FBT TRANSPORTATION SUMMIT

FBT TRANSPORTATION SUMMIT The Tipping Point? JULY 17, 2009 Alan E. Pisarski

WAS IT WILL ROGERS WHO SAID: The way to solve traffic congestion is for the government to make the cars and the private sector to build the roads!

WAS IT WILL ROGERS WHO SAID: The way to solve traffic congestion is for the government to make the cars and the private sector to build the roads! WE ARE ALMOST THERE!

WHAT'S WRONG WITH THE AMERICAN PEOPLE? Why do they want what they want? Why can't they want what we want them to want? If this keeps up our government will have to elect new people!

Issues with public s choices Too much transportation spending Low income are transportation poor Transportation trade-off with housing loses Job sprawl a problem We all must come home to the center city! Is the public coerced by circumstances or just making dumb choices? Is this serious and real or just reauthorization hype?

Summing up: threats & opportunities Threats Policies to penalize Dispersed jobs Dispersed households Policies to promote Higher density Organized society Subsidies to Recentralize Promote density Opportunities Jobs moving closer to skilled workers Increase mobility Promote greater job access Live where you want work where you want

8/6/2007 9/6/2007 10/6/2007 11/6/2007 12/6/2007 1/6/2008 2/6/2008 3/6/2008 4/6/2008 5/6/2008 6/6/2008 7/6/2008 8/6/2008 9/6/2008 FUEL CHEAP NOW? Cost/ gal Fuel Efficiency Cost/ mile 440 WEEKLY GAS PRICES 1 YEAR 420 1981 2007$ 3.09 16.4 18.8 cents 2007 2.85 22.4 12.7 cents 400 380 360 340 320 300 280 260 240 4.00$ range More sticker shock? 2008 approx. 4.00 23.7* 16.8 cents 220 200

TWO REACTIONS TO $4 GAS HURRAY! Schadenfreude! Those suburbanites had it coming! At last we are at the Tipping Point Now there will be a rush to the city center of people and jobs BOO! Less VMT = social and economic interactions lost Now is the worst time to be cutting economic activity

WHY NO TIPPING POINT? Jobs are no longer in center Employers go where the skilled workers are It s easier to replace offices than houses Budget Calculation = total of Commute + Housing cost Increased transportation cost modifies the calculation; just as increasing congestion does Current decline in housing costs (and gas costs) modifies again.

% Would 5$ or 6$ gas change America? LIFE STYLE PREFERENCES WILL DETERMINE GOALS; AND TECHNOLOGY WILL RESPOND The consumer benefit of automobility is colossal think of toll costs = $4/gal Europe at $9/gal; still has traffic jams Key Effects impede access to mobility of minorities and lower income populations Rural economic stress Reduced access to broader worker pool FLEET TURNOVER RATE WILL BE KEY 50 40 % of households without vehicles 43.1 30 20 10 32.6 30.5 21.8 20 23.8 17.2 19.7 12.9 0 1960 1970 1980 1990 2000 2010 All Black Hispanic

How do we spend our transportation money? Dominant factor is acquisition, use and care of vehicles Purchased transportation (6%) = anything you buy a ticket for: air, cruise, transit (13% of 6%), taxi Tolls almost zero Un-reimbursed Cars and trucks, new Gasoline oil Maintenance and repairs Transportation Spending 2007 $$ 6% 12% 9% 4% 6% Vehicle rental, leases, licenses,oth 27% 18% 18% Cars and trucks, used Vehicle finance charges Vehicle insurance Purch transportation Consumer expenditure survey BLS

$ BY THE WAY Spending on Tolls ANNUAL TOLL EXPENDITURES PER HOUSEHOLD 20 15 10 5 Tolls home area Tolls out of town 0 METRO CITY SUBS RURAL

$ BY THE WAY Spending on Tolls ANNUAL TOLL EXPENDITURES PER HOUSEHOLD 20 15 10 5 Tolls home area Tolls out of town Auto service clubs 0 METRO CITY SUBS RURAL

