The Week Observed: June 26, 2015

Below is the inaugural issue of The Week Observed, City Observatory’s weekly newsletter. Every Friday, we’ll give you a quick review of the most important articles, blog posts, and scholarly research on American cities.

Our goal is to help you keep up with—and participate in—the ongoing debate about how to create prosperous, equitable, and livable cities, without having to wade through the hundreds of thousands of words produced on the subject every week by yourself.

Each issue of The Week Observed will have three parts. First, we’ll recap our own work. Next, we’ll link to three of the most interesting articles or blog posts about urban issues. Finally, we’ll include links to longer reports, either from academics, think tanks, or independent researchers, that have expanded our knowledge about cities and how to make them better.

The Week Observed is a new project, and we’d love to hear about ways about ways to make it better. Feel free to contact either of us at our email addresses below, or shoot a note over Twitter to @cityobs.


  • Joe Cortright (
  • Daniel Kay Hertz (

What City Observatory did this week

1. Portland, the Mission, and the housing affordability debate. Daniel Hertz says critics of the proposed “Mission moratorium” are right that holding back new construction will only drive up prices regionally – but argues that fear of displacement is sometimes a separate question.

2. The new trend in homeownership: Gerontrification. Joe Cortright digs into two new housing reports from the Urban Institute and Harvard, and finds an under-reported shift in homeownership towards the elderly.

3. In case you missed it, earlier this month we released our latest CityReport, “Less in Common.” In it, we find evidence that our common civic spaces are shrinking, with terrible consequences for economic vitality and opportunity.

The week’s must reads

1. The American Planning Association and the National Resources Defense Council give a good overview of the Senate’s proposed federal transportation bill, the unfortunately-named DRIVE Act. Particularly worrisome is the replacement of the popular TIGER grants program with the “AMP,” which would give even greater privilege to highway projects. Next month, Congress faces (yet another) deadline to fix the Highway Trust Fund, so look for action on the DRIVE Act next week.

2. The AP has a good overview of the Supreme Court’s landmark decision to uphold the “disparate impact” standard under the 1968 Fair Housing Act, giving a big win to affordable housing advocates and the Obama Administration’s HUD.  In many cities, the location of publicly subsidized housing has reinforced concentrations of poverty, especially for people of color.

3. Margery Austin Turner at the Urban Institute synthesizes the new evidence about place-based economic mobility from Raj Chetty, and argues that we have to redouble our efforts both to improve the quality of low-income neighborhoods, as well as to give residents of those neighborhoods the chance to move to higher-opportunity communities if we so choose. (Turner’s piece came out before this week, but it’s important, and seeing as this newsletter did not yet exist, we’re going to cheat.)

New knowledge

1. The Urban Institute’s “Headship and Homeownership: What Does the Future Hold?”, and Harvard’s Joint Center for Housing Studies’ “The State of the Nation’s Housing 2015” – which Joe built off of in the post linked above – are both worth a read on their own.

2. Smart Growth America released “Core Values: Why American Companies Are Moving Downtown.” The findings here are consistent with the trends we spotted in our City Observatory report on “Surging City Center Job Growth” earlier this year.

The report includes interviews with 40 of the almost 500 companies that have chosen to create jobs in walkable downtowns in the last five years. They find relocation decisions were driven by:

  • proximity to educated workers,
  • proximity to customers and business partners, and
  • a desire for a distinct office culture, among other reasons.

We really like that this report “shows its work”: They’ve compiled a list of the companies that moved or expanded downtown, and even created an online mapping tool so you can see the current and former locations of the firms that moved.

3. At the Urban Institute, Corianne Scally discusses a paper she co-wrote on why so many programs designed to increase the housing mobility of low-income residents don’t work as well as one might hope. At the heart of the issue: sources of instability, including job loss or other personal circumstances, that cause frequent and urgent moves.

Three more takeaways from Harvard’s “State of the Nation’s Housing” report

“The State of the Nation’s Housing 2015,” the report published last week by Harvard’s Joint Center for Housing Studies, has already garnered a lot of attention. We wrote about how it points to a new “gerontrification” of homeownership, with all the growth in non-renter households predicted to come from the 65+ age range; Emily Badger focused on the rising popularity of renting among all age groups; and so on.

But before the urbanist news cycle moves on completely, we wanted to point out three more takeaways from the long, data-rich report that we hope don’t get lost.

1. There is a national shortage of rental housing that’s pushing prices higher.

The shift to renting has led to competition over scarce apartments (and for-rent single family homes) – even as production of rental properties has picked up. JCHS reports that the national vacancy rate fell to a nearly 20-year low of 7.6% in 2014, pushing rents up by 3.4% in the same year, or twice inflation. What’s more, the rental market might be about to get another shock of demand as the economy improves and young adults who had been living with their parents decide to move out.

While the demand for apartment living isn’t evenly spread around the country, the fact that there is now a clear shortage of rental housing nationwide ought to suggest even more strongly that places where demand is most concentrated need to step up and provide the housing that people want to live in. Of course, something close to the opposite is happening: cities like San Francisco are allowing very little new housing, rental or otherwise, exacerbating their own housing crises.

2. In many communities with high concentrations of low-income households and people of color, home prices are still too low.

The financial crisis and collapse of the housing market struck a terrible blow to Americans’ household wealth – a blow that was felt most acutely by people with low incomes and people of color. As an excellent Washington Post series catalogued earlier this year, by 2013 the median black household held just $11,000 in net assets – half of which was in housing – while the median white household held $134,000.

The JCHS report finds that “in about a tenth of the nation’s zip codes…, [home] prices are still more than 35% below peak,” and more than one in four homeowners in those neighborhoods is still underwater on their mortgage. In more than half of those zip codes, people of color make up the majority of residents. Of zip codes where home prices have risen – or fallen by no more than 10% since their pre-crisis peak – only 10% are predominantly minority.

Credit: JCHS "State of the Nation's Housing 2015"
Credit: JCHS “State of the Nation’s Housing 2015”


(We should also note that Zillow’s research department has also done great work on the racial disparities of homeownership. Here’s a fantastic post from earlier this year breaking down racial gaps in home price trends by metro area.)

3. More than two million subsidized affordable homes are set to lose their subsidies in the next ten years.

Many affordable housing programs – including the largest, the Low Income Housing Tax Credit, or LIHTC – create subsidies with expiration dates. Over the next ten years, 1.2 million LIHTC homes, and about a million homes subsidized by other programs, are set to return to prevailing market prices – usually far above what’s affordable to the very low income populations they serve.

That puts many American cities in the unenviable position of trying to grow their stock of affordable housing even as their existing affordable housing starts to disappear. Over the next decade and beyond, how to solve this Sisyphean problem will have to be a major part of the housing policy debate. At City Observatory, we certainly don’t think we have a solution yet – but we’d like to see more attention brought to the issue.

Climate concerns crush Oregon highway funding bill

While headlines focus on the nearly-bankrupt federal Highway Trust Fund, state and local departments of transportation across the country are facing declining revenues, maintenance backlogs, and an insatiable desire for funding new projects. As a result, this summer, a number of states are working on new highway funding packages. So far in 2015, eight states have enacted revenue increases, but others are still struggling to do so. Michigan’s Legislature is contemplating a $3.4 billion plan that would be financed in part by cutting the state’s earned income tax credit. Minnesota couldn’t muster the support for a proposed $6 billion statewide program, settling instead for a “lights on” alternative that actually reduces statewide highway construction funds by about one-sixth.

