Transit has a net economic benefit

Quantifying the economic impacts and benefits of transit

Decades of economic analysis have yielded a singular conclusive finding:

The studies in Table 1 all calculate benefit-cost ratios for transit investments in urbanized areas. Benefit-cost ratios are a quantification of the economic returns that result from a financial investment. In all cases shown below, the benefit-cost ratio exceeds 1, meaning that $1 invested in transit yields more than $1 in economic benefits. Three Chicago-specific studies conducted over the past two decades all show significant benefits to the region if we were to invest in a state of good repair or expand service. Of all the studies we surveyed, the smallest expected return from investing in transit was 21%. This would be considered a hugely successful investment in the private sector.

Table 1: Transit yields a high return on investment

Economic benefits to residents, employers and communities

Transit benefits the economic health of the greater Chicago region in a variety of ways.[1][2][3] When regions step up their transit investment and transit ridership increases, businesses, households and communities experience the following types of economic benefits:

• Access to talent: Businesses gain access to larger labor markets with more diverse skills, enabled by larger public transit service areas and reduced traffic congestion.  In a very dense urban area when highways are highly congested. Residents can live in a wide variety of locations throughout the region and access well-paid jobs.
• Less traffic: Transit investments reduce roadway congestion for cars and trucks, shortening commutes and improving freight delivery.
• More disposable household income: When more people ride transit, their travel costs are lowered and funds are freed for housing, entertainment and other living expenses.
• More well-paid jobs: Investment in transit attracts more employers to the region. Companies that are looking to locate in world-class regions are increasingly seeking places with robust transit systems. Public transit is seen less as a necessary urban amenity for places to compete for workers, conventions and other economic activities.[4]
• Employment from transit system operations and infrastructure investments: The Regional Transit Authority (RTA), Chicago Transit Authority (CTA), Metra and Pace collectively employed 14,532 full-time people in 2017. These solid middle-class jobs provide a service that enables the region to function. Additionally, construction jobs are created by major transit capital investments that maintain or expand the system. For example, CTA’s new South Terminal at 95th/Dan Ryan created over 760 construction jobs.[5]

• Increased productivity: High-quality transit that speeds travel and allows workers to perform tasks other than driving during their commutes means increased morale and output.
• Higher property values: Transit investment often catalyzes residential and commercial property development. Increased property values near transit grow wealth for owners and increase tax revenue. From 2015 to 2017, new CTA stations at Morgan and Cermak-McCormick Place yielded over $2.5 billion in private land investment.[6]
• Equitable and affordable transportation: Nearly 20 percent of RTA transit riders have incomes under $25,000 per year.[7] When lower income groups have improved mobility and access, it generates savings on government services and support programs.[8]
• Reduced vehicle emissions and improved air quality[9]: Transit’s ability to reduce solo drivers and auto emissions improves the environment.
• Reduced fatalities and injuries: Trips shifted from cars to transit reduce traffic-related injuries and deaths, a significant societal cost.
• Improved health outcomes: Transit increases opportunities for active transportation like walking and biking, resulting in a healthier population.

Success breeds success

Expanded investment yields more transit usage, while minimal investment depresses the number of riders. As municipalities and regions grapple with how to keep their transportation infrastructure functioning, policy makers face tough decisions about how and where to make investments. The following chart is a simplified framework of how different levels of investment impact ridership. If our region wants more people to use transit—a highly efficient, equitable and sustainable form of transportation—we need to invest in it.

Table 2: Tending to transit