The first settlers of Middle Arm fished for their livelihood, but after World War I logging became increasingly important. By 1920 eight men were loggers and in the 1940s James Strong Ltd. of Little Bay Islands operated a large sawmill there. During the 1950s Bowaters began to exploit the area's timber resources and developed woods roads which in time became a major road system linking Middle Arm with the other communities in the area. Many residents have also earned their living in the mining industry, mainly at Baie Verte. A fish plant processing cod and other groundfish opened in 1980.
The original settlers of Middle Arm were mainly Methodist. The Pentecostal Assemblies arrived in the early 1930s and by 1971 over 90% of the population was Pentecostal. The Pentecostal High School in the community also served Burlington. Principal family names of Middle Arm in 1990 were Austin, Bowers, Budgell, Chipp, Janes, Mitchell, Noble, Prowse, Robinson, Saunders and Thomas.