Changes in the MarylandTransportation Sector over Time
Jobs by Skill Level by Industry120 Percent of Jobs by Skill Levels100 80 60 40 20 0 High-skill Middle-skill Low-skill
The Maryland Transportation Sector• Proportionately smaller than US, Virginia, and New Jersey;• Proportionately largest in Western Maryland, Southern Maryland and the Upper Eastern Shore;• Growth stopped in the 2000s; and• Employs a large proportion of low skilled workers.
Demand-Side Effects ofExpansion in theTransportation Sector • Direct Effects • Multiplier Effects Price S • Most effective in recession— P1 P0 like now; • Higher proportionate effects in D’ Eastern and Western Maryland Q0 Q1 Quantity D • Larger benefits for low skilled workers.
Multiplier Effects of Expenditure on Transportation
Supply-Side Effects ofExpansion ofTransportation Sector • Employment Effects – Localization economies • Property Value Effects Price S S’ – Access capitalization • Productivity Effects P0 P1 – Production costs D – Time cost savings Q0 Q1 Quantity
Importance of Maryland’s One Percent• 1.2% of land• 38.8% of all jobs• Compared to the rest of the state, Maryland’s Economic Centers feature— – High employment densities – High industrial diversity – High relative wages – High employment growth – High share of total trips – High transit share of trips – Shorter trip lengths.
Determinants of Job Growth in Maryland’s Economic Center• # firms in the same industry (+)• # firms in different industry (+)• Average firm size (-)• Property Value (-)• Average Peak Hour Speed (+)• Distance from Highway ramp (-)• Distance from Highway (-)• Distance from Nearest Bus Stop (-)• Within half mile of transit station (+)
Dollar Value of Freight Flows 17 Source: 2009 IMPLAN data, EcoNorthwest Haul-Choice Model of truck-dependent industries
There’s No Free Lunch• Raise $800 million in net new annual funding for transportation through a combination of net new revenues and bonding.
Gasoline Prices and Taxesin Other States and Nations
External Costs of Driving• The National Academy of Science estimated external damages on a per-gallon basis, with a range of 23 to 38 cents per gallon (with gasoline vehicles at 29 cents per gallon).
Who Pays the Gas Tax? • Most analysts agree: gas taxes are regressive. • Persons in the bottom half of the income distribution average 0.85 percent of income. • ―Nevertheless the magnitude of the tax burdens is moderate enough so that, when combined with a reasonably simple compensation scheme, gasoline tax increases could be implemented that would generate substantial revenues and provide efficiency benefits, yet protect the poor from undue hardship.‖HOWARD CHERNICK & ANDREW RESCHOVSKYNational Tax Journal, June 1997
Concluding Comments• Transportation plays a critical role in the Maryland economy--as everywhere else;• Transportation expenditures stimulate demand and job growth—especially during recessions;• Capital investments in transportation infrastructure can reduce costs, spur productivity, and increase property values;• Increases in gas taxes would push prices closer to true marginal social cost.