AAR releases economic impact report

Written by William C. Vantuono, Editor-in-Chief

The Association of American Railroads (AAR) released on June 13, 2016 a "State of the Industry Report" featuring new research from Towson University Regional Economic Studies Institute (RESI) that finds spending by the seven largest U.S. railroads created $274 billion in economic activity, generated nearly $33 billion in state and federal tax revenues and supported nearly 1.5 million jobs nationally in 2014 alone.

AAR says the report is the first of its kind to quantify the impact of investments by Class I railroads with U.S. operations on the overall economy.

Several key points highlighted by AAR:

*Spending: $28 billion in investments by freight railroads in 2014 is more than half of all federal spending on transit formula grants, federal highway construction programs and airport improvement programs combined. Railroads invested $30 billion in 2015 and since 2011 have averaged $26 billion annually. AAR President and CEO Edward R. said the the railroads woukd be far less able to make these investments without the existing “balanced regulatory environment,’ which “should not be changed.”

*Output: $274 billion in output—or goods and services produced—is nearly the GDP of Finland, according to International Monetary Fund data. This amount of money could build 24,909 miles of six-lane urban interstate highway, fund Medicare for nearly 25 million Americans or pay for the four-year college education of 2.2 million students.

*Jobs: One job in the freight rail industry supports nine others touched by the industry, including retail, manufacturing and transportation and warehousing. Class I railroads employed 166,000 people in  2014, which translates to nearly 1.5 million indirect and induced jobs (created or supported jobs).

*Taxes: The rail industry’s state and local tax generation is greater than the taxes collected by 30 individual states in 2014; The nearly $21 billion in federal taxes is nearly three times the amount allocated for the National Science Foundation in 2014.

“Railroads maintain high paying jobs within its sector and create numerous jobs in related industries that collectively spur significant economic activity,” said Dr. Daraius Irani, lead researcher and Chief Economist at RESI. “Significant capital investments by railroads and the steady presence of a coast-to-coast network that can reliably deliver goods at a cost effective rate generates a ripple effect seen in this study. Railroad spending means job growth, dollars to communities and global competitiveness.”

“Railroads provide the foundation that enables the world’s top economy to thrive,” said Hamberger in the report. “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.”

The Brookings Institution, Competitive Enterprise Institute, the University of Oregon and R Street also provided perspectives in the report, which can be read HERE.


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