I-5 in Portland. Credit: Doug Kerr, Flickr
I-5 in Portland. Credit: Doug Kerr, Flickr


And this past week, Oregon’s effort to fund a new transportation package imploded, after carbon reduction estimates prepared by the State Department of Transportation were shown to be exaggerated by a factor of five.

The Oregon Legislature was considering a $343 million program financed by a higher gas tax and vehicle registration fees—but a critical element in the compromise to get the needed support for the bill was a repeal of the state’s recently enacted “clean fuels” law, which would have required lower carbon content in the state’s fuels.

Advocates of the repeal (and the transportation package) had argued that provisions in the new program—including a series of investments in alternative fuel vehicles and electric vehicle charging stations, coupled with “operational improvements” in state highways—would reduce carbon emissions by as much as the clean fuels law. According to the state transportation department, measures like additional ramp meters, variable electronic speed limit signs, and travel advisory signs would lower carbon emissions.

But in dramatic testimony to the State Legislature on June 24, Oregon Department of Transportation (ODOT) Director Matt Garrett conceded that his staff had overstated carbon emissions savings by a factor of five, and that rather than saving more than 2 million tons of carbon over a decade, the measures would save only about 400,000 tons. This admission vindicated the opposition of environmental groups, and led Governor Kate Brown and legislative leaders to withdraw support for the bill.

It’s striking that environmental considerations played such a key role in the defeat of this transportation measure. There’s little question that carbon emissions from transportation are a major contributor to greenhouse gases and climate change, but policymakers in very few states have made the connection between added road building and more carbon pollution.

A critical question is whether operational improvements like ramp metering actually reduce emissions. Data cited by Oregon environmental groups cast serious doubt on that assertion. The Oregon Environmental Council produced a Federal Highway Administration report showing the evidence that transportation operations improvements reduce greenhouse gases is “largely inconclusive.” Yes, some measures may smooth out traffic flow, thereby reducing emissions, but they also lead to additional ramp idling.  What’s more, cars consume more gas per mile at higher speeds than lower ones. Some studies find that such projects actually increase net emissions.

As environmental groups like the Oregon Environmental Council and the Oregon League of Conservation Voters pointed out, even ODOT’s new, much-reduced estimate of carbon savings are extremely suspect.

The Federal Highway Administration commissioned the RAND Corporation to study the scientific literature on the efficacy of alternative investments—including ramp metering—in reducing greenhouse gas emissions. RAND’s 2012 review concluded that studies of the impact of “operations improvements” on vehicle emissions have produced mixed results, to say the least.

For example, according to RAND, one of the few evaluations of the effect of ramp metering on emissions was carried out in Oregon. The state deployed 16 ramp meters on a stretch of I-5 in and around downtown Portland in the AM and PM peaks, and estimated that overall, emissions fell by 1,000 tons per year. This implied that per meter savings (on this very heavily used stretch of urban freeway, with 1980s vintage gas guzzlers,) saved about 64 tons per meter per year. If you could duplicate that record (with today’s much more fuel efficient cars, and on roads with much lighter traffic), it would require metering 640 freeway ramps to achieve 400,000 tons of savings per year.

As it turns out, there aren’t anywhere near that many freeway ramps in the entire state. What’s more, ramp metering has already been installed on all of the most heavily traveled freeways in the Portland area, meaning that the segments that are left are likely to be much less “productive” in terms of carbon reductions.

But that’s just the visible tip of a much larger carbon emissions iceberg that this package represented. The $343 million bill earmarked $124 million dollars for a series of highway expansion projects, including widening the I-205 Freeway from 4 to 6 lanes in Portland’s suburbs. The scientific evidence on the effect of capacity increases on carbon emissions is unequivocal: providing more capacity generates “induced demand”—more traffic, longer trips, and greater sprawl—and therefore actually increases carbon emissions. As far as we can tell, ODOT’s modeling of HB 2801 made no allowance for the increased carbon emissions as a result of induced demand.

But here, the science is well established. One need go no further than Portland State University’s Transportation Research and Education Center. Two of its scientists, Alex Bigazzi and Miguel Figliozzi, in a paper published by the Transportation Research Board, showed that increasing capacity on congested roads to allow traffic to move faster and more smoothly actually increases total emissions.

As a society, we’re increasingly coming to understand that the threat of climate change is real, and we are also beginning to understand that it will necessitate a different approach to transportation investments than we’ve made in the past. It’s tempting—but simply wrong—to think that making cars move faster is a solution. This clash in Oregon is a harbinger that efforts to combat climate change and business-as-usual transportation spending are likely to be on a collision course in the years ahead.

Playing together is getting harder to do


In our CityReport, Less in Common, we explored a key symptom of the decline in social capital: Americans seem to be spending less time playing together. One major driver of this trend is a dramatic privatization of leisure space. Instead of getting together in public parks and pools (or just playing in the street), more of our recreation takes place in private backyards, private pools, and private gyms. Prior to World War II, for example, there were fewer than 2,500 homes in the US with in-ground private pools. Today, there are more than five million.

Everyone's got a pool in this southern California subdivision. Credit: Google Maps
Everyone’s got a pool in this southern California subdivision. Credit: Google Maps


While that may not seem like a big deal – isn’t it a good thing if people can swim in their own backyards? – pools are a particularly good example of the ways that the privatization of leisure space is tied up with the history of sprawl and racial segregation. When prohibiting black swimmers from enjoying public pools became illegal, many of them lost all or nearly all of their white patrons, or simply shut down. Their replacements sprouted in places where exclusion was easier: behind the fences of private yards or gated communities. The stakes were demonstrated as recently as last week, when white residents of a gated community in McKinney, Texas objected to black residents and their friends in their community pool. The police officers who showed up handcuffed, manhandled, and pulled a gun on the unarmed teens – many, if not all, of whom had a right to be there – all in the name of keeping their pool exclusive.

And what’s true of swimming pools is true of many other kinds of recreation: we’re spending more time playing apart in private places than playing together in public ones. For example, while regular exercise has become an important priority for many Americans, we increasingly exercise in private facilities, rather than public parks or community centers. The membership of private gyms has increased from 13 million in 1980 to more than 50 million today. While It’s great that more people are working out, the membership of private gyms skews heavily towards younger, wealthier and better educated demographics.

Moreover, the pattern of privatized recreation starts at an early age. Opportunities for children to serendipitously engage in unstructured (and largely unsupervised) play have diminished.

One of the iconic images of recreation in the U.S. is the pickup game, whether it’s half-court hoops on a public playground, or baseball in the proverbial sandlot, or soccer on a grassy field. Whoever shows up can play, and the games have their own, largely self-organizing and self-regulating character. While there’s no published data on this kind of informal activity,the privatization of recreational space means these games are harder and harder to play – and when they do happen, the players are more likely to be of the same racial or economic background. Even participation in organized sports has been in decline. The number of 6- to 17-year olds participating in the four most popular team sports – baseball, basketball, football and soccer – has declined 4 percent nationally in the past five years.

Credit: Shad A Hall, Flickr
Credit: Shad A Hall, Flickr


More generally, it has become increasingly rare for younger children to walk or cycle away from their homes and away from constant parental supervision. The few parents who promote greater independence are treated as eccentric for raising “free range kids.” Recently, in the suburbs of Washington DC, parents were taken to court for letting their children ages 6 and 10, walk three blocks to a local park unaccompanied. The combination of physical distance and paranoia limit the amount of time kids spend unsupervised in the public realm.