Transportation spending rises as a share of spending until the highest spending fifth of the population TRANSPORTATION SPENDING AS SHARE OF TOTAL EXPENDITURES BY QUINTILE - 2007 CEX 25% 20% 15% 10% 5% 0% 18.4% 18.7% 19.3% 15.8% 16.4% About $9,000 out of $50,000 Lowest Second Middle Fourth Highest

Housing is a major cost for lowest fifth but declines with rising spending TRANSPORTATION AND HOUSING SPENDING AS A SHARE OF TOTAL EXPENDITURES BY QUINTILE 50% 40% 30% 20% 10% 0% 40.5% 36.6% 33.9% 33.2% 32.5% 15.8% 18.4% 18.7% 19.3% 16.4% HOUSING TRANSPORTATION Lowest Second Third Fourth Highest

The total share of housing + transportation declines in share with spending TOTAL OF HOUSING AND TRANSPORTATION SPENDING AS A SHARE OF TOTAL EXPENDITURES BY QUINTILE 60% 50% 40% 30% 20% 10% 0% 56% 55% 53% 53% 49% HOUSING TRANSPORTATION H+T Lowest Second Third Fourth Highest

One of the key issues is central city vs suburban vs rural spending patterns SHARES OF SPENDING FOR TRANSPORTATION 25% 20% 15% 10% 16.0% 17.9% 21.6% 5% 0% cc sub rural workers 1.3 1.4 1.3 vehicles 1.5 2.1 2.5 % renter 49% 27% 20%

Rural Wins in Housing + Transportation share of spending SHARES OF SPENDING TO TRANSPORTATION PLUS HOUSING 60% 51.5% 52.0% 50.1% 50% 40% 16.0% 17.9% 21.6% 30% % TRANS 20% 10% 35.5% 34.1% 28.6% % HOUSING 0% cc sub rural w orkers 1.3 1.4 1.3 ve hicle s 1.5 2.1 2.5 % renter 49% 27% 20%

$ Transportation spending is all about workers Household Spending for Transportation by worker level Additional Spending per Worker 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 I person no earner I person earner multi no earner multi one earner multi 2 earners multi 3+ earners 3000 2500 2000 1500 1000 500 0 I person no earner $2,681 I person earner multi no earner $2,469 multi one earner $2,292 multi 2 earners $1,935 multi 3+ earners

Why we are a rich nation Linkage between key variables 3 2.5 2 1.5 1 0.9 1 1.5 1.4 2 1.8 2.4 2 2.8 18,000 16,000 14,000 12,000 10,000 8,000 6,000 workers vehicles Transportation 0.5 0.5 4,000 2,000 0 Lowest Second Middle Fourth Highest 0 Americans are wealthy because they work Americans have cars because they work Americans spend $ on transportation because they work The ratio of highest to lowest same for trans as for all spending (about 4.8)

We are spending less on transportation this decade 20.00% 18.00% 16.00% 14.00% transportation share of spending Buying fewer and cheaper cars 12.00% 10.00% Transportation share of spending Trans share w/o gas 2000 2001 2002 2003 2004 2005 2006 2007

Transportation spending has been dropping by quintile

Housing spending took off as transportation spending declined Housing and Trans shares of Spending 54% 52% 50% 48% 46% 44% 42% Housing + Trans Share Housing + Trans Share w/o gas 2000 2001 2002 2003 2004 2005 2006 2007

The housing bubble is visible Spending Trend Index 2 1.8 1.6 1.4 1.2 1 Transportation Housing...... Gas Transportation - Gas 0.8 0.6 2000 2001 2002 2003 2004 2005 2006 2007

