Wednesday, December 12, 2012


...or why bus, commuter rail, and Amtrak grow and car travel stalls and slides backward
If economics historically gets tagged with being the “dismal science” then transportation economics deserves placemet as the muck at the bottom of the economic swamp. For a century transportation economics mostly remained deep inside the academic walls. Moving goods mostly addressed costs and efficiencies moving a carload of freight from factory to port to a destination whether that be a coal fired electric plant or after warehousing and braking the carload down, delivery by a firm like UPS to a customer on main street.
When dealing with moving people from place to place, transportation economics mostly examined large metropolitan areas for where to put the next subway stop, bus route, or airport hub. Household transport economics started and ended from the advent of the car with the household car—the numbers of car per household, annual growth in car travel, new holiday car travel records, how high could driver licensing percentage could go among the driving age population, highway crash statistics, etc.
But beginning about 1990 a shift began, a tectonic shift with more and more statistics showing a slowing—and now even a decline—in car travel. Statistics now show a drop of young people getting drives licenses in a 15 year study 1995-2010, and in Burlington, VT a sudden abandoning by about 500 commuters to and from the Queen City for the commuter “Link” services operated by the Chittenden Country Transportation Authority (CCTA). Oh, one more statistic—nationally the median household expenditure for transportation which reached as high as 19-20 percent at times dropped to 16.0 in 2008-2009, according to the U.S. Bureau of Labor Statistics.
Behind the tectonic shifts, there appear to be two extremely powerful economic forces which together determine the economics of the household at work. And, those two powerful economic forces tell us we have not seen anything yet on the drive by households to shed high cost driving for either public transportation or just not making certain trips altogether. Those two forces are: basic wages and the cost of housing. The best measure of a nation's income and trends comes in the “average manufacturing hourly wage” data. That average wage peaked about 1970 and since 1980 dipped slightly during the interim and now sits about the same level $19.14 (August 2012, average hourly manufacturing wage for “production and non-supervisory employees”). Simply, little has changed in the income of the typical worker in manufacturing in the U.S. in over three decades.
The second major factor affecting transportation for households is the cost of housing. Here the news gets even worse. From 1980 to 2009 in constant 2000 dollars, median rent (usually a two bedroom unit) increased from $376 to $689 monthly, 83%. So, no real increase in wages for three decades and housing cost rising over 80%. What do these have to do with transportation? Or with households cutting back with expensive local transportation represented by the car and its 50-cent-a-mile typical expense (the current reimbursement Federally approved rate)? Simply there is a very strong economic force in the decision making of households to minimize the joint cost of housing and transportation, the two areas that consume about half (49% for families in 2011) of the average households. So we have experienced three decades of flat manufacturing wages and during that time an 80% increase in housing costs as measured by the median rents. Finally, the periodic national travel survey reveals that from 2001 through 2009 for every age group travel by car declined with he largest decline in miles of travel, an average of 20%, came in the under-30 age group.

Where does that leave a household who for a long time experienced the pressures of rising housing costs and no wage increases—everything else being equal. Reducing housing costs represent a far more difficult short term possibility (long term too!) to change than transportation costs. When an opportunity to more than halve the cost of a necessary trip—getting to and from work, for example—it is no surprise why a commuter between Burlington and Montpelier chooses a Link commuter bus costing 10 cents a mile versus solo driving at 50 cents a mile—a daily saving of $32 based on the 80-mile roundtrip by Link service priced at $8 and $40 for the solo drive. Finally, with these two factors at work it comes as little surprise that the growth of outer suburbs of metropolitan areas over the past two decades suddenly ended and that in many metropolitan areas the long term decline in city centers ended an in many cases central cities gained population. The housing and transportation cost relationship fully explains these two metropolitan developments.
What's more there appears little change in the future of the increasing housing-transportation cost to the household—the household faces increased housing cost over and above inflation and car travel costs doing the same. Perhaps this relationship explains why when the Boston area transit agency increased fares on bus-subway-commuter rail services by 23% early this summer there was no drop in passenger numbers. The increase in public transit fares were insufficient for a typical household commuter or transit user to switch to an alternative, such as the car, and those who used transit were not “cruising” or taking public transport just to see the countryside, they were making mostly necessary trips to work, professional appointments, school, etc.
We can expect that there will be a continued abandoning of the car for necessary trips—and even for discretionary trips—if reasonably priced service alternatives are provided—right now that is really just about any public transit, including Amtrak, which generally enjoys high single digit and double digit growth each year.

No comments:

Post a Comment