And helicopter parents don’t have helicopters – they rely on SUVs to haul children from place to place. The result is that parents spent a not inconsiderable amount of time and money transporting children to and from school, play dates and other social activities – the kinds of trips that in earlier times (and denser communities) kids could have taken on their own. Todd Litman estimates the “chauffeuring burden” accounts for between 5 and 15 percent of all vehicle travel, and imposes costs greater than the high end estimates of congestion time loss. Plus, the added time spent traveling in private cars is time spent cocooned in a vehicle, out of the public realm.

In sprawling suburbs, the closest park or schoolyard may be too far away to walk or bike. The tendency toward building larger elementary and secondary schools, coupled with lower residential densities means schools are further from the average household (even though they may have ample open space).

The average size of an elementary school has increased about 20 percent in the past two decades, chiefly as older, smaller schools are closed, and newer schools tend to be larger.

In 1982 the average elementary school had 399 students, but by 2010 had grown to 470.

This pattern has been reinforced by policies that make it hard to retain or renovate small schools, and which produce bigger schools on the urban fringe. Nationally adopted standards for school size mandate that new elementary schools have a minimum of ten acres, with the result that fewer, bigger schools are built, typically on the periphery of communities where large sites are available, and where land is cheap.

The lessened ability of kids to bike and walk to school, and to travel independently and their growing dependence on adults to be their chauffeurs, chaperones and social directors has been identified as a major contributing factor to the rapid growth of childhood obesity. But it seems equally likely that inactivity and isolation is also contributing to the widespread malady of decreased social capital.

As one old saying goes, “the family that plays together, stays together.” The same might well be said of communities. Looking for opportunity to create more ways that we can play together in the public realm is likely to be an important strategy for reducing the erosion of our shared social capital.

The new trend in homeownership: Gerontrification

Two major reports in the last week have painted a stark picture of the future of the US housing market. Last week’s report from the Urban Institute predicted that the decline in homeownership over the past seven years will be “the new normal.” Then, on June 24, Harvard’s Joint Center on Housing Studies released its own report, “The State of the Nation’s Housing 2015,” echoing many of the same themes.

The bottom line: the single family homeownership market is not coming back for the foreseeable future. And the reasons are as much about demographics as economics.

Credit: Christopher Sessums, Flickr
Credit: Christopher Sessums, Flickr


RENTING UP; OWNING, NOT SO MUCH. As we’ve noted at City Observatory, the shift to renting has been strong over the last several years: since 2007, the number of rental households in the US has increased by 17 million, while the number of owner occupied homes has declined.

The two studies agree that this shift to renting will continue for the foreseeable future. According to the Urban Institute, 13 million of the 22 million net new households formed between 2010 and 2030 will be renters. For its part, the Joint Center for Housing Studies predicts that a majority of those under 30 today will form rental households during the decade ahead.

This trend toward rental housing has become well-established in the past few years. According to the Harvard report, The overall homeownership rate has fallen from a peak of 69% during the housing bubble, to 64% in 2014. The decline since 2007 has erased all of the gains in homeownership of the past two decades, and the national homeownership rate is now down to the same level it was in the early 1990s. (So much, apparently for the much ballyhooed efforts to create an ownership society through housing).

As the Joint Center on Housing Studies (JCHS) report makes clear, there are lots of economic reasons for these trends. Most importantly, real inflation-adjusted household incomes are below the levels they were in the 1990s. Households with less income can afford less housing, and as a result are less likely to be homeowners. Also, today’s young adults are much more likely to be burdened by student debt: The JCHS reports that 41% of 25-34 year old renters have student debt, up from 30% a decade ago, and that debt averages more than $30,000 – up 50 percent from a decade earlier. Finally – and for very good reasons – lending standards are much tougher today, and households with weak credit can’t qualify for home loans as easily as they could in the era of NINJA (no income, no job or assets) lending during the housing bubble. But the growth in renting isn’t just a story of relatively impoverished millennials: JCHS shows that renting levels are up for those 45 to 64, and that households in the top half of the income distribution – which are far more likely to own – accounted for 43% of the growth in the rental housing occupancy.

THE “GERONTIFICATION” OF HOMEOWNERSHIP. The other major implication of these two studies hasn’t gotten much attention. The aggregate statistics conceal deeper changes in the pattern of homeownership by age. Over the next two decades, the typical homeowner will be older than today – much older, because all of the net growth in homeownership will be among households whose head is 65 years or older – and the number of homeowners under 45 will decline. The Urban Institute’s estimates are that by 2030, this will produce a pronounced “generation gap” in housing tenure: 34 million homes owned by those over 65 (up from 15 million in 1990) and just 22 million homes owned by those under 45 (down from 24 million in 1990).

Much of the gain in home ownership during the 1990s and early 2000s was the product of demographic forces – the Baby Boom generation maturing fully into its maximum home-owning years. As the JCHS data show, the only age cohort that has higher home ownership today than 20 years ago is those 65 and over. For all age groups under 65, homeownership rates are 3 to 5 percentage points lower today than they were in the early 1990s.

The Urban Institute predicts that the trend toward older homeowners will continue through 2030. All of the net increase in homeownership from 2010 through 2030 will be in households aged 65 and over. The net increase will be about 9 million more homeowners between 2010 and 2030.  Homeowning households aged 65+ will increase by 13.6 million rover those two decades. The number of homeowners aged 45 and under will decline by almost a million between 2010 and 2020, and rebound only about 360,000 over the following decade. Thus there will be no NET increase in homeownership by young homeowners over the two decades 2010-2030.



The trends in homeownership are heavily driven by the aging of the US population.  Nearly all of the growth in households between 2010 and 2030 will come in households headed by seniors, according to the JCHS projections. Households headed by those under 45 will increase by about 5 million through 2030; households with heads aged 45 to 64 will be nearly flat; and the number of households headed by those 65 and older will increase by about 21 million (JCHS, Table 6).

Rather than gentrification, maybe we need to be thinking about “gerontrification.” The shift in the age profile of the typical homeowner and the growing generation gap between renters and owners is likely to pose big challenges to housing policy.

Will older homeowners want to age in place? Will we experience a housing size and tenure mismatch, with smaller and older households owning homes and larger and younger households primarily renting? These two studies just scratch the surface of these important questions. Stay tuned: these are interesting times for the housing market.

Show Your Work: Getting DOT Traffic Forecasts Out of the Black Box

  • Traffic projections used to justify highway expansions are often wildly wrong
  • The recent Wisconsin court case doesn’t substitute better models, but it does require DOTs to show their data and assumptions instead of hiding them


The road less traveled:  Wisconsin Highway 23

There’s a lot of high-fiving in the progressive transportation community about last month’s Wisconsin court decision that stopped a proposed highway widening project. The reason? The state Department of Transportation (DOT) used inadequate traffic projections to justify the project.

The plaintiffs in the case were in a celebratory mood. Steve Hiniker, Executive Director of 1000 Friends of Wisconsin said “We have known for years that the state DOT has been using artificially high traffic forecasts to justify a number of highway expansion projects.  Now a federal court has validated our claims.” Over at CityLab, Eric Jaffe calls it a court-ordered vindication of the peak car argument: “How Wisconsin residents cried peak car and won.

But while the decision is hugely encouraging, it’s important to understand that 1,000 Friends of Wisconsin v. US DOT wasn’t a conclusive win for better traffic projections — the case was actually decided on different, much narrower grounds.

