Tag Archives: economic development

Investment in Transportation is Linked to Job Creation in Minnesota Counties

A new study by the Local Road Research Board (LRRB) shows that transportation investments within a county can increase the local employment rate, while investments in trunk highways surrounding a county can also enhance county and regional employment.

The goal of this project was to quantify the relationship between transportation investment and economic development as it is represented in data showing the effect of  the investment on job creation in counties.

“The entire project was new and useful. It provided answers to questions about the benefits for counties building local roads, beyond getting traffic from here to there,”
said Bruce Hasbargen, County Engineer, Beltrami County.

Background

As federal resources for transportation development have declined, state departments of transportation and local organizations have needed to be selective in funding transportation projects, choosing those that generate the greatest local return on investment.

Transportation engineers and planners understand the positive effects new roadway projects have on local and regional economies. But to demonstrate these effects to elected officials who develop the budgets—as well as to the tax-paying public— they have needed supporting quantitative data.

Previous LRRB research has produced data linking transportation investments to increases in local property values in Minnesota counties. More analysis and information were required about the possible links between local transportation investment and other economic indicators, such as job creation.

What Did We Do?

After an initial literature search, researchers followed the methodology of the earlier study by gathering and examining data from several sources. The Minnesota County Finances Report yielded investment information. Since 1985, this report has collected information about grants and expenditures for county-managed local roads. MnDOT’s Trunk Highway Construction and Maintenance Costs provided data related to these expenditures collected from 1995 to 2012.

To determine transportation investment effects on job creation and employment, researchers used several comprehensive data sources to measure employment across the state and in counties: the Quarterly Census of Employment and Wages (which reports overall employment); County Business Patterns (which reports private employment only, based on business register data); and data from the Minnesota Department of  employment and Economic Development.

Researchers combined data on transportation investment, business patterns and socioeconomic conditions in Minnesota counties from 1995 to 2010. The data included the number of county business establishments, jobs in Minnesota counties by sectors and the amount of the annual payroll. Investigators also examined spatial (GIS-map based) data from counties.

By linking the data of county business patterns to expenditures on local roads and trunk highways, researchers performed statistical analyses and created an econometric model to address these questions:

• How does transportation investment affect the employment rate, aggregate employment (number of jobs) and annual payrolls in Minnesota counties?
• Which type of transportation investment—trunk highways or local roads—is more effective in job creation?
• Does the link between transportation investment and job creation differ between metropolitan and rural counties?

The model’s design controlled for unrelated factors that would affect employment rates, including population, age structure, population density, educational attainment and level of urbanization.

What Did We Learn?

The literature search showed evidence of connections between transportation projects and local economic development across many decades and countries, although the results were varied and not predictive.

The data analysis found that long-term transportation investments contribute to employment in Minnesota counties, including several positive and statistically significant relationships:

• A 1 percent increase in local road capital within a county is associated with a 0.007 percent increase in the employment rate in the county, holding constant various socioeconomic factors.
• A 1 percent increase in trunk highway capital in surrounding areas is associated with a 0.008 percent increase in the employment rate of a county, again holding constant various socioeconomic factors.

The impacts are significant but not substantial, which researchers say may be explained by the fact that most Minnesota counties are rural and already have relatively high employment rates. Moreover, not all areas are positively affected by these investments.

The overall findings are largely driven by rural areas, while the evidence for metropolitan and micropolitan areas is mixed.

The results suggest that in Minnesota it would be more effective to invest in rural areas compared to urban areas as far as employment growth is concerned.

“As federal transportation money decreases, state and local agencies must make difficult policy decisions with diminishing budgets. This research provides quantifiable data about the local and regional benefits of new roads, which agencies can use to promote and support transportation projects,” said Zhirong (Jerry) Zhao, Associate Professor, University of Minnesota, Humphrey School of Public Affairs.

