Generating 1.5 million jobs and $274 billion in economic activity in 2014 alone, it seems the position of freight railroads in the US remains strong. These statistics have been taken from a report recently released by the Association of American Railroads (AAR) that was researched by Towson University's Regional Economic Studies Institute (RESI). With the aim of exploring impact of the seven largest US Class 1 railroads on both a local and national level it is the first report of its kind.
In the US today, the freight rail network consists of 140,000 miles of line, covered by the afore-mentioned Class 1 railroads, 21 regional railroads and 510 local railroads. As a primary method of transporting goods around the country, freight rail secured its position as a pillar of the US economy. With this in mind, it is easy to see why, since its introduction into the States the freight network has been essential. AAR President and CEO Edward Hamberger discussed the matter arguing that "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."
Since regulatory reforms were introduced in the 1970s the growth of freight rail has continued to increase. This is arguably because smart public policies that enabled private and capital investments into the industry. Investment in turn benefited the people, in fact the report by AAR shows that for every $1 that is spent on railroads another $10 is generated.
“Railroad spending means job growth, dollars to communities and global competitiveness” asserts Dr. Daraius Irani, lead researcher and Chief Economist at RESI. In short arguing that through their report, AAR and RESI have shown that railroad investment creates a positive ripple effect across the economy.
As Irani and Hamberger suggest, the ripple effects of freight rail are easy to spot, particularly in the job market. In 2014 alone the industry supported roughly 1.5 million jobs in the US and created $88 billion in wages. AAR’s report shows that for each job in freight another nine will be supported, including jobs outside of the industry like retail, manufacturing and warehousing.
Expanding on this the report shows that more than half of the total federal spend on transit grants, improvement and construction investments in 2014 were spent on freight rail; a figure totalling $28 billion. The output of freight rail in this same year totalled $274 billion.
As if this wasn’t enough, AAR also calculated that the industry created $33 billion in tax revenue. What is clear, is that in the year of 2014 freight rail proved its worth. The ripple effect driven forward by the work of the seven Class 1 railroads was staggering on both a local and national level. In fact the output of the industry in only one year ($274 billion) was a sum almost equal to the total GDP of Finland in that same year! These figures point towards the benefits of a freight netowrk and railroads. Not only is freight greener alternative to road transportation, but it proves its worth by keeping the country connected, creating and supporting jobs and therefore communities.
Read the full report here to find out more.
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