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Traffic Congestion and the Economic Decline of Cities

How traffic is costing people jobs and stifling economic growth

Samuel Staley
January 5, 2012

As the economic recovery continues to lag, one of the nation's job killers, traffic congestion, is re-emerging. After a brief respite during the recession that saw travel times improve, greater travel delay costs us nearly $4 billion more now than in 2008 as more and more people find themselves once again "stuck" in traffic as the economy improves.

In a recent Reason-Rupe poll, 49 percent of Americans said traffic congestion has gotten worse in the past five years. And 54 percent said they see traffic congestion getting even worse five years from now.

Despite the public's concerns, a small but growing group of urban planners is vocalizing support for traffic congestion. They say it's a symptom of economic success. In fact, cities are now voluntarily opting to slow themselves down by embracing congestion. Salon.com writer Will Doig notes that cities are doing this by encouraging non-automobile transportation modes such as bicycling, slowing cars with "traffic calming" devices, adopting "slow zones," encouraging "walkability" and replacing expressways with "lower-speed boulevards."

And Rod King, the organizer of an advocacy group aiming to reduce London, England's speed limit to 20 miles per hour, says the "peripheral advantages" to slower cities include increased bicycling as roads become safer, less government spending since cities don't need to install speed bumps, and better air quality as less fuel is burned speeding between traffic lights. Add in lower fatality rates as cars travel more slowly and, King says, "putting on the brakes starts to look like a no-brainer."

The slow cities King and Doig are advocating are missing a critical element -- the economic repercussions of slowing people down. The time spent stuck in traffic or on a slower commute or journey is time not spent shopping, eating at home with family, playing or working.

Longer commutes limit the size, scope and depth of labor markets. Firms have less access to workers because workers generally don't look for jobs far from where they live. And it's well established among urban economists that workers will accept lower paying jobs in order to avoid too long of a commute.

This isn't just theory. Real-world data supports the negative economic impacts of rising traffic congestion. A study by economist Kent Hymel appeared in the Journal of Urban Economics which linked traffic congestion to slower employment growth. Hymel examined traffic congestion and employment growth in 85 metropolitan areas between 1990 and 2003 and found evidence of rising regional traffic congestion choking employment growth. For example, a 50 percent reduction in congestion could boost employment by 10 to 30 percent in America's top 10 most congested cities. For Los Angeles, the most congested city in the U.S. in several measures according to the Texas Transportation Institute, a 10 percent increase in regional congestion reduced employment growth by 4 percent, according to Hymel's estimates. In short, Hymel writes, "congestion has a broad negative impact on economic growth."

In Gridlock and Growth, a 2009 study published by Reason Foundation and University of North Carolina at Charlotte, Professor David Hartgen found shortening travel times to include a larger labor market would add billions of dollars to regional output and income in cities including Seattle, San Francisco, Salt Lake City, Detroit, Dallas, Denver, and Charlotte. A 10 percent reduction in travel times could boost production of goods and services by 1 percent, leading to tens of billions of dollars in higher income and output for those cities, Hartgen found.

So, does this mean the congestion enthusiasts are simply wrong?

On a regional level, yes.

Traffic congestion's localized impacts, however, may not be quite as negative for certain types of neighborhoods. The key is understanding the difference between regional and localized congestion. And different strategies for disparate mobility problems may be necessary.

John Norquist, CEO of the Congress for New Urbanism, recommends that traffic analysts distinguish between "through traffic" and traffic intended for local destinations, citing a case in Milwaukee where city officials preserved several city blocks of retail business instead of widening the road to improve traffic circulation. On the block level, congestion may be a sign of economic success, but the congestion itself still inhibits mobility and circulation. Congestion still has a negative impact. The question is whether congestion can be reduced, or even eliminated, while also preserving the features of the block that make it economically successful. On the block level, eliminating congestion may not be practical or feasible.

But what is good for the block is not necessarily good for the region. Most transportation policymakers focus on regional congestion, not the relatively isolated nodes or places that many planners envision when they consider the supposed benefits of low circulation. Congestion relief is typically focused on improving traffic flows along miles of congested roadway and intersections such as the Kennedy Expressway and "Spaghetti Bowl" in Chicago, the I-10 and I-405 in Los Angeles, the LBJ (I-635) expressway in Dallas, or the I-395 beltway around Washington, D.C. These stretches of roadway contribute to regional congestion and capture the lion's share of the negative impact for cities.

In these cases, the research confirms that traffic congestion is an economic plague on America's urban areas and regions. Speeding up traffic is a key to sustainable regional economic growth. Policymakers shouldn't lose sight of this when creating jobs and keeping America's cities productive.

Samuel R. Staley, Ph.D. is a senior research fellow at Reason Foundation.


Samuel Staley is Research Fellow


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