The federal district court ruling is really a take down of the opaque “black box” approach most state DOTs use in transportation forecasting. The project in question was a 20-mile long widening–from two lanes to four–of a stretch of state highway 23 between Sheboygan and Fond du Lac.  The environmental group sued, charging that the Environmental Impact Statement prepared to justify the project and evaluate alternatives was based on faulty and outdated forecasts that overstated future traffic levels.

The court made it clear that it wasn’t in the business of adjudicating competing claims about the reasonableness of models or modeling assumptions.  And it didn’t rule that 1,000 Friends of Wisconsin’s arguments about declining traffic or peak car or lower population projections trumped or invalidated Wisconsin DOTs modeling.  What the court did do, however, was say that WisDOT failed to explain how its model worked in a way that the public (and the court) could understand.  Essentially, the court ruled that Wisconsin DOT couldn’t use a “black box” to generate its projections — instead it had to present its data, assumptions and methodology in such a way that the public and outsiders could see how the results were produced.  Judge Lynn Adelman wrote:

“In short, a reader of the impact statement and the administrative record has no idea how WisDOT applied TAFIS and TDM to produce the actual traffic projections that appear in the impact statement.”  (page 12)

The court was unpersuaded by vague and repetitive blandishments offered in defense by the DOT about techniques and the mechanics of modeling methodology.  The court specifically found that the DOT staff failed to explain how they arrived at the projected traffic volumes that appear in the impact statement, which seem to conflict with the recent trend of declining traffic volumes. And it found that:

“. . .  the defendants repeated and elaborated on their general discussion of how TAFIS and TDM work and did not explain how those tools were applied to arrive at the specific traffic projections that appear in the impact statement.” (page 13).

It appears that the DOT’s position foundered over its inability to answer very basic questions about how a decline in population forecasts and a decline in recorded traffic levels squared with its modeling of future traffic levels.  The Wisconsin DOT didn’t explain to the court’s satisfaction why it was sticking with the same level of traffic predicted for 2035, when population growth rate forecasts–which were supposedly a key input to the model–were reduced by two-thirds.

As a legal matter, the court went out of its way to state that it wasn’t about to second guess the methodology and assumptions chosen by the state DOT.  Here the court ruled, as other courts have, that unless the methodology is “irrational,” it’s not in violation of the National Environmental Policy Act (NEPA).

While it falls short of  a legal vindication of the “peak car” argument, requiring DOTs to open up their “black box” forecasts is still likely to be a devastatingly important ruling.  Official DOT traffic forecasts are frequently presented as the product of a special kind of technical alchemy.  While model results are clothed with the illusion of precision (“this road will carry 184,200 cars in 2035”), there’s really much, much more ambiguity in the results.  To pass muster under NEPA, the process used for calculating future traffic levels will now likely be laid bare.

Those who’ve worked with traffic models know that they’re clumsier, clunkier and more malleable than the precise, hyper-technical image that traffic engineers (or politically appointed transportation agency officials) typically paint of them in the introductions to environmental impact statements.  The numerical outputs from computer simulations, for example, are often subjected to “post-processing” — the preferred euphemism for manually changing predicted traffic levels based on the judgment of the modeler (or the desires of the modeler’s client.)

And there’s lots of room for manipulation. In his book, “Toll Road Traffic and Revenue Forecasts” Rob Bain, a pre-eminent international expert on traffic forecasting, lists 21 different ways modelers can inflate traffic forecasts and concludes “it is perfectly possible to inflate the numbers for clients who want inflated numbers” (page 75).

In practice, DOTs have often used traffic forecasts as a sales tool or a rationalization for new projects.  Once the traffic modeling generates a sufficiently high number to justify additional capacity, the agencies stick with it in spite of evidence to the contrary.  For the proposed $3 billion Columbia River Crossing between Oregon and Washington, the two state DOTs stuck with exaggerated vintage 2005 forecasts in a final environmental impact statement issued in 2013; ignoring actual declines in traffic that had occurred in the intervening years.  And as in Wisconsin, they offered no explanation as to why the modelling didn’t change.

For years, we’ve known that DOT traffic forecasting models are frequently wrong and that they regularly over-estimate future traffic and congestion.  Multi-billion dollar projects are often predicated on traffic forecasts that fail repeatedly to be borne out by reality.  The Sightline Institute showed that for Washington’s SR-520 floating bridge project, the state always forecast a big increase in traffic, even though traffic levels continually declined.


The political acceptance of these kinds of errors is rampant in the industry.  The State Smart Transportation Institute analyzed an aggregation of state traffic forecasts prepared annually by the US DOT showed that the 20-year projections overestimated future traffic volumes in every single year the reports could be compared against data on actual miles driven by Americans.


A big part of the reason these flawed forecasts have continued to be made–and not corrected–is that the forecasting process is opaque to outsiders.  The federal district court’s ruling in 1000 Friends of Wisconsin v. U.S. DOT should make it much more difficult for highway builders to continue justifying projects based on this kind of “black box” modeling. As the old saying goes:  sunlight is often the best disinfectant. Greater transparency in the data and assumptions that underlie traffic forecasts could lead to much wiser decisions about where to invest scarce transportation resources.



Portland, the Mission, and the housing affordability debate

It would be tempting to call the eight hours of testimony over a proposed moratorium on housing construction in San Francisco’s Mission neighborhood, and the SF Board of Supervisor’s subsequent failure to approve that moratorium earlier this month, a climactic moment in the battle of two very different perspectives about affordable housing. Tempting, but almost certainly wrong, since the vote was hardly the end of the housing crisis in San Francisco or elsewhere. More and even bigger battles probably await.

In the interim, two West Coast writers have taken another shot at convincing a sometimes skeptical audience that blocking new development is not the path to affordability. At Portland’s Willamette Week, Aaron Mesh takes on what he calls “five myths about Portland apartments.” (City Observatory’s own Joe Cortright makes an appearance, too.) Most importantly, he points out that new apartment buildings are a symptom, rather than a cause, of higher rents. Ultimately, both are a result of the fact that many more people – and more people with more disposable income – want to live in central Portland than did ten or twenty years ago.

Over at Planetizen, Reuben Duarte goes into much more detail about the relationship between new apartments and rising rents, both in theory and in reality. Because rents will grow as long as there are people who are willing and able to pay more, simply preventing new construction can’t bring down prices. In fact, as the number of people who want to live in places like the Mission grows, a smaller and smaller percentage of those people will actually be lucky enough to snag an apartment. And how will the lucky ones manage it? By offering to pay more, of course. Duarte’s own, more nuanced explanation of this dynamic – using the metaphor of baseball tickets – is very much worth a read.

He also points out that this all isn’t just economic theory; it’s also reflected in what’s actually happening. Since the 1970s, coastal California, from the Bay Area to Los Angeles, has seen dramatically slower housing growth than the United States as a whole – even as the region’s population has boomed. This tracks with the Mission’s experience in particular, which saw fewer than 100 new apartments built in the year prior to the proposed moratorium. If low levels of construction were associated with affordability, you’d expect the California coast, and the Mission, to be models of low-cost housing. Instead, of course, it’s entirely the reverse.

