THE IMPACTS

  • The U.S. Transportation Construction Industry’s
    Economic Impacts

    The firms and public agencies that design, build, maintain and manage the transportation infrastructure network in the United States—together with those who manufacture and produce the equipment, materials, supplies and services necessary for their work—comprise the U.S. transportation construction industry. Its impacts on the nation’s economy are enormous:

    • Annual Output Value—The total value of public and private transportation construction and maintenance in the United States will be over $273 billion in 2015. To put this in context, it exceeds the output of the following U.S. industry sectors: wireless communications carriers ($254 billion); food and beverage stores ($222.5 billion); insurance agencies and brokers ($219.5 billion); nursing care facilities ($171.1 billion); aircraft manufacturing ($158.3 billion) and automobile manufacturing ($131.4 billion),  to name a few.
    • Annual Contribution to U.S. output and Gross Domestic Product (GDP) — As the money invested in transportation construction moves through the U.S. economy, it generates over $508 billion in total annual economic activity for the nation— and contributes approximately $254 billion to the U.S. Gross Domestic Product (GDP).  Transportation construction activity accounts for 1.6 percent of U.S. GDP. The total economic activity generated is larger than the estimated 2015 GDP of 160 nations ranked by the International Monetary Fund, including: Thailand ($397.5 billion); Denmark ($361.3 billion); Israel ($321.2 billion); Ireland ($252.6 billion); Iraq ($240 billion) and New Zealand ($211.4 billion).
    • Creating & Sustaining U.S. Jobs—Transportation construction in the United States supports the equivalent of 3,971,108 full-time jobs. This includes 1,978,275 direct jobs in transportation construction and related-activities and 1,992,833 jobs induced, or sustained, by transportation construction industry employee, firm and agency spending throughout the U.S. economy.
    • To put the industry’s impact on U.S. employment in context, it provides more American jobs than direct employment by the nation’s colleges and universities (1,827,587 employees), motor vehicle and parts dealers (1,795,334), clothing stores (1,753,511), commercial banking (1,618,588), hotels and motels (1,488,512), real estate (1,456,754), food manufacturing (1,445,754), truck transportation (1,413,085) and legal services (1,172,339), among others.
    • Contributions to U.S. Payroll & Taxes—Transportation construction activity in the United States generates $155.7 billion annually in direct and induced wages. These workers and their employers contribute an estimated $17.5 billion each year in state and local income, corporate and payroll tax revenue and an additional $10.9 billion in federal payroll taxes.

    But that is only a small part of the picture. Without the infrastructure built, maintained and managed by the nation’s transportation construction industry, virtually all of the major industry sectors that comprise the U.S. economy—and the American jobs they sustain—would not exist or could not efficiently and profitably function.

    Dependent Employment—The simple fact is that more than 62.9 million American jobs in just tourism, manufacturing, transportation and warehousing, agriculture and forestry, general construction, mining, retailing and wholesaling alone are dependent on the work done by the U.S. transportation construction industry. These dependent industries provide a total payroll of over $2.5 trillion and their employees contribute more than $462 billion annually in state and local income, corporate and unemployment insurance taxes and the federal payroll tax.

    To learn more, get the National Report.

  • The Scope & Economic Utility of the U.S.Transportation
    Infrastructure Network

    A Dynamic National Transportation Network1

    The U.S. transportation infrastructure network includes:

    • 4,115,462 center-line miles of public roadways and bridges, including 47,575 miles of Interstate highway
    • 608,445 bridges
    • 138,565 miles of track operated by freight railroads
    • Just under 13,000 commercial and general aviation airports
    • 29,620 miles of inland and inter-coastal commercial waterways
    • 12,413 miles of subway and urban rail commuter track

    Providing Access to Jobs, Shopping, Recreation & Family Activities2

    The U.S. transportation infrastructure network provides all Americans with unprecedented access and mobility. Each year, the nation’s roads and highways handle more than 4.3 trillion highway passenger miles of travel.

    In the country’s urbanized areas, unlinked passenger trips total 9.9 billion annually. Our light, heavy and commuter rail system facilitates almost half of those trips with over 4.4 billion unlinked annual passenger trips.

    Accommodating Business Shipments3

    The U.S. transportation infrastructure network enables the shipment of over 17.5 million tons of goods and materials each year between American companies and between foreign companies and their domestic customers.  This freight has a value of $14 trillion. Nearly 76 percent of this value is shipped via trucks. The remainder is shipped by multimodal (12.2 percent) or by rail (2.9 percent), water (1.2 percent) and air (1.2 percent). Pipelines carry 5.1 percent of the value of all freight shipments.

    The U.S. Department of Transportation estimates that the value of domestic freight shipments will increase by 77 percent between 2015 and 2040, reaching $27.1 trillion .

    One of America’s Most Valuable Capital Assets4

    In 2013, the nation’s transportation infrastructure was worth $4.47 trillion. Approximately 90 percent of the nation’s transportation infrastructure is owned by federal, state and local governments. The remainder is privately owned. The highways, streets, transit infrastructure, runways and other transportation structures owned by the government are 31.2 percent of all government fixed assets.