Significant declines in transportation spending as a share of all spending PERCENT CHANGE IN CONSUMER SPENDING 2000-2007 Veh. rental, leasing, oth. Vehicle finance charges Gasoline and motor oil Cars and trucks, used Cars and trucks, new Vehicle purchases (net outlay) trans w/o gas AVERAGE SPENDING GREW 30% Transportation Fuel oil and other fuels Electricity Natural gas Mortgage interest and charges Housing Average annual expenditures -20% 0% 20% 40% 60% 80% 100%

suburban growth continues but economy has slowed moves 35 million people moved from 2007 to 2008; down from 40 million in 2005-2006 The mover rate dropped below 12%; lowest ever recorded (started 1948) In met areas over a million pop suburban share: was 51.3% in 2000 now at 52.5% in 2008; gained 66% of the growth to 2008 Census Domestic Mobility Study 80% 70% 60% 50% 40% 30% 20% 10% 0% 2000 Population 600,000 400,000 200,000 - (200,000) (400,000) (600,000) (800,000) Suburban share of growth in Metros over 1 million 2001 2001 2002 2002 2003 2004 2005 2006 Migration Patterns Metropolitan Areas over 1 million 2003 2004 2005 2006 2007 2008 2007 2008 Total Change Historic Core Counties Suburban Counties

miles The days of living outside the factory gate are gone Of course people have the option but few choose to take advantage of it. Higher incomes yields more freedom to choose and people choose to optimize other things schools, safety, attractiveness, access to amenities We don t need to redesign our world to make it more efficient. The existing distribution of jobs housing and other destinations provides ample opportunities to be closer to destinations if we choose. There is no indication of such a preference. Work trip length increases with income! In a job-scarce environment access to jobs over greater distances is a key economic factor Work trips are increasingly minor part of people s lives. 6000 5000 4000 3000 2000 1000 0 < $10K 18 16 14 12 10 8 6 4 2 0 10K - < $20K Household travel & Income < $10K 20K - < $30K 10K - < $20K 30K - < $40K 20K - < $30K 40K - < $50K 30K - < $40K 50K - < $60K 40K - < $50K 60K - < $70K 1990 1995 2001 50K - < $60K 70K - < $80K Work trip length & income 60K - < $70K 70K - < $80K 80K+ 80K+

Why don t we live next to our work? Typical worker changes jobs every few years: so move each time? Immense friction involved. might be back! Jobs and workers are more dispersed; Smaller work destinations; no factory gates to live next to! 70% of workers live in a household with other worker(s). Whose job are we going to live next to? Expansion of job specialization spreads the range over which one can/must seek jobs Work in fast food store closest one is best Work in environmental physics is there a reactor down the street?

Jobs have been following workers to the suburbs for 40 years 17 of 18 industries decentralized 1998-2006 Only 21% of jobs within 3 miles of center in 98 metros; 45% of jobs more than 10 miles Outer parts grew 17% in employment: center by 1% Job Sprawl Revisited; Brookings Work flow in millions CIA III

COMMUTERS LEAVING HOME COUNTY TO WORK 1990 U.S. 23.9% 2000 U.S. 26.7% Va. 52% 2007 U.S. 27.4% Va. 52.5% WHY? SPRAWL? ACCESS? OCCUPATIONS? CHOICE

N Fannin Walker Murray Union Rabun Gilmer White Stephens Gordon Lumpkin Banks Floyd Hall Hart Bartow Cherokee Jackson Elbert Polk Cobb Gwinnett Oglethorpe Haralson Fulton Morgan Wilkes Lincoln Carroll Clayton Newton Greene Columbia Henry Warren Coweta Jasper Richmond Spalding Hancock Heard Troup Pike Jones Burke Monroe Washington Upson Bibb Wilkinson Jefferson Harris Talbot Screven Twiggs Muscogee Taylor Emanuel Houston Effingham Laurens Macon Candler Marion Bulloch Schley Dooly Dodge Stewart Toombs Evans Chatham Sumter Wilcox Bryan Telfair Tattnall Quitman Terrell Lee Crisp Ben Hill Appling Long Clay Worth Irwin Coffee Wayne Liberty Dougherty Tift Bacon Early Mitchell Pierce Glynn McIntosh Baker Colquitt Berrien Miller WareBrantley Thomas Lowndes Decatur Brooks Clinch Camden Grady Echols Charlton W Georgia: Counties (in yellow) with more than 25% exports to work 2000 E Ga_25per_more_2000.shp 0-25 25-100 Georgia.shp S

