Oct 27, 2010
Public Transportation: Road to Job Creation?
Public spending on transportation options like trains and buses is both a beneficial enhancement of the nation's infrastructure and a cost-effective way to create jobs, according UWM economist James Peoples.
Job creation is best accomplished through major investment in public transportation projects, says University of Wisconsin–Milwaukee Economics Professor James Peoples.
Peoples appeared at the White House Oct. 5 to present his research findings on transportation, stimulus spending and job creation before members of the President’s Council of Economic Advisers and other attending economists.
“The first 10 months of stimulus spending have revealed that money invested in public transportation infrastructure projects creates twice as many jobs per dollar as investment in highway infrastructure – according to researchers from Smart Growth of America and the U.S. Public Interest Research Group. Yet, over 90 percent of the stimulus package has targeted highway infrastructure,” says Peoples.
From February to December of 2009, this spending resulted in 19,000 job-months per $1 billion spent in public transportation, compared to 10,000 job-months per $1 billion spent on highway infrastructure.
Transportation: hot topic, top priority
Transportation infrastructure of every kind is in desperate need of maintenance and repair, says Peoples, current president of the American Economic Association’s Transportation and Public Utilities Group. Despite the topic’s recent relevance – see the future of Milwaukee’s Hoan Bridge, the New Jersey tunnel project and front-page analyses of infrastructure’s role in stimulating economic recovery – Peoples says transportation infrastructure has suffered from economic neglect for several decades.
The stimulus dollars already spent on improvements to existing roads and rails are making a positive impact – to the particular benefit of businesses that ship freight (coal, soy, corn, wheat, etc.) across the U.S. via major railroad operators and interstate trucking.
But to create jobs and better transportation systems, Peoples told the President’s Council of Economic Advisers that public-transportation projects make the most substantial economic impact.
“High unemployment in the construction industry has contributed to a large pool of workers who are qualified to immediately work on the creation of all kinds of transportation structures.”
Additionally, Peoples noted that construction materials are priced competitively and federal interest rates are unusually low, making infrastructure investments more affordable for federal, state and private-industry budgets.
Unlike maintenance projects for existing road and rail networks, Peoples says public-transportation projects like bus-route expansion and high-speed rail could sustain job creation longer term, as engineers, operators, technicians and even custodial employees would be needed to maintain them.
“Transportation findings provided by Smart Growth America show public transit use exceeds population growth by threefold since 1995,” adds Peoples, “so there is a demand for more and more efficient public-transportation options.”
Build infrastructure, reform funding structure
Americans like their cars, says Peoples, who concedes that a major shift away from personal transportation and toward public transit appears to be a “tough and unlikely transition” in the immediate future.
But as gasoline supplies dwindle, fuel prices increase and individual consumers deal with more restrictive personal budgets, Peoples says that public transportation could surge in popularity and necessity.
Early economic data suggest an alternative funding structure for public transportation would be necessary to fund major projects and support salaries for a wider pool of transportation workers. This could include higher user fees, public-private partnerships and contractual arrangements to employ transit workers.
Peoples concedes that all of the above are a tough sell in a fractious political climate, where conversation and legislation around unemployment and stimulus spending make taxpayers and politicians on both sides of the aisle uncomfortable.
Yet the fiscal squeeze on existing transportation options, from reductions in bus services paired with rising user fees, to congestion on commercial railways and airline runways, is a trend that Peoples says is unlikely to reverse itself.
So in addition to the data he’s already collected, and conversations and collaborations with transportation industry insiders, Peoples says some old-fashioned optimism is in order as policymakers and taxpayers think about the future of public transportation.
“You have to believe in your location,” he says. “There’s no way we could build the New York subway system if we were called upon to build it today. But at the time it was being designed and then constructed, people believed in the city and its boroughs, and that population and business in New York City would grow. They believed there was a reason for a transportation project of that size and scope.
“We need that in the Midwest right now,” continues Peoples. “People have to believe in Milwaukee, and see the need for us to be connected to Chicago, Madison, Minneapolis.”
For more on Peoples’ research, see: “U.S. Public Transit Earnings, Employment and Privatization,” written with former UWM student, now colleague Bin Wang and colleague Wayne K. Talley in the journal Research and Transportation Economics. http://econpapers.repec.org/article/eeeretrec/v_3a23_3ay_3a2008_3ai_3a1_3ap_3a99-106.htm.
For a closer look at the economic data referenced in this article: www.smartgrowthamerica.org/.