Image of trunk highway 61
Investments in trunk highways, such as Trunk Highway 61 in northeast Minnesota, are associated with employment rate increases in the counties where improvements are built, as well as regional benefits.

What’s Next?

The results of this project provide an internal decision-making tool for local agencies. They also offer quantitative data in support of transportation investment to convey to elected officials and the tax-paying public. Although no follow-up research is currently planned, many further studies of this type are feasible. For example, studies could evaluate associative effects of transportation investment on other socioeconomic factors, such as sales tax bases, small business development, workforce specialization and public education.

This post pertains to LRRB-produced Report 2018-04, “Transportation Investment and Job Creation in Minnesota Counties,” published January 2018. The full report can be accessed at mndot.gov/research/reports/2018/201804.pdf.

Study reveals how Minnesota industries rely on transportation

Results of a newly released MnDOT research report shed new light on the role transportation plays in our state’s economic competitiveness, and highlight the unique challenges faced by some of the state’s major industry clusters.

The report, authored by Professor Lee Munnich of the University of Minnesota’s Humphrey School of Public Affairs, underscores the importance of a reliable transportation system in facilitating economic growth. Munnich examined the impact of transportation on Minnesota’s competitive industry clusters — geographically concentrated, interconnected groups of companies and institutions that share knowledge networks, supply chains and specialized labor pools.

MnDOT Research Project Engineer Bruce Holdhusen said MnDOT’s goal with the study was to discover how its investment decisions could help support job creation and economic prosperity.

“The idea is to look at the companies and industries that are already bringing money into the state, figure out what their transportation challenges are, and then use that information to see what kind of investments we could make to support their continued growth,” Holdhusen said.

MnDOT is incorporating the results of the study into its statewide freight planning. The industry clusters-approach also is being used by MnDOT in a statewide effort to talk with manufacturers, other shippers, and carriers about their transportation priorities and challenges.  MnDOT will focus on its Metro District starting this summer.  Two similar projects have been undertaken in Greater Minnesota, with a third study starting later this year. (Results from one study, in southwest Minnesota/District 8, are available online.)

The full report is available online, and examines a wide range of industries, including forest products, medical devices, robotics and processed foods. We’ve pulled out a few interesting tidbits below.

Recreational Vehicles (Northwest Minnesota)

A semi truck driving on a snowy highway.
Minnesota winters are great for snowmobiling, but not always great for shipping snowmobiles. (Photo by Dave Gonzalez, MnDOT)

As noted in the report, Minnesota’s extreme winter weather poses unique challenges to its economic competitiveness. Ironically, nowhere is this more evident than in the state’s snowmobile-producing northwest corner.

Polaris and Arctic Cat (together with smaller, more specialized firms like Mattracks) employ thousands of Minnesotans, producing a wide variety of recreational vehicles and accessories that are sold and distributed all over the world. While the companies’ snowmobiles might fare well in a blizzard, the trucks that deliver them don’t. A bad snowstorm can cause delays in both supply and product shipments; it can also prevent employees from getting to work, or even shut down a plant altogether. On a larger scale, these issues make it difficult for the companies to expand at their ideal rates.

The report notes that MnDOT’s 511 system is an important source for many companies to identify and respond to potential shipping delays. It recommends continuous improvements to the system.

The Mayo Clinic (Rochester Area)

Metal FedEx containers at an airport.
Air carriers like FedEx have limited capacity for refrigerated shipments, which creates challenges for shipping medical lab samples. (Photo by Dave Gonzalez, MnDOT)

The Mayo Clinic has become synonymous with the Rochester metropolitan area, and for good reason: it employs 37,000 residents and brings in 500,000 unique patients each year from all 50 U.S. states and 150 countries. As you might imagine, generating that much activity in a community of only 110,000 people creates some unique and significant transportation challenges.