Credit: CA Legislative Analyst's Office, "California's High Housing Costs: Causes and Consequences"
Credit: CA Legislative Analyst’s Office, “California’s High Housing Costs: Causes and Consequences”


(This also seems like a good place to make the necessary caveat that San Francisco in particular, with its combination of extreme anti-growth laws and overwhelming demand, is a highly unusual case in American housing policy. Its high profile can distract from the more common problem of increasing poverty. On the flip side, it puts problems that exist in several other major American cities in much lesser forms in heightened relief, and makes something of a worst-case scenario for a future in which those places, too, have failed to head off this kind of massive shortage.)

I would, however, also like to add something to both of these pieces. From a big-picture perspective, Mesh and Duarte are right that new construction can slow or reverse the growth in regional housing prices, and restricting construction will tend to exacerbate that growth. But people don’t live their lives from 30,000 feet; they live them on the ground, which is why these ideas often seem so counterintuitive. More importantly, the people who packed the SF Board of Supervisors’ meeting to testify in favor of the moratorium don’t necessarily care about the medium-to-long-term trends in regional housing prices; they care about whether their own rents, and those of their family and friends nearby, will increase by more than they can afford in the next year, six months, three months.

Which means that arguments about supply and demand, though important, aren’t necessarily addressing their immediate needs and fears. Cities like Portland and San Francisco need better housing growth policy, it’s true: more construction now means less displacement, regionally, in the coming years. But if we care about preserving the option for people to remain in their communities now – which we should, for reasons both ethical and political – then we need to acknowledge the need for both housing growth policies and anti-displacement policies.

An affordable housing development in Portland, OR. Credit: Brett VA, Flickr
An affordable housing development in Portland, OR. Credit: Brett VA, Flickr


The problem, of course, is that it’s not at all clear what those immediate anti-displacement policies should be. A moratorium won’t work; neither will supply. Inclusionary zoning won’t produce nearly enough units. Unfortunately, the case that affordable housing in San Francisco, and much of the rest of the Bay Area, is doomed under any realistic policy regime is pretty strong. In part, this ought to serve as a cautionary tale for cities that fail to respond quickly to shifts in housing demand, neither allowing housing growth to match nor devising any other durable protections for residents.

The intense movement of concentrated wealth and demand for housing in places like the Mission, though, also suggests that we need to think about housing prices not just at a regional level, but in particular local communities. In places where demand simply overwhelms supply, we need other strategies. If we really want our cities to be integrated, diverse places in the long run, we need to be prepared to offer low-income people off-market housing units and vouchers – not in the almost token-sized quantities of most inclusionary zoning programs, but at a scale that actually preserves housing choice for more than a lucky few.

Is gentrification a rare big city malady?

  • Gentrification is a big issue in a few places, and not an issue at all elsewhere.
  • Big cities with expensive housing are the flashpoint for gentrification.

The city-policy-sphere is rife with debate on gentrification. Just in the past weeks, we have a French sociologist’s indictment of bourgeois movement to the central city, the Mayor of Washington and the Secretary of Housing and Urban Development pointing to 300 new units of affordable rental housing as a bulwark against gentrification in DC’s fast-changing Shaw neighborhood, and continued debate over the merits of a moratorium on new housing development as a means of stemming change in San Francisco’s Mission District.

Most of the stated concern about gentrification revolves around the belief that neighborhood improvement automatically produces widespread displacement of the existing population.  But how widespread is the problem?

Outside a big cities with tight housing markets, the effects of gentrification may be much more benign. In an essay entitled “Is gentrification different in legacy cities?” Todd Swanstrom argues that in most of the nation’s metros, the effects of gentrification are more muted, and on balance positive. Because housing prices are low and there is a lot of slack in the housing market, the movement of better educated and higher income people into cities is far less likely to result in the displacement of the existing population.

The variety of opinions about the effects of gentrification are apparent when one talks to mayors. Consider the results of a 2014 survey of the nation’s mayors undertaken by Boston University. The survey explored mayoral attitudes about gentrification, asking them whether they agreed, disagreed or neither agreed nor disagreed with the proposition that “rising property values are good for a neighborhood.” Overall, of the 70 mayors surveyed, 45 percent agreed and 30 percent disagreed with this statement. The pattern of responses is highly correlated with property values: mayors of cities with median home values in the bottom and middle third of the national distribution agreed by a more than two to one margin that rising values are good, compared to only about 20 percent of the mayors of cities with the most expensive homes.

Mayoral Opinion on “Rising Property Values”


Source: Boston University Initiative on Cities, Mayor’s Leadership Survey


Another way of tracking public awareness of the issue is through data on Internet searches. Google data confirm that public interest in gentrification is increasing. The increase has mostly been strong and steady, with a very strong spike coinciding with Spike Lee’s famous anti-gentrification rant at the Pratt Institute in Brooklyn in February, 2014.

The Google data also show a distinctive geographic pattern to the interest in gentrification. Google Trends reports the metropolitan areas with the greatest relative propensity to search for specific terms, including gentrification. Searches for gentrification come disproportionately from a handful of large metropolitan areas, corresponding to some the nation’s largest and most liberal cities: New York, Austin, Chicago, San Francisco, and Washington head the list. And 32 of the 51 largest US metropolitan areas have reported values of zero for searches related to gentrification.

Top Metropolitan Areas for Gentrification Searches


Source: Google Trends, Page Rank Index for “Gentrification” Relative to Top Metro (New York).  Metros color-coded based on statewide presidential vote in 2012, blue-democratic, red-republican.

All of the other metropolitan areas in the country have an index value of zero in Google Trends, indicating almost no interest in the subject.

Fifteen of the nineteen metropolitan areas on this list, including 12 of the top 13 are located in blue states (based on statewide vote for president in 2012). It’s been argued elsewhere that liberals have done a lousy job of fighting gentrification, and these data at least superficially support this argument.

A common factor in gentrification is a surging demand for urban living in the face of a limited supply of urban housing.  We haven’t undertaken a detailed analysis of the housing markets in the cities where gentrification interest is strongest, but they map to largest cities with robust housing markets (with the exception of Detroit).  In smaller markets, and where housing is relatively inexpensive, gentrification doesn’t seem to register as an issue, as measured either by Google Trends or mayoral opinion.

Its instructive to look at the relationship between metro area population, housing prices and interest in gentrification.  The following table stratifies the nation’s 51 largest metropolitan areas – all those with a population of one million or more – by population size, and looks at average home prices (reported by Zillow) in metros with, and without, a reported interest in gentrification (as indicated by the Google Trends data discussed above).

Several findings stand out.  First, interest in gentrification is universal among the 12 largest metropolitan areas, but decreases rapidly as metro area population falls:  half of the second quartile of large metros, two the next quartile and none of the last quartile had a measurable interest in gentrification, according to the Google search results.  Second, home values tend to be much higher in metros with an interest in gentrification:  average prices are about 50 percent higher in the second quartile, and about three times higher in the third quartile.   As the final column suggests, home prices tend to be higher in larger metros, but the smaller metros that have an interest in gentrification have average home prices that are higher than in the largest 12 markets.  Interest in gentrification is strongly related to market size and to high home pricesAs John Buntin speculated in Slate, the high interest in gentrification in pricey coastal real estate markets may have more to do with middle class concerns about affording real estate than about the displacement of the poor.

