Highways and Labor Markets

Michael Lewyn's picture

In a recent blog post,(1) highway expert Alan Pisarski suggests that highway-oriented sprawl development is somehow necessary for the development of modern labor markets.(2) Pisarski writes that regional job markets are jobs are more specialized today than they were in his youth, and labor markets are thus "of immense size because many [highly specialized] employers need a market of hundreds of thousands of potential workers to reach the ones they need. The Atlanta region of 26 counties is not a great economic engine because it is 26 charming adjacent hamlets, but rather because the market reach of employers, suppliers, customers and job seekers spreads over several million residents."

In other words, for a labor market to function at peak efficiency, (a) employers and employees must be able to draw on the entire region for jobs, and (b) highway-driven, Atlanta-like sprawl(3) facilitates this match in a way that walkable communities don't. Assumption (a) makes sense to me; Assumption (b) does not.

Instead, it seems to me that employers and employees can reach each other more easily in a less sprawling, car-oriented region. Why? Because they can travel shorter distances to do so, and can do so in a broader variety of ways.

In both Atlanta and in less car-dominated regions, most people have jobs outside their own neighborhoods. But in Atlanta, many of those people will have to drive 10 or 20 (or even more) miles to reach those jobs. In New York or Tokyo, many (admittedly not all) of those people will be able to reach those jobs via walking or public transit, and because these regions are more compact than Atlanta, more people will be able to commute fewer miles to reach those jobs, regardless of their modes of transportation.

To illustrate the point more precisely, imagine two regions, Atlanta and Compactville. Atlanta's urbanized area has 4.4 million people spread out over about 3000 square miles. (4) Compactville has a New York City-like density of around 20,000 people per square mile, which means its 4.4 million people occupy about 220 square miles. Compactville's residents, like