Transportation Makes Cities Both Smaller and Bigger Smaller in that the times to traverse distances are reduced Bigger in that a city knitted together with effective transportation acts bigger economically socially Atlanta would be 26 hamlets adjacent to each other without regional access and interaction

We also could: Go to the nearest grocer? The nearest Doctor? The nearest Day Care center? The nearest restaurant? The nearest house of worship? If you want Wonder bread it s as close as a 7/11 but if you want Russian Black bread with raisins (I know this great place in Baltimore)

Next Reauthorization Finance, Finance, Finance Stimulus package will affect decisions Tolling, congestion pricing disliked by leadership but few options More afraid of gas tax increases Is private sector still ready with $$$ Devolution by Default??

Next Reauthorization Maybe reorg DOT away from modes to functional structure = intercity; metro Metro mobility = transit, bikes, walking Intercity; tourism weak Watch private freight rail New focus on land use policies

Next Reauthorization Who will be in charge? WH? DOT? Congress? If meet September deadline then DOT s role limited DOT might prefer a CR so that they could be serious players next year -- proposed 18 month temporizing legislation to gain time Coincidentally fitting with a lame duck Congress

State of play in national legislation Financial issues Not close to increase in last cycle (40%) Needs put at 2x funding Fed Gas tax at 18.4 doesn t = 3 in 1956 Fed share of capital about 40 % Few opportunities regarding revenues Innovative Finance as alternative INNOVATIVE FINANCE AIN T MONEY

THREEWAY CONFLICTS TRANSPORTATION LEGISLATION ENERGY LEGISLATION GHG LEGISLATION Cap and Trade rebate or spend? Carbon Tax Air could catch brunt of plans after roads ALL ANTAGONISTIC TO MOBILITY

Impacts on mobility Energy; GHG = CUT VMT! Metro Mobility = Walk, Bike, Transit Coalition w/hud = use Transportation $$ for land use coercion and subsidies Emphasis on Tolling/Pricing but not market driven; pay-at-pump insurance VMT tax = tax travel based on where, when and what you are doing GOAL IS TO SUPPRESS VMT GHG IS JUST THIS YEAR S EXCUSE

The policy conflict = opposed thinking about the world Neighborhood Shorter trips Walk/bike Land use solutions Design What s freight? Accessibility Public Mass Behavior change Make it happen Globally Integrated Longer trips Broad community Choices Market forces Major role for freight Mobility Private Personalized Technological fix Let it happen

The focus on changing behavior diverts us from the real issues Enhancing economic opportunities Access to workers; access to jobs Mainstreaming minorities Safety Serving an aging population Greater freedom of mobility Infrastructure Reconstruction Reducing Congestion More!

Summing up: threats & opportunities Threats Policies to penalize Dispersed jobs Dispersed households Policies to promote Higher density Organized society Subsidies to Recentralize Promote density Opportunities Jobs moving closer to skilled workers Increase mobility Promote greater job access Live where you want work where you want

THANK YOU! Alan E. Pisarski PISARSKI@ALANPISARSKI.C0M 703 941-4257

WE HAVE NO CHOICE BUT TO CARE GREATLY ABOUT TRANSPORTATION! Transportation is all about reducing the time and cost penalties of distance on our economic and social interactions. To the extent that nations succeed in that function they enable tremendous forces of economic opportunity, social cohesion and national unity.

Average Spending for Purchased Transportation total spending = $538/yr 10% 4% 4% 13% 2% 67% airfares Icty Bus Transit Taxi Icty Train ship