National Journal: Mass Transit, Buy America, and the Economy

National Journal
Transportation Insiders
January 13, 2014

To state that investing in the country’s transportation infrastructure boosts the country’s economy is almost as redundant as saying one equals one. Narrowing the statement to say that there is an economic boon to using American manufacturers for subway cars and buses only slightly reduces the redundancy. It’s still investment and it still provides local jobs

The politics of using domestic manufacturers for mass transit trends toward Democrats. Mass transit has more appeal for Democratic politicians because they generally represent the urban areas that most benefit from transit options. The Transportation Department’s “Buy America” program, which requires contractors to purchase more than half of their equipment and raw materials from U.S. manufacturers, is a concept strongly supported by unions and Democrats. There is less enthusiasm for it from conservatives who believe in free trade and a free market.

Still, as policy issues go, Buy America isn’t terribly controversial. It’s just a matter of where to draw the line.

research paper released last week by economists at the University of Massachusetts suggests that the emphasis on domestic manufacturers should be a bit tighter. The report found that when transit authorities use only domestic manufacturers for buses and railway cars, they create at least 26 percent more jobs than when they only meet the requisite 60 percent domestic threshold.

 It’s important to consider the source here. The study by U-Mass’s Political Economy Research Institute was conducted in collaboration with Jobs to Move America, a coalition of community development, labor, environmental, and civil rights groups that advocates for domestic manufacturing in transit. Organized labor, in particular, lobbies heavily on domestic manufacturing as a way of keeping jobs at home. Free traders might not be so enthusiastic.

Yet the research suggests that it isn’t Buy America, per se, that creates jobs. It’s a lot more investment. Author Jeannette Wicks-Lim carefully outlines the employment areas that are impacted by domestic manufacturing, pointing out that truly dramatic boosts in employment would only occur if the country’s current transit investment doubles.

Right now, the report says, public transit agencies spend about $5.6 billion annually on new railway vehicles and buses. If policymakers wanted to double transit ridership within 20 years—and that’s a big ‘if’—transit agencies would need to spend closer to $12.8 billion per year. Only at that investment higher level would 21,400 more full-time jobs be created, including 9,300 related manufacturing jobs.

Transit offers a host of other benefits besides job creation. It reduces congestion, pollution, and (at least for me) driving-induced blood pressure spikes. But at current spending levels, the transit-related job creation possibilities are modest, an 8 percent boost in the durable manufacturing sector’s annual growth. And that’s only if transit authorities commit to 100 percent use of domestic manufacturers.

That’s not a likely proposition, but it makes for an interesting thought exercise nonetheless.

For our insiders: What is the value of Buy America? Should the current thresholds and waiver systems be adjusted? How does mass transit contribute to the job market? Is it realistic to try to double transit ridership over the next 20 years? What are the benefits or drawbacks to such a goal? What role does transit play in the economy generally?


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