    Investing in the Public Interest5

    Federal, state and local governments invest public dollars to finance over 91 percent of the annual cost of designing, building, managing and maintaining the nation’s transportation infrastructure. Private dollars finance the remaining nine percent, largely for the construction and maintenance of commercial railroads, driveways, private parking facilities, and streets for new housing and commercial buildings.

    1Sources include: Federal Highway Administration, Bureau of Transportation Statistics, Federal Aviation Administration and Federal Transit Administration. 2 Ibid. 3 U.S. Federal Highway Administration Freight Analysis Framework 4 U.S. Bureau of Economic Analysis
  • The Return on Investment That Keeps Recurring

    One of the most attractive benefits of major public investments in transportation infrastructure is they create tangible capital assets that are long-lived. In addition to creating jobs and generating tax revenues throughout the economy during the construction cycle, infrastructure improvements also foster and facilitate continuing economic growth over many years beyond the initial investment.

    The greatest long-term economic returns are often found in strategic investments that facilitate business activity. Infrastructure investments aimed at reducing traffic congestion or providing faster point-to-point travel, for example, can increase productivity by reducing travel time.

    The U.S. Department of Transportation has identified more than 200 major traffic bottlenecks across the nation. Mitigating or eliminating these chokepoints/jams would save billions of dollars in lost productivity and motor fuel, which would benefit the national economy. Such work would also significantly reduce unnecessary motor vehicle emissions, improving the environment.

    Investments in multi-modal new capacity for "Critical Commerce Corridors" like "truck only" lanes, intermodal connectors and freight transfer facilities would provide long-term economic benefits for many areas of the United States.

    What would an additional investment in transportation infrastructure make possible? Consider the possibilities.

    While there is no single answer to the question, "How much does it cost to build a mile of road?" some states have developed cost models to guide planning for their highway construction program. These models provide a "ballpark figure" for various kinds of highway improvements.

    The ultimate cost of a project will depend on the topography and local conditions for rural projects and the size of the urbanized area for urban work. Below are some estimates developed by FHWA in 2002 that have been updated to account for general inflation:

    • Construct a lane of highway: approximately $2 million-$3 million per mile in rural areas or $3 million-$6 million per mile in urban areas, depending on the location and terrain. More complex projects can range from $10 million to over $30 million per mile;
    • Reconstruct pavement: approximately $1 million per mile in rural and suburban areas; $1.8 million per mile in urban areas;
    • Resurface and widen lanes:  approximately $1 million per mile in rural areas; $2 million or more per mile in urban areas;
    • Re-alignment costs for pavement work in a normal area can range from $2 million in flat rural terrain to $12.5 million in mountainous areas, and an average of $7 million in urbanized areas; for complex projects the average can range from $12.2 million per mile in rural areas to $23 million per mile for urban work; and
    • Reconstructing and widening a mile of interstate: $1.8 million per mile for rural Interstates and $3.3 million for urban interstates.
  • The Challenge Ahead: A Threat to U.S.Productivity
    & Competitiveness

    There are enormous challenges facing the U.S. transportation infrastructure network that will have a direct impact on U.S. productivity and economic competitiveness in the years to come. These issues include:

    • The U.S. DOT has identified a backlog of $877 billion in highway and bridge construction projects across the country.5
    • The Federal Transit Administration estimates a backlog of nearly $78 billion to bring all transit systems up to a state of good repair.
    • Traffic congestion cost Americans living in the nation's 471 urban areas $160 billion per year in lost time, wasted motor fuel and vehicle wear and tear. This is an average of $960 per U.S. commuter
    • On average, urban commuters experience the equivalent of 42 hours per year stuck in rush hour traffic. In total, Americans spend 6.9 billion hours per year stuck in traffic.7
    • Americans are traveling more as the economy continues to grow—driving just under 3.09 trillion miles for the 12 months ending June 2015. This is above pre-recession levels of 3.01 trillion miles during the same time period in 2007-2008, before the Great Recession.8
    • The supply of infrastructure has not been able to keep up with travel demand—the number of highway lane miles grew nine percent between 1980 and 2013, while vehicle miles traveled nearly doubled, increasing 96 percent over the same time period.9
    • Nearly 16 percent of roadway miles eligible for federal aid in the country need major reconstruction, repair or rehabilitation. Nearly 24 percent of the nation's bridges are structurally deficient or functionally obsolete10
    • Real highway spending per miles traveled in the U.S. has fallen by nearly 50 percent since the federal Highway Trust Fund was established in 1956. Total combined highway and transit spending as a share of GDP has fallen by about 25 percent in the same time period to 1.5 percent of GDP today.11
    • The federal gas tax, which finances highway and transit capital investments and is not adjusted annually for inflation, has lost almost 39 percent of its purchasing power since it was last raised in 1993.
    5 U.S. DOT 2013 Status of the Nation's Highways, Bridges and Transit: Conditions and Performance. Estimate in 2010 dollars inflated using the consumer price index from the U.S. Bureau of Labor Statistics to 2015 dollars. 6 Texas Transportation Institute, 2015 Urban Mobility Report 7 Ibid. 8 Federal Highway Administration Traffic Volume Trends 9 Federal Highway Administration Highway Statistics 10 Federal Highway Administration Highway Statistics 11 Paving Our Way, Report of the National Surface Transportation Infrastructure Financing Commission, February 2009
  • Methodology and Sources

    The employment estimates for the transportation construction industry are derived from several different sources and have been updated from the original 2012 U.S. Transportation Construction Industry Profile, published in November 2012.

