How Traffic Congestion Affects Economic Growth
Our relationship to traffic is pretty simple: We hate it. We also loathe its awful-sounding synonyms, congestion and gridlock.
"Without failure, people find it a tremendous inconvenience," says Matthias Sweet, a researcher at the McMaster Institute for Transportation and Logistics at McMaster University. "I’ve never talked to anybody over a dinner table conversation, or making it late to a meeting, saying 'boy, I’m glad I got stuck in traffic.'"
Yet traffic's relationship to the economy of whole metro regions is much more complicated, so much so that researchers haven't entirely explained it. Congestion makes people late to work. It stresses us out before we even get there. Deliveries can't arrive on time. All that gas costs money. But many of the American cities with the worst congestion also have the largest economies. And, to a certain extent, congestion is a sign that an awful lot of people have jobs to get to, which is indisputably a good thing. (Case in point: During the government shutdown, congestion in the Northern Virginia suburbs of Washington noticeably declined, a bittersweet benefit for the region.)
Sweet likes to explain this convoluted relationship between congestion and economic growth with an analogy from the oft-analogized film The Good, the Bad and the Ugly.
"We all know that it’s pretty ugly out there when you’re stuck in gridlock, but we have reasons to believe that there might be parts of congestion that are all three of those," he says. "Congestion may be good in that it’s an indicator of active and vibrant urban places. Congestion might be bad in so far as it means that access is impeded, freight deliveries aren’t able to to happen on time, and people are hating life."
Often, we look at the first-order costs of congestion, like the monetary value of the time spent sitting in traffic. Sweet has tried to look instead at some of the larger, second-order costs in regional job growth and productivity. Sure, traffic is bad for you while you're sitting in it. But how – and when – is it also bad for the economy?
Sweet took data from 88 of the most congested metro areas in the U.S. between 1993-2008, drawing on measures of congestion from the Texas A&M Transportation Institute (yes, he's aware that TTI's methodology is often criticized, but he considers their data the best available). He looked at both a measure of travel delay (in the average annual hours of delay per auto commuter) and travel capacity (in the average daily traffic per freeway lane throughout an entire metro network).
Using data from sources like the Census Bureau and Federal Transit Administration, he also tried to control for other factors that might impact economic growth, like the skill and education of the local labor force, the reach of its transit infrastructure, or the density of jobs. This means that a city like Atlanta, for instance, might be economically hindered by freeway congestion, and meager transit service, and the spatial disconnect between jobs and workers. But Sweet's model tries as much as possible to isolate the impact of the congestion.
His results, which are a bit counter-intuitive, suggest that higher levels of congestion are initially associated with faster economic growth. But, above a certain threshold, congestion starts to become a drag on growth. Specifically, congestion seems to slow job growth when it gets to be worse than about 35 to 37 hours of delay per commuter per year (or about four-and-a-half minutes per one-way trip, relative to free-flowing traffic). A similar threshold exists when the entire road network gets too saturated throughout the course of the day (for transpo wonks, that's at about 11,000 ADT per lane).
"The thresholds make things very complicated," Sweet says. "It means that congestion, in some cities, is more good than bad. And in other cities, it’s more bad than good."
Sweet says his estimates are "as close to causal as you can imagine." That means, for uncongested cities, that a little more congestion might actually be good for their economies. But why would that be? Sometimes the cost of alleviating congestion is higher than the cost of the congestion itself. A city that has only a little bit of traffic would be wasting taxpayer money paving new lanes of highway. Until congestion reaches Sweet's tipping point, it's economically inefficient to spend resources trying to fix it. Pave new unnecessary highways, Sweet says, and you do more harm than good to the economy.
Above that four-and-a-half-minute threshold, however, something else happens: The quality of life of people making those commutes starts to decline. Now, if you have to spend a miserable hour or two five days a week just getting to work, you're either going to require higher wages to compensate you, or you're going to look for another job. And if congestion makes it harder to match the right workers to the best jobs, that's economically inefficient, too.
The good news in all of this is that Sweet found no level of congestion so awful that it entirely halts a region's job growth. All of those other variables that he controlled for – the other transportation infrastructure, the demographics, even the efficiency of the local government – matter too much. You'd need an unholy mix of disadvantages on all of those fronts to really stall economic growth.
"Detroit is a great example," Sweet says. "They have a perfect storm of a lot of things going on right now. In the study time frame, they were the only region that had any kind of sustained job losses, but that also exceeded these congestion diseconomy levels. But I don’t think you could argue that congestion in itself caused Detroit’s problems."