Unlike most competitor institutions (Johns Hopkins in Baltimore, for example), the Mayo clinic is located in a relatively small metropolitan area. The local airport has an older navigation system and offers less direct commercial air service. As a result, it depends on high-quality transit and freight service to help accommodate the constant flow of visitors and supplies. The shipping of highly perishable lab samples is also a challenge, as air carriers have limited capacity for refrigeration. Finally, adverse weather conditions can affect emergency services dispatchers’ ability to send fast modes of transportation such as helicopters.

Hospitality and Tourism (Brainerd Lakes Area)

Boats docked on a lake at dawn.
Lakeside resorts a great way to enjoy Minnesota’s scenic beauty — but getting there can be a challenge. (Photo by Dave Gonzalez, MnDOT)

The oil boom in North Dakota has generated a lot of wealth in a short amount of time, and resorts like the Grand View Lodge in Nisswa would love to capture some of it by enticing new vacationers from the west. The trouble is, the area is inconvenient to reach from that direction.

A four-lane highway makes it easy for visitors from St. Cloud or the Twin Cities to visit resorts in the Brainerd area, but travelers coming from the Dakotas face a more circuitous route. Air travel options help to an extent, as visitors from even farther distances can fly into Fargo and then drive in from there. St. Cloud also has daily air service from Chicago, which helps maintain a constant flow of visitors.

Related Materials

Access Across America: University of Minnesota ranks accessibility to jobs by transit

New research from the Accessibility Observatory at the University of Minnesota ranks 46 of the 50 largest (by population) metropolitan areas in the United States for accessibility to jobs by transit.

The new rankings, part of the Access Across America study begun last year, focus on accessibility, a measure that examines both land use and transportation systems. Accessibility measures how many destinations, such as jobs, can be reached in a given time.

“This project provides the most detailed evaluation to date of access to jobs by transit,” says Andrew Owen, director of the Observatory. “We directly compare the transit accessibility performance of America’s largest metropolitan areas.”

The findings have a range of uses and implications. State departments of transportation, metropolitan planning organizations, and transit agencies can apply the evaluations to performance goals related to congestion, reliability, and sustainability. In addition, detailed accessibility evaluation can help in selecting between project alternatives and prioritizing investments.

“It can help reveal how the costs and benefits of transportation investments are distributed,” Owen says.

Top 10 metro areas: job accessibility by transit (January 2014)

  1. New York
  2. San Francisco
  3. Los Angeles
  4. Washington
  5. Chicago
  6. Boston
  7. Philadelphia
  8. Seattle
  9. Denver
  10. San Jose

The report—Access Across America: Transit 2014—presents detailed accessibility values for each of the 46 metropolitan areas, as well as detailed block-level color maps that illustrate the spatial patterns of accessibility within each area. In addition, time-lapse map videos for each area are forthcoming and new analysis of the data from the accessibility to jobs by transit rankings will be published periodically. Upcoming reports in the Access Across America series will explore more detailed aspects of transit accessibility to jobs, including accessibility to jobs of different wage levels and a comparison with accessibility by car.

In the study, rankings were determined by a weighted average of accessibility, giving a higher weight to closer jobs. Jobs reachable within 10 minutes were weighted most heavily; jobs were given decreasing weight as travel time increases up to 60 minutes. Travel times were calculated using full transit schedules for the 7:00 to 9:00 a.m. period. The calculations include all components of a transit journey, including “last mile” access and egress walking segments and transfers.

“Accessibility is the single most important measure in explaining the effectiveness of the urban transportation system,” says David Levinson, University of Minnesota civil engineering professor and principal investigator on the project.

According to Owen, accessibility can be measured for various transportation modes, to different types of destinations, and at different times of day. “There are a variety of ways to define accessibility,” Owen explains, “but the number of destinations reachable within a given travel time is the most directly comparable across cities.”

The research is sponsored by the Center for Transportation Studies at the University of Minnesota. Accessibility Observatory reports, including the analysis of job accessibility by auto published last year and interactive maps, are available on the Access Across America: Transit 2014 web page.