Average Home Value in Markets by Interest in Gentrification
Average Home Value
Market Size Number Interested Interested Not Interested Value All Markets
12 Largest 12 297,267 NA 297,267
13th-24th 6 308,850 205,467 257,158
25th-36th 2 550,600 154,720 220,700
37th-51st 0 NA 164,513 164,513
Source:  Google (Gentrification Interest), Zillow (Home Prices)

Most cities have strong limitations on dense development, particularly in the most desirable neighborhoods, so when housing demand surges, it leads to price increases and development pressure that is felt in lower income neighborhoods.  In sprawling markets where the housing supply is relatively elastic (Atlanta, Houston, Dallas) gentrification is far less of an issue; and as noted above, it seems to be a non-issue in most Sunbelt cities (for example Phoenix, Jacksonville, Tampa, Nashville, Charlotte).

These data show that interest in gentrification, while growing is still a highly localized issue:  it tends to be a concern in large cities, not small; in expensive housing markets, not affordable ones, and is disproportionately of interest in common in blue states, and relatively rare in red ones.


The Convention Center Business Turns Ugly

There’s probably no better example of the faddish, “me too” approach to urban economic development than the pursuit by cities of every size for a slice of the convention and trade show business. Cities have built and expanded convention centers for decades, and in the past few years it’s become increasingly popular to publicly subsidize the construction of “headquarters hotels” near convention centers in hopes of drumming up further business.

As Heywood Sanders pointed out in a commentary at City Observatory in April, the consultant reports prepared to justify these convention centers and hotels are brimming with Pollyanna-ish optimism. But occasionally, even upbeat prose and glossy presentation can’t conceal some of the bitter truths about this industry.

The latest report we’ve seen was prepared for a proposed Milwaukee convention center expansion project by the Chicago-based firm of Hunden Strategic Partners (HSP). Copies of the report are available on the website of the Greater Milwaukee Committee, the study’s sponsors. It’s interesting reading–full of data about the convention centers of more than a dozen cities around the country, as well as the economics of the convention business. Here are some of the highlights, from our perspective.

The sales pitch has changed from hope to fear.

Traditionally, the rationale for building convention centers was to tap into the supposed motherlode of the growing convention center business. By getting a larger share of the growing market for conventions, the theory went, a city could create new jobs and generate additional income and tax revenue.  Today, however, the message is much more grim: cities have to throw money at convention centers (and accompanying headquarters hotels) to avoid losing businesses to others. As Urban Milwaukee’s Bruce Murphy argues, the rationale for public investment is increasingly reduced to mimicking what other “peer” cities are doing. The sales pitch is now: expand your facilities because other cities are doing the same. There’s no expectation of growing profits or jobs; it’s all about avoiding losses and keeping up with the competition.

The convention market isn’t growing.  

The key reason for the grim outlook in this business is that the overall market for conventions and exhibitions is simply stagnant.  The peak year for the US convention business was 2000. Two recessions, and several generations of social media technology later (fifteen years ago, there was no Skype, Facebook, Twitter or Instagram), the market for exhibition space hasn’t grown at all.


The HSP report tries to put a good face on the data, claiming “Exhibit space supply has increased every year since 1999, however paid exhibit space rises and falls with the economy.” Since 2000, however, the “falls” have more than offset the “rises,” and as a result, while the supply of exhibit space has expanded by more than 45 percent, the demand for space in 2014 (blue line on the chart above) was still about 5 percent lower than it was 14 years earlier. As the report dourly concedes “the supply demand gap gives meeting and event planners an edge in negotiations.” Too much space chasing too few conventions is the real reason that so many cities are finding the convention business a consistent money-loser.

The public cost of the headquarters hotels are now measured in billions.

Cities around the country are throwing scarce public resources into subsidizing headquarters hotels as a way to try and drum up more business for struggling convention centers.  According to the report, cities have put more than $1.4 billion in public funds into the construction of almost 20,000 hotel rooms in 28 projects around the country.

Source: Hunden Strategic Partners


Cities are being conned by clearly unrealistic consultant studies into believing that their money-losing convention center, with just a bit more space or a somewhat newer or somewhat larger “headquarters” hotel, can turn things around. But outside of a handful of places like Orlando and Las Vegas — cities that dominate the market for big national conventions — the convention business is, by and large, a municipal money loser.  Caveat Emptor!




The Civic Commons & City Success

Urban housing sprawl.

Why we wrote “Less in Common,” our latest CityReport.

We’ve come increasingly to understand the role of social capital in the effective function of cities and urban economies.  The success of both local and national economies hinges not just on machines and equipment, skilled workers, a financial system and the rule of law, but also on widespread norms of reciprocity and a sense of connectedness and mutual obligation and respect —  a combination of factors that has come to be called “social capital.”

Robert Putnam’s work—Making Democracy Work, Bowling Alone, and most recently Our Kids—deserves considerable credit for popularizing the term social capital.  Nobel economist Douglass North argued that social capital is one of the keys to the adaptive efficiency that enables economies to progress.  In his book Triumph of the City, Ed Glaeser describes how this process plays out in particular places: “Humans,” he says, “are a social species, and our greatest achievements are all collaborative. Cities are machines for making collaboration easier.”

The latest research from Raj Chetty, Nathan Hendren, and their colleagues, reinforces the critical role of place-based social ties in shaping the economic opportunities of the poor.  They found that metro areas with high levels of racial and economic segregation—a key correlate of declining social capital—also had far lower rates of economic mobility for the children of the poor.

The stakes are high.  In the pursuit of overall economic well-being and widespread opportunity for success, social capital in cities is critical.

Less in Common explores the ways in which the social fabric—the network of connections that tie us together in communities—has become generally thinner and more frayed over the past several decades.


In assembling this report, we purposely set out to be eclectic both in our scope and in the kinds of data and indicators we assembled.  Here you’ll find measures of everything from stated social trust, to the numbers of security guards, to the numbers of library books we borrow, to the numbers of swimming pools and farmers markets in our neighborhoods.  Unlike Gross Domestic Product, measures of social capital don’t have a single common denominator that enable them to easily be summed and compared.  Many, if not all, of these trends play out in cities, and have profound implications for city success.

While there are some counter-currents, the overall pattern of change is an ominous one.  Stated trust is declining.  Income segregation is increasing.  We are more isolated individually, and our governments and civic institutions are more fragmented and balkanized.  We spend less time in the shared public spaces that are open to people different from ourselves.

There is compelling evidence that the connective tissue that binds us together in cities is coming apart.   As we’ve spent more time in isolation and less time socializing with our neighbors, participation in the civic commons has suffered. Rebuilding social capital in America will require innovative approaches to spur community engagement.

How do we reinvigorate the civic commons?  While some solutions may be national in scope, many of the best opportunities for strengthening social capital will be in individual neighborhoods.

There’s no single-minded policy solution that can accomplish the task alone — no –whether infrastructure improvement, human capital investment, regulation or deregulation, tax or tax break –that can easily or comprehensively address the problem.  There are many facets to this issue and consequently many dimensions along which we can pursue solutions.

We offer Less in Common as a rough portrait of some of the trends that have been playing out, and as one contribution to the discussion about how we can strengthen and rebuild social capital in our neighborhoods, our cities and our nation.  We look forward to the conversation.

Urban residents aren’t abandoning buses; buses are abandoning them

“Pity the poor city bus,” writes Jacob Anbinder in an interesting essay at The Century Foundation’s website. Anbinder brings some of his own data to a finding that’s been bouncing around the web for a while: that even as American subways and light rail systems experience a renaissance across the country, bus ridership has been falling nationally since the start of the Great Recession.

But it’s not buses that are being abandoned. It’s bus riders.

