Economic Competitiveness: Transit’s High-Value in the Knowledge Economy

The Environmental and Energy Study Institute (EESI) and the American Public Transportation Association (APTA) held an Infrastructure Week briefing about how transit investments affect the nation’s competitiveness. The world’s economies are increasingly based on knowledge and information. High-tech, knowledge-based innovation districts are increasingly shaping the U.S. economy. What are the characteristics of a knowledge-based economy, and the people who work in it? What role does transit play in the location choices of high-value technology firms, and why? Does transit help these firms attract the workforce they want?

• Alderman Robert Bauman, City of Milwaukee, WI; Transportation and Infrastructure Committee Chair, National League of Cities, announced that in February, the Milwaukee city council approved local funding for a downtown streetcar system. The streetcar system is expected to drive job creation and economic development by improving mobility in the downtown area. Service should start by 2018.
• Some citizens are skeptical of the transit project, but a hefty majority of comments have been positive. Comments on a popular city blog, Urban Milwaukee, showed 70 percent of total respondents favor the project. The feedback also revealed a large generational split in the public's support.
• A recent think-tank report suggests that 25 to 34 year-olds with a bachelor’s degree or higher level of education are increasingly moving to the close-in neighborhoods of the nation’s large metropolitan areas, fueling economic growth and urban revitalization.
• The project budget centers on the 54 million dollars in interstate cost-estimate federal money that has been sitting idle since 1991. The project was approved three years ago by the state legislature but the lack of political consensus has been a hurdle. About half of the project's total cost of $123.9 million will be covered by local funding sources.
• Linda Watson, President and CEO, Capital Metropolitan Transportation Authority (Austin, Texas), noted that Austin, along with many parts of Central Texas, is projected to double in size over the next 20 years, with 150 people moving to Austin every day. Forbes has named Austin America's #1 fastest-growing city for the fourth year in a row. Along with this growth, Austin is also seeing a significant drop in car ownership and an increase in downtown living among multiple generational groups.
• Just as the industrial economy and the post-industrial service economy each had their own transportation systems, the evolving knowledge economy will need a suitable transportation system to provide high-tech, reliable transportation to urban, tech-savvy knowledge workers.
• Many firms in the knowledge economy are choosing locations like Austin that appeal to knowledge workers. These locations offer housing options that provide walkable access to services, entertainment, shopping, and mobility choices. High-tech workers are finding a special appeal in places that are walkable and connected by transit.
• While Austin is taking measures to address its rapid growth, the city cannot do it alone: federal support is needed. Passenger fares, combined with state and local funding, pay for more than 80 percent of the $61 billion in public transit expenditures in the United States every year, but federal spending remains a critical part of paying for capital and operating expenses.
• Watson stresses, therefore, that Congress needs to pass a new surface transportation authorization before MAP 21 expires on May 31. Without such a bill, local administrations will not be able to fully invest in public transit.
• The case for investing in public transit is clear. For every $1 spent, there are $4 in economic benefits. And failing to invest also has consequences: in Austin, each driver wastes, on average, nearly 43 hours per year in traffic.
• Watson strongly urged Congress to enact a new, multi-year authorization bill that provides dedicated funding for the Highway Trust Fund, to pay for the current federal transit program and for additional investments in transit and highway infrastructure.
• Joanna Turner, Executive Director, National Association of Regional Councils, introduced NARC, a DC-based organization representing regional councils and metropolitan planning organizations.
• NARC members recognize that the economy is changing; we are in the midst of a major transformation of our economy. The Millennial generation of 18 to 34 year-olds now forms the largest contingent in the U.S. workforce, having just edged out Generation X.
• A ZipCar survey shows that for every generation prior to Millennials, cars are the most prized technological possession; for Millennials, it is computers. Millennials are driving significantly less than previous generations, and there has been a marked decline in the share of licensed drivers under the age of 35. In 1981, 46 percent of those under the age of 35 had a driver’s license. That has dropped to 30 percent, and the trends suggest a continued decline.
• These statistics and trends mean that transit-accessible locations are particularly important for knowledge-based businesses trying to recruit a millennial workforce.
• Shyam Kannan, Managing Director, Office of Planning, Washington Metropolitan Area Transit Authority, said the growth in the Washington DC area over the past 15 years has largely been driven by Millennials who are moving into downtown areas and other locations near mass transit. While representing only about five percent of the region's land surface, these growth areas captured nearly 25 percent of household growth.
• Over the past 10 years, the District has added roughly 80,000 people, the bulk of whom are Millennials. They are drawn to the District not just because of its robust economy but also because of the availability of low-cost transportation infrastructure.
• According to Kannan, "the success of the region’s economic growth is literally riding on Metro’s success." Real estate data shows that 84 percent of all construction activity in the region is taking place within a quarter mile of a metrorail station and 86 percent of office projects currently underway are located near metrorail.
• It is critically important to increase Metro's capacity in order to accommodate future population and economic growth.

Twelve short-term, flat-funding extensions for surface transportation over the last six years have degraded the nation’s surface transportation network and constrained the nation’s economy, thereby impacting short and long-term U.S. global competitiveness. There is bipartisan agreement that a long-term transportation authorization bill is an economic necessity, and diverse funding solutions are on the table. While all agree that transportation is fundamental to the economy, it has been nearly six years since the last transportation finance hearing in the House. A crisis is fast approaching as the current Transportation Bill authorization expires May 31, 2015, just at the height of the construction season for transportation projects and repairs.

High-tech, high-value industries involved in the knowledge-based economy tend to cluster to enable collaboration and labor market pooling. In addition, a growing number of “knowledge workers” prefer walkable, bikeable communities connected by transit, to minimize travel times and make commutes more productive. Community leaders have found that these traits improve the competitiveness of an entire region.

A previous APTA report showed that transit investment in the major metropolitan areas of Boston, Atlanta, Denver, Chicago, Seattle and San Francisco would provide more efficient access to jobs, enabling over 100,000 jobs and $8.6 billion in GDP by 2040.