Monday, May 4, 2015

To Attract New Business, Invest in Mass Transit

Cities that are looking to attract businesses to their region should be sure to provide potential employees with an affordable way to access those jobs, according to a new Urban Studies report. (Note: access to the full paper requires a subscription.)

Researchers from the Center for Businesses and Economic Research at Ball State University examined Rust Belt counties with and without fixed-route bus systems and found an inverse relationship between transportation investment and employee turnover. In other words, counties that invested more in mass transit had lower employee turnover. This, in turn, means cost savings for businesses in the area, which can spend less on finding, hiring, and training new workers.

All this taken together, the report concludes that cities interested in attracting new businesses to the region should invest in mass transit, as these businesses want to expand in cities where workers can affordably and reliably get to work; this has the added benefit of helping low-income people access jobs, as these people might not be able to afford cars to get to said jobs.

While this is nothing new - it's a given that businesses need employees, and that mass transit helps employees get to work - it nonetheless provides further empirical evidence of the connection between investment in transit and economic development.

So, every city should have a bus system. This is easier said than done, though.  Imagine a city that doesn't yet operate a bus system. Starting from scratch, this city would have to make a huge capital investment in purchasing the buses they'd need to run the system. At $300,000 or more a head for diesel buses - those running on natural gas, or hybrid models, cost more - that's a pretty big expense for the type of small or mid-size city we're talking about. America's cities aren't exactly drowning in windfalls these days. And apparently it's standard to pay for the whole bus up front, rather than borrowing money and paying it back over time, likely meaning a revenue increase would be necessary to raise the required amount all at once. We all know how much everyone likes to see their taxes go up.

And lest we forget the typical bus's service life of 12 years, meaning this big investment isn't even a one-time deal. Not to mention personnel expenses to hire all the drivers, schedulers, human resources, admin, etc, etc. When you add up all these expenses, it's understandable that some of America's smaller cities may make the rational, if short-sighted decision simply to go without.

It's also not immediately obvious whom this applies to, anyway: most US cities already have some kind of bus system by now. Arlington, Texas, once (in)famous for being the largest US city without a bus system, finally got a line in 2013, and no city seems to have stepped up to take the title. Reliable mass transit for a city hoping to lure businesses to their borders has become more of a prerequisite than a selling point.

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