The drop in bus ridership over the last several years has been mirrored by a decline in bus service, even as transit agencies have managed to resume increasing frequency and hours on all types of rail lines – heavy, light, and commuter.* (In this post, “service” means vehicle revenue miles – literally, multiplying a city’s bus or rail vehicles by the number of miles they run on their routes.) After a post-recession low in 2011, by 2013 rail service had increased by over 4% nationally in urban areas of at least one million people. Light rail in particular has continued its decade-plus boom, with a service increase of more than 12% in just two years. By contrast, bus service – which already took a heavier hit in the first years of the recession – was cut an additional 5.8%.


And it turns out that when you disaggregate the national data by urban area, there’s a very tight relationship between places that cut bus service between 2000 and 2013 and those that saw the largest drops in ridership. If you live in a city where bus service has been increased, it’s likely that your city has actually grown its bus ridership, despite the national trends. In other words, the problem doesn’t seem to be that bus riders are deciding they’d rather just walk, bike, or take their city’s new light rail line. It’s that too many cities are cutting bus service to the point that people are giving up on it.


Admittedly, this is a crude way to demonstrate a very complicated relationship. To rigorously test the impact of bus service on ridership, you’d want to take into account all sorts of other things: the presence of other transit services; population density; gas prices; demographics; and so on.

Fortunately, we don’t have to do that, because researchers at San Jose State University’s Mineta Transportation Institute just did it for us. And they found that even if you control for those other factors, service levels are still the number one predictor of bus ridership.

Still, I can imagine two big objections to the idea that cuts to bus operations are behind ridership declines. First, a lot of cities have opened new rail lines since 2000 – many of which, if not most, replaced heavily-trafficked bus routes. In those cases, cities are adding rail service and reducing bus service, but it obviously wouldn’t be right to say that those bus riders are being abandoned.

But while that has surely happened in some places, it just doesn’t match the overall data. Rail service, including new lines, has been booming since long before the recession – but up until about 2009, bus service was growing, too, or at least holding steady. If rail expansions were driving bus cuts, you’d expect to see those cuts all the way back to the beginning of the data. But you don’t. Instead, cuts to bus routes appear right as transit funding was hit hard by the recession.

Second, you might argue that service and ridership are linked, but the other way around: as ridership declines, agencies cut back on hours and frequency to match demand. Teasing out which way the causation runs would be difficult – and the answer would almost certainly include at least some examples in both directions. One quick-and-dirty way to get an idea, though, is to compare ridership changes from one year to service changes in the next year. If agencies cut service because of earlier ridership declines, then you’d expect to see that places with larger drops in ridership in “Year One” tend to be the places with larger cuts to service in “Year Two.”


But, again, they don’t. In fact, just 3% of the variation in service cuts is explained by ridership changes from the year before.

So while that’s hardly ironclad – and I look forward to further research that sheds more light on this problem – it does appear that a major part of the divergence in bus and rail ridership is a result of a divergence in bus and rail service: since the recession, transit agencies have cut bus service year after year, while returning service to rail relatively quickly.

Why did they do that? I don’t know. But I can speculate that it has something to do with the fact that bus transit supporters are not always the same kinds of people as rail transit supporters. Even though more people take buses than trains in nearly every metropolitan area in the country, train riders, on average, tend to be wealthier and whiter. Not only that, but many civic and business leaders who don’t use transit at all are heavily invested in rail service as an economic development catalyst for central city neighborhoods. In other words, rail tends to have a more politically powerful constituency behind it than buses.

As a result, when the recession blew a hole in transit budgets around the country, it may have been politically easier for local governments to fill those holes by sustaining cuts to bus lines, rather than rail.

To be clear, the problem here has nothing to do with whether transit agencies are running more services that are rubber-on-asphalt or steel-on-tracks. As Jarrett Walker has eloquently argued, the technology used by a particular line matters far less than the quality of service: how often it runs, how quickly, for how much of the day.

But there are at least two problems here. First, because of the spread-out nature of even relatively dense American cities, it will be a very, very long time before rail transit can connect truly large numbers of people to large numbers of jobs and amenities. When Minneapolis opened the 12-mile Blue Line light rail in 2004, for example, it was a major step forward for Twin Cities transit – but still, only 2% of the region’s population lived close enough to walk to one of the stations. For everyone else, transit still meant taking the bus, even if they were taking the bus to a train station.

And even in places with well-developed rail networks, those systems are usually oriented to serve downtown commuters. Especially in outer neighborhoods, crosstown trips in places like Chicago, Boston, or DC are heavily reliant on buses. Abandoning buses means abandoning those trips, and the people who depend on them.


Boston's T reaches both Dorchester and Jamaica Plain, but a bus is by far the easiest way to get from one to the other on transit. Credit: Google Maps
Boston’s T reaches both Dorchester and Jamaica Plain, but a bus is by far the easiest way to get from one to the other on transit. Credit: Google Maps


Second, there are serious equity issues with shifting resources from bus to rail – again, not because of anything inherent to those technologies, but simply because of who happens to use them in modern American cities. In most cases, shifting funding from bus to rail means shifting funding from services disproportionately used by lower-income people to ones with with a stronger middle- and upper-middle-class constituency. And while transit ought to be viewed as much more than just a service for the poor, we can’t ignore the equity impacts of transit policy.

In light of all this, we have to stop talking about America’s bus woes as a ridership problem. All the evidence suggests that when service is strong, and buses are a reliable way to get to work, school, or the grocery store, people will take them. Instead, the problem is that fewer and fewer people have access to that kind of strong bus line. If we care about ridership, we need to restore and enhance the kind of transit services that people can rely on.

* “Heavy rail” includes traditional subways and elevated trains found in cities like New York, Washington, and Chicago. “Light rail” includes many newer systems, with smaller train sets that are sometimes designed to run on streets as well as in their own right of way. Rail lines in Seattle, the Twin Cities, and Dallas are typical of light rail. “Commuter rail” services generally reach from central business districts far out into the suburbs, and are meant almost exclusively for peak-hour workers.

The real welfare Cadillacs have 18 wheels

  • Truck freight movement gets a subsidy of between $57 and $128 billion annually in the form of uncompensated social costs, over and above what trucks pay in taxes, according to the Congressional Budget Office.
  • If trucking companies paid the full costs associated with moving truck freight, we’d have less road damage and congestion, fewer crashes, and more funding to pay for the transportation system.


Screen Shot 2015-06-01 at 2.02.10 PM

During National Infrastructure Week earlier this month, we again endured what has become a common refrain of woe about crumbling bridges, structurally deficient roads, and a lack of federal funding for infrastructure. This call for alarm was quickly followed by yet another Congressional band-aid for the nearly bankrupt highway trust fund – and this one will hold for just sixty days.

It’s clear that our transportation finance system is broken. To make up the deficit, politicians frequently call for increased user fees – through increased taxes on gasoline, vehicle miles traveled, or even bikes. All the while, one of the biggest users of the transportation network – the trucking industry – has been rolling down the highway fueled by billions in federal subsidies.

A new report from the Congressional Budget Office estimates that truck freight causes more than $58 to $129 billion annually in damages and social costs in the form of wear and tear on the roads, crashes, congestion and pollution – an amount well above and beyond what trucking companies currently pay in taxes.

CBO doesn’t report that headline number, instead computing that the external social costs of truck freight on a “cents per ton mile basis” range between 2.62 and 5.86 cents per ton mile. For the average heavy truck, they estimate that the cost works out to about 21 to 46 cents per mile travelled.