    The information includes establishment and employment data for sole proprietorships and businesses identified as relevant to transportation construction and maintenance for highways, bridges, airport runways and terminals, port and waterway facilities, railroads and transit. The total direct employment number for suppliers is calculated using the percentage of an industry’s output that is related to transportation construction, based on benchmark national input output tables from the U.S. Bureau of Economic Analysis, published in 2007. The private employment data is from the U.S. Census Bureau’s County Business Patterns (CBP) and Nonemployer Statistics series. Annual employment and payroll data from the CBP were calculated in July 2015.

    For an industry like construction, employment levels in the spring vary significantly from average annual employment. Using data from the U.S. Bureau of Labor Statistics Current Employment Situation, we used the CBP data to estimate average annual employment levels in 2014 using the differential between BLS CES employment levels in March 2014 and the average annual CES employment for 2014. The employment is higher for some industries and slightly lower for others. This differential was also used to adjust average annual wages from the CBP. State and local government transportation employment data is from the U.S. Census Bureau’s Annual State and Local Government Census. All payroll data has been adjusted for inflation to 2015 dollars using the consumer price index.

    Induced employment is calculated according to the same method used by the U.S. Department of Transportation Federal Highway Administration (FHWA). In the last detailed calculation of highway jobs in 2007, FHWA estimated that for every $1 billion invested in highway construction yields 27,823 jobs. Of that total, 13,861 are considered direct jobs for on-site construction and direct and indirect suppliers, and 13,962 jobs are induced. This study uses that same ratio, calculating induced jobs based on our own estimate of direct employment, as described above.

    Data on the infrastructure profile is from a variety of sources. The miles of roadway and road conditions are calculated from FHWA’s Highway Performance Monitoring System as reported in the 2013 Highway Statistics, which is comprised of data reported by the states and collected by the U.S. Department of Transportation. A road is considered in need of repair if the International Roughness Index (IRI) is above 120 for interstates or above 171 for other principal roadways. Major roadways that are measured using the Present Serviceability Rating (PSR) standard are considered “unacceptable” if the rating is less than 2.5. Interstates, freeways, rural major collectors, urban collectors and urban minor arterials are considered roads eligible for federal aid and are used for calculating the percentage of roads in need of repair.    

    All bridge information, including conditions, is from FHWA’s 2014 National Bridge Inventory. The cost to repair estimates for bridge work are required by FHWA for all structures eligible for the Highway Bridge Replacement and Rehabilitation Program. However, a state may report cost estimates for additional bridges at their discretion.

    Average commute times and mobility information is from the U.S. Census Bureau. Fatality and crash information is from the national Fatality Accident Reporting System.

    State and local tax revenues are estimated using a multiplier based on the ratio of total state and local tax collections for income, payroll and corporate taxes, published by the U.S. Census Bureau, per $1 of earnings. The federal payroll tax rate is estimated to be 7.65 percent.

    The number of airports for each state includes all civil and joint use airports as reported by the Federal Aviation Administration’s Administrator’s Fact Book Statistics.  Bus route miles include directional route-miles, defined as the “mileage in each direction over which public transportation vehicles travel while in revenue service.”  The source is the Federal Transit Administration. Railroad miles and the number of railroads and ports and waterway data are from the Bureau of Transportation Statistics. The total number of waterway facilities includes docks, piers, harbors and ports. 

    The industry’s total economic impact is based on economic multipliers including highway, street and bridge construction, other nonresidential structures, and architectural, engineering and related services from the detailed input-output tables of the U.S. Bureau of Economic Analysis. The 2015 value of total capital outlays, maintenance and services is estimated using the Federal Highway Administration’s Highway Statistics, the Census Bureau’s Value of Construction Put in Place, the Economic Census, and other public and private data sources. The definition of services is for road-related expenditures such as snow and ice removal, landscaping and enhancements, and does not include expenditures for highway patrol or administrative costs.

    The data on GDP by industry is from the U.S. Bureau of Economic Analysis. Industry output data for 2015 was estimated by adjusting the 2014 value for inflation using the consumer price index from the U.S. Department of Labor. The data for country specific GDP is from the International Monetary Fund’s World Economic Outlook Database.  The information is for current GDP in U.S. dollars.       

    For additional information, please contact:           

    Dr. Alison Premo Black
    ARTBA Senior Vice President & Chief Economist
    202-289-4434
    ablack@artba.org