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The Economic Impacts of Railroads

Posted by Content Coordinator on Friday, June 17th, 2016

ASSOCIATION OF AMERICAN RAILROADS

CHAPTER 1: Economic Impact Study – Railroads Boost Jobs & Growth

For the first time ever, freight rail’s economic impact on America’s economy has been quantified—and it’s huge. According to a study from Towson University’s Regional Economic Studies Institute, freight railroads have a ripple effect that resulted in nine jobs for every one freight rail job and supported approximately $274 billion in economic activity across the country in 2014 alone. The industry also contributed billions in taxes at the federal, state and local levels, which helped build schools, pave roads and pay for teachers, police and firefighters. The experts agree: Freight rail has a significant economic footprint that must be preserved by smart public policy.

Railroads Drive the American Economy

Freight Rail's Private SpendingNew research from Towson University shows that freight railroads trigger a powerful economic ripple effect across the United States. This report’s four chapters expand on the theme.

By Edward R. Hamberger

We all learned it in school: Molecules are the basic building blocks of life. Without them, our world as we know it would not exist.

In much the same way, freight railroads provide the foundation that enables the world’s top economy to thrive. For manufacturers and consumers, small and large businesses, energy companies and farmers, freight rail is the basic building block that allows a great sweep of economic activity to take place across the country. Without railroads, our economy would be vastly different.

This report, the second in the Association of American Railroads’ State of the Industry series, for the first time ever, shares data that begin to quantify the freight railroad sector’s economic and fiscal impact. The findings underscore the fact that freight railroads trigger a powerful economic ripple effect across a myriad of U.S. industries.

Whether selling and building automobiles and houses, powering businesses or enabling manufacturers to reach new customers, American industries rely on rail to get raw goods and products to market in the United States and beyond. The net economic effect is profound.

New research from Towson University’s Regional Economic Studies Institute has found that in 2014 alone, major U.S. railroads supported approximately 1.5 million jobs, nearly $274 billion in annual economic activity, approximately $88 billion in wages and nearly $33 billion in tax revenues.

Railroads make consistently high capital investments, and the results are impressive: high-paying jobs within the industry, additional jobs that are supported by the industry, the connection of a wide swath of industries and consumers to the global market, and the growth of local communities because of the infusion of sizeable funds into the market and government budgets. These benefits come at a savings of billions of dollars each year for taxpayers because America’s freight railroads operate overwhelmingly on infrastructure that they own, build, maintain and pay for themselves.

“Railroads have a wide footprint on the economy, impacting many industries and occupations,” the Towson researchers conclude.

As our first State of the Industry Report released in January explained, railroads are part of an integrated system that also involves trucks, barges and pipelines, and moves 54 tons of freight per American every year. Second to none in the world, this transportation network enhances both our quality of life and standard of living in innumerable ways.

This critically important network would not exist if policymakers undermined the transformative measures enacted through partial deregulation.

The Towson University report makes clear that this economic powerhouse relies on forward-thinking policies that allow railroads to earn the revenues needed to invest back into rail infrastructure and meet demands in a changing marketplace. Without these policies, the nation would lack a sound freight network that safely, reliably and cost-effectively transports goods and provides a passageway for people each day.

This second report of 2016 makes the case that smart public policy, massive private infrastructure and equipment investments by railroads have had a strong economic impact on America at large. Throughout the report, outside experts provide context regarding freight rail’s economic impact.

Through a mix of content, the four chapters of this report show the many ways that railroads contribute to our nation’s economic vitality:

Impact on Nation’s Economy: A synopsis of the Towson study and commentary on the effect of railroads on the economy from issue area experts.

Impact on Customer: How railroad industrial development teams catalyze economic growth in communities; the impact of freight rail on small businesses and the relationship between freight railroads and local economic development.

Impact to Consumer: A look at how freight railroads help make Americans’ lifestyle possible by providing safe, efficient and environmentally friendly service that results in store shelves lined with goods, auto lots filled with vehicles and even commuter and passenger rail’s ability to speed people to work each day.

Railroad Regulations: An explanation of what it takes to make a 140,000-mile, nationwide network the best in the world—including targeted investments in infrastructure and equipment made possible by smart public policies.

As you explore the report, you’ll discover that while railroads are not always visible to us as we go about our everyday lives, they have a deep economic impact that we feel every day. Later this year, we’ll expand the snapshot of what freight railroads make possible by focusing on the economic contribution of railroads to a select number of industries.

Meanwhile, the next time you see a freight train, don’t just think of tracks. Instead, remember those trains create jobs, support communities and bring American goods to the global marketplace.

Download full version (PDF): AAR State of the Industry Report 2 – Economic Impact

About the Association of American Railroads
www.aar.org
America’s freight railroads operate the safest, most efficient, cost-effective, and environmentally sound freight transportation system in the world — and the Association of American Railroads (AAR) is committed to keeping it that way. Founded in 1934, AAR is the world’s leading railroad policy, research, standard setting, and technology organization that focuses on the safety and productivity of the U.S. freight rail industry.

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