans/.
8 Fortune 500, “Tyson,” http://fortune.com/fortune500/tyson-foods/, accessed January 22, 2018.
9 Fortune 500, “Tyson.”
10 Arkansas Next, “Where The Jobs Are (And Who Pays the Most) in Arkansas,” September 13, 2017, http://www.arkansasnext.com/post/106872/where-thejobs-are-and-who-pays-the-most-in-arkansas#Most.
11 Fortune 500, “Tyson.”
12 Fortune 500, “Murphy USA,” http://fortune.com/fortune500/murphy-usa/, accessed January 22, 2018.
13 Arkansas Next, “Where The Jobs Are”; Fortune 500, “Murphy USA.”
14 Fortune 500, “J. B. Hunt,” http://fortune.com/fortune500/j-b-hunt-transportservices/, accessed January 22, 2018.
15 Arkansas Next, “Where The Jobs Are”; Fortune 500, “J. B. Hunt.”
16 Fortune 500, “J. B. Hunt.”
17 Fortune 500, “Dillard’s,” http://fortune.com/fortune500/dillards/, accessedJanuary 3, 2019.
18 Fortune 500, “Dillard’s”; Arkansas Next, “Where The Jobs Are.”
19 Fortune 500, “Windstream Holdings,” http://fortune.com/fortune500/windstream-holdings/, accessed January 22, 2018.
20 Windstream, “History,” http://news.windstream.com/history, accessed January 3, 2019.
21 Fortune 500, “Windstream Holdings.”
22 Windstream, “History.”
23 Murphy Oil Corp, “Our History,” http://www.murphyoilcorp.com/About-Us/ Our-History/, accessed January 3, 2019.
24 Fortune 500, “Arkansas.”
25 Jeremy Horpedahl, “Make State Great,” Arkansas Democrat-Gazette, May 4, 2017.
26 Ibid.
27 Ibid.
28 Ibid.
29 Scott Drenkard, “The Texas Margin Tax: A Failed Experiment,” Tax Foundation Special Report No. 226 (Washington, DC: Tax Foundation, January 2015), https://taxfoundation.org/texas-margin-tax-failed-experiment/.
30 See Amy Fontinelle, David Mitchell, and Thomas Snyder, Unnatural Rights in the Natural State: Occupational Licensing in Arkansas (Conway, AR: Arkansas Center for Research in Economics, 2016), http://uca.edu/acre/files/2014/07/ACRE_OccupationalLicensing_InteractiveWeb.pdf; Dick M. Carpenter, Lisa Knepper, Kyle Sweetland, and Jennifer McDonald, License to Work: A National Study of Burdens from Occupational Licensing, 2nd ed. (Arlington, VA: Institute for Justice, 2017).
There are 12 main chapters in the book, each detailing and explaining and important part of the Arkansas economy. They are Median Household Income; Fortune 500 Companies; Economic Freedom; Personal Income; Wages; Poverty; Migration; Education Attainment; Government Revenue and Spending; Total Nonfarm Payroll Employment; Gross Domestic Product; Unemployment and Labor Force Participation
These 12 chapters were written by expert authors, including: Jeremy Horpedahl, an ACRE scholar and assistant professor of economics at the University of Central Arkansas; Amy Fontinelle, author and editor of hundreds of public policy works; and Greg Kaza, Executive Director of the Arkansas Policy Foundation.
If you are interested in sharing your thoughts and questions about Arkansas’s economy, we would love to hear from you. You can email ACRE at acre@uca.edu, tweet Dr. Jeremy Horpedahl, at @jmhorp, or comment on ACRE’s Facebook page.
If you would like a printed copy for your own home or office, please email acre@uca.edu with the subject line Printed Citizen’s Guide, and include your name, your organization’s name, and your address.