That might not sound like a lot, but the nation’s 10.6 million trucks travel generate an estimated 2.2 trillion ton miles of travel per year (Table A-1, page 32). When you multiply the per ton mile cost of 2.52 to 5.86 cents per mile times 2.2 trillion ton-miles, you get an annual cost of between $57 and $128 billion per year.

Unfortunately, trucking companies don’t pay these costs. They are passed along to the rest of us in the form of damaged roads, crash costs, increased congestion and air pollution. Because they don’t pay the costs of these negative externalities, the firms that send goods by truck don’t have to consider them when deciding how and where to ship goods. This translates into a huge subsidy for the trucking industry of of between 21 and 46 cents per mile.

For comparison, CBO looked at the social costs associated with moving freight by rail. Railroads have much lower social costs, for two reasons: first, rail transport is much more energy efficient and less polluting per ton mile of travel; second, because railroads are built and maintained by their private owners, most of the cost of wear and tear is borne by private users, not the public. Railroad freight does produce social costs associated with pollution and crashes, but the social costs of moving freight by rail are about one-seventh that for truck movements: about 0.5 to 0.8 cents per ton mile, compared to 2.52 to 5.86 per ton mile for trucks.

Screen Shot 2015-06-01 at 2.02.36 PM

As we always point out, getting the prices right – whether for parking or road use – is critically important to creating an efficient transportation system. When particular transportation system users don’t pay their full costs, demand is too high, and supply is too low.  In this case, large federal subsidies for trucking encourages too much freight to be moved by truck, worsening congestion, pollution and road wear, while the fees and taxes paid by trucking companies aren’t enough to cover these costs. The classic solution for these currently unpriced external costs is to impose an offsetting tax on trucks that makes truck freight bear the full cost associate with road use, crashes and environmental damage. The CBO report considers a number of policies that could “internalize” these external costs associated with trucking – including higher diesel taxes, a tax on truck VMT, and even a higher tax on truck tires.

The revenues produced would be considerable: a VMT tax that internalized social costs of trucking would generate an estimated $68 billion per year. To put that number in context, consider that in 2014, total public spending – federal, state and local – on roads and highways was $165 billion. In addition, the higher tax would reduce freight moving by road – mostly by shifting cargo to rail – and lead to benefits of lower pollution, less congestion and less wear and tear on roads. We’d also save energy: net diesel fuel consumption for freight transportation would fall by 670 million gallons per year – a savings of about $2 billion annually at current prices.

There are good reasons to believe that the CBO report is conservative, and if anything, understates the social costs associated with trucking. For example, the report estimates that social costs associated with carbon emissions at somewhere between $5 and $45 per ton. Other credible estimates – from British economist Nicholas Stern – suggest that the cost today is about $32 to $103 per ton, rising to $82 to 260 per ton over the next two decades.

The external social costs of truck and rail freight, per ton mile, are estimated as follows:

Screen Shot 2015-06-01 at 2.03.03 PM
Source:  Congressional Budget Office, 2015


Such a tax would make truck freight more expensive, but other costs – now borne by the rest of us – would go down by a comparable amount. And there would be important savings in costs for freight either moved by other modes (especially rail, which is about two-thirds cheaper), or sourced from closer locations.

There’s a clear lesson here: It may seem like we have a shortage of infrastructure, or lack the funding to pay for the transportation system, but the fact that truck freight is so heavily subsidized means that there’s a lot more demand (and congestion) on the the roads that there would be if trucks actually paid their way. On top of that, there’d be a lot more money to cover the cost of the system we already have.

So the next time someone laments the sad state of the road system, or wonders why we can’t afford more investment, you might want to point out some 18-wheelers who are now getting a one heck of a free ride, at everyone’s expense.

View the full report: “Pricing Freight Transport to Account for External Costs: Working Paper 2015-03

Less in Common

The essence of cities is bringing people—from all walks of life—together in one place.  Social interaction and a robust mixing of people from different backgrounds, of different ages, with different incomes and interests is part of the secret sauce that enables progress and creates opportunity.  This ease of exchange underpins important aspects of our personal lives, civic effectiveness and economic development.

But over the past several decades, a number of trends–some social, some economic, some political, and others technological–have interacted to dramatically change the ways, the places, and the amounts of interaction between different groups in our society.  By many measures, we now spend less time in social settings, and are less likely to regularly interact with people whose experiences are different from our own.  In our schools, communities, work, shopping and personal activities, we’re increasingly separated from one another.

Our new report, Less in Common, surveys a wide range of measures of how Americans have grown apart from one another over the past several decades.  We’ve intentionally drawn promiscuously from a variety of fields to illustrate the breadth and variety of ways in which this trend seems to be unfolding.

Many of these changes are reflected in the physical landscape of our cities.  In North America, development patterns, particularly the growth of suburbs after World War II, diminished access to an easily shared urban life.  Space and experiences became more private, fueled by suburban expansion, large lots, and the predominance of single-family homes. These development patterns have resulted in Americans having “less in common.”  This phenomenon appears to play out in many different ways:

Distrust among Americans is increasing.  A key marker of social capital that is regularly used in comparing nations and tracking trends over time is the generalized feeling of trust.  The General Social Survey reports that the share of the population that says “most people can be trusted” has fallen from a majority in the 1970s, to about one-third today.

Americans spend significantly less time with their neighbors.  In the 1970s, nearly 30 percent of Americans frequently spent time with neighbors, and only 20 percent had no interactions with them.  Today, those proportions are reversed.

The biggest portion of our leisure time is spent watching television.  TV watching is up to 19 hours per week today compared to about 10 hours in the 1960s.  We spend less time socializing and communicating.

Our recreation is increasingly privatized.  Since 1980, the number of members of private health clubs have quadrupled to more than 50 million.  We used to swim together—prior to World War II, almost all pools were public.  Today, we swim alone in the 5 million or so private swimming pools compared to just a few thousand public ones.

Driving alone has become the norm, with transit reserved for the poor. Today, 85 percent of American commuters travel to work in private automobiles, up from 63 percent in 1960.  Carpooling has fallen by half since 1980, and the share who commute via transit has declined from 12 percent in 1960 to less than 5 percent today.

Economic segregation trends upward as middle-income neighborhoods decline. High-income and low-income Americans have become more geographically separated within metropolitan areas. Between 1970 and 2009 the proportion of families living either in predominantly poor or predominantly affluent neighborhoods doubled from 15 percent to 33 percent.

Many of us live in gated communities. By 1997 it was estimated that there were more than 20,000 gated community developments of 3,000 or more residents. By design, gated communities restrict access and carefully control who is allowed into a community to separate residents from outsiders.

Politically, America sorts itself into like-minded geographies.  Nearly two-thirds (63 percent) of consistent conservatives and about half (49 percent) of consistent liberals say most of their close friends share their political views.

There are some counter-trends to the general pattern of isolation and separation.  Racial segregation, though still high, has declined steadily for decades. New community spaces—like farmer’s markets—have grown rapidly.  Widespread availability of the Internet combined with social media has made it easier and more democratic to connect with others and with all forms of information.

A broadly shared sense of common interest, anchored in a society that promotes social mobility and easy interaction, is a vital underpinning of effective political institutions and the economy.  If we’re going to make progress in tackling a range of our nation’s challenges, and live up to our full potential, we need to reinvigorate the civic commons.

You can also see the findings in the form of an easy-to-share infographic:

Click to see the full infographic.
Click to see the full infographic.