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The Value of Transportation Investments

Whether it is connecting the nation’s metropolitan economic centers or ensuring that a school bus arrives safely, transportation is vital to every aspect of American life. This section addresses many of the functions transportation serves, and also analyzes how the transportation system must change with a changing nation.

 

Transportation and Employment

Transportation and employment are inextricably linked. The vast majority of America’s wage earners must travel to a job site, whether by highways or public transportation. Good transportation expands job opportunities—a benefit for workers; and expands access to the labor pool—a benefit for industry. Over 13 million workers nationwide were engaged in transportation-related employment in 2006, about 10 percent of America’s total employment of 136 million.

Highway Construction Generated Employment

Of particular importance in periods of significant unemployment is the power of transportation construction investment to generate jobs. Every billion dollars of federal highway investment supports nearly 35,000 jobs. The FHWA has developed a new computer model to estimate the employment generated by highway construction investment in three components:

  • Construction-Oriented Employment—All those jobs created by the hiring of firms to do construction or who produce direct inputs (e.g., paving materials) to the construction project.

  • Supporting Industry Employment—Includes employment in firms that provide inputs to the firms that provide direct inputs (e.g., production of steel that goes into guardrail).

  • Induced Employment—Includes the jobs generated by the consumption expenditures of the job-holders in the first two categories (e.g., their groceries, housing, and other purchases).

The model assumes state matching spending of 20 percent for federal dollars, for a total of $1.25 billion.

Freight

Freight movement in the United States has seen prodigious growth in recent decades and accommodating this increase will be a key challenge of the coming authorization legislation. Expectations are that freight movements, as measured in tons, will grow by approximately 80 percent by 2035, with air freight and air/truck freight flows forecast to quadruple. The overall value of goods shipped is forecast to nearly triple in the period, indicating a growing emphasis on the speed and reliability. While the nation is currently experiencing a recession, the economy is expected to rebound. Growth expectations for the future indicate greater distribution and consumption of goods by businesses and households.

Overall forecasts of freight flows by all modes in the period from 2006 to 2035 by value are shown in the table below. Overall values of goods shipped are expected to grow in the range of 3 to 3.5 percent per year, contrasted to the forecast of tonnage growth of around 2 percent per year. Truck flows comprise about 60 percent of total tonnage now and are forecast to maintain that share in the future, with approximately two-thirds of the domestic flows by truck.

 

International Trade

Freight has also grown as a result of increases in international trade. Between 1980 and 2005, container traffic through United States ports grew six-fold. In 2006, nearly 42 million containers were shipped. By 2020, the number of containers shipped through America’s ports could exceed 100 million. A significant part of the growth in freight shipments has been in Mexican and Canadian trade, which has increased substantially since implementation of the North American Free Trade Agreement (NAFTA) in 1994. While Canada and Mexico have for decades been our major trading partners, in 2006 trade with China surpassed that with Mexico.

Travel and Tourism

The Travel Industry Association estimated that travel and tourism in the United States generated $700 billion in 2006, with about $90 billion of that amount from foreign visitors. Travel and tourism is the number one industry in three states, as measured by employment, and among the top ten industries in all but two states.

  • Roughly $180 billion of total spending is estimated to be in transportation services.

  • Recent traffic volume data indicate that about 57 million international visitors came to the United States in 2007, up 11 percent over 2006, with roughly 18 million from Canada, 15 million from Mexico, and 24 million from overseas.

The new dynamic economies around the world want to see America. China, already sixth in the world in international tourism spending, showed a 24 percent increase in travel to the United States for the year 2007. India also has rapidly increased its spending in the United States, up 39 percent in 2007.

The new dynamic economies around the world want to see America. China, already sixth in the world in international tourism spending, showed a 24 percent increase in travel to the United States for the year 2007. India also has rapidly increased its spending in the United States, up 39 percent in 2007.

 

Future Travel Demand in a Changing Nation

  • The United States population now stands at roughly 305 million people, and has been growing in this decade at about 1 percent. We are a growing society, expanding in population, workers, and households. In contrast, Western Europe, Russia, and Japan are all expected to lose population over the next 50 years. The United States is a nation that adds a Canada each decade and our necessary responses to growth are never done.

  • The Census Bureau reported that, of the 15 million persons added in the decade as of 2005, 58 percent came from natural increase (births minus deaths), and the remainder was the product of immigration. This has significant implications for driver age population.

Growth in Mid-Sized Metropolitan Areas the Fastest

Population distribution trends in this decade indicate that midsized metropolitan areas, with populations between one and five million, are expanding faster than the national average of roughly one percent per year.

By Demographia’s count, America now has 51 metropolitan areas of over one million containing 163 million people, which is more than half of the United States population. This will need to be a focus of transportation improvements in the years ahead.

Trends in population distribution show us:

  • A highly dispersed, high-value, globally engaged, high-mobility society.

  • Skills-seeking employers in search of replacements for the retiring baby-boomer generation. Connecting distant workers with jobs will be a critical productivity-enhancing function of transportation.

  • Approximately half the United States population will live in metropolitan complexes of over 5 million. These immense “megalapolitan” areas will span a hundred miles or more. These areas will be critical to national productivity; and serving their transportation needs will be a major input to that productivity.

  • Continued “suburbanization” of people and jobs with continuing in-fill of existing areas should be expected, leading to a blurring of metropolitan and nonmetropolitan boundaries. Population growth will continue in the metropolitan areas and in their rural fringes, with households in search of affordable housing.

  • Within this overall metropolitan context, it is possible that communities will evolve with a greater emphasis on walking for some local trips. Concerns for limiting travel costs may spur more development in areas easier to serve with transit. More compact development patterns with more infill may result in shorter trip lengths.

  • Rural populations will be increasingly important to the nation’s economy; and rural development will accommodate retirees and amenities-seeking workers focused around recreation/tourism or specialized economic development features. Maintaining high-quality access for rural areas will require substantial investments in transportation.

  • Greater competition will arise between air and auto travel for intermediate trips between 250 to 500 miles. In some corridors, intercity passenger rail will play a significant role.

Commuting in Central Cities/Suburbs/Rural Areas

A reality of future metropolitan areas will be the continued growth of the suburbs—not merely in population, but in jobs and retail sales. In metropolitan areas over a million in population, where about 54 percent of the nation’s population resides, 92 percent of the population growth in this decade has been suburban.

Commuting flows already reflect many of these attributes, as shown in the figure below, but will increasingly follow this pattern as different growth rates continue. The increasingly crucial nature of the interaction of rural areas with metropolitan areas and between metropolitan areas is revealed by the figure.

 

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