The Economic Impact of Public Transit Investment

Trolley Image ConceptualAPTA announced the release of a new study showing the Economic Impact of Public Transportation Investment run by the Economic Development Research Group.  The report focused on how investment in public transportation affects the economy in terms of employment, wages, and business income.  It updates a 2009 report with the same title.

The report shows an increased investment in public transportation would represent a ratio of more than $3.7 billion per year of additional GDP per $1 billion invested annually over the next 20 years.

“This includes $2.0 billion due to the productivity effect of cost savings in the economy and $1.7 billion supported by the pattern of public transportation investment spending.  At current wage rates, this is equivalent to a ratio of approximately 50,731 jobs per $1 billion invested in public transportation.”

They arrive at these numbers by looking at the expanded service and improved mobility public transit provides.  When sustained over time, they figure that public transit facilitates such economic gains by:

  • Shifting consumer spending away from vehicle ownership and its associated costs (approximately $10,103 a year).
  • Business and household savings from reduced traffic congestion.
  • Operating cost savings from worker reliability due to reduced congestion.
  • Access to broader labor markets with  more diverse skills.

They then break these numbers into a range of spending impacts.  Capital investment, such as purchasing of vehicles, equipment, facilities, etc. are sources for jobs in the US and the analysis shows that 15,900 jobs are supported each year when $1 billion is spent on public transportation capital.  Public Transportation Operations also provide a significant source for jobs.  This report shows that 24,200 jobs are supported each year that $1 billion is spent on public transportation operations.  Analysis shows that the total combined impact of these factors equals an average of 21,800 jobs each year, made possible through public transportation expenditures.

They parse the benefits further:

“Corresponding to the 21,800 jobs is approximately $3 billion of added business output (sales volume), which provides $1.7 billion of GDP (gross domestic product, or ‘value added’_ – including #1.3 billion of worker income.  THis additional economic activity generates approximately $432 million in federal, state and local tax revenues.”

In short, long term investment in public transportation supports American jobs, provides household and business savings.  Over 20 years, the total effect on the economy could be 3.7 times the amount currently spent annually.

Read the full report here.