The key contribution to economic growth from transportation investment comes from improvements to business productivity rather than the employment or personal income impact of the construction activity. Nonetheless, the productivity impact is hard to measure and see while the direct employment impact of construction spending is much easier to estimate. As such, most past analyses of the impact of transportation investment have focused on the direct employment and personal income impact, along with multiplier effects.
The Michigan Department of Transportation has retained the University of Michigan and Regional Economic Models, Inc. (REMI) to estimate the employment and personal income impacts of Michigan’s transportation infrastructure expenditures. The findings of the 2006 study show that “MDOT’s highway and bridge investments will support $1.83 billion of economic activity (2004 dollars), measured in terms of Gross State Product, generate $1.2 billion in personal income, and will support 30,824 jobs.” According to the Michigan Infrastructure and Transportation Association (MITA), every $100 million investment in transportation generates 4,750 jobs, $200 million in family income and $60 million in federal, state and local income taxes.
However, it is important to note again that from a macroeconomic standpoint, this is not the real purpose or benefit of transportation investment. In fact, we really want to make these costs and “job benefits” in transportation construction as small as possible by achieving very efficient construction activity and assuring we get the maximum productivity benefits from the investment with as little construction cost as possible.
At an individual and more personal level, transportation investment helps improve mobility, a key quality of life indicator. It helps save time, reduces accidents and helps residents save money. For instance, the investment in Michigan’s interstate system is estimated to have saved every Michigander $2,728 per year in safety, time, fuel and lower finished goods costs, or about $27.6 billion per year. On the other hand, the lack of sufficient investment is costing Michigan drivers a lot. The Texas Transportation Institute estimates that congestion is costing drivers $2 billion a year in lost productivity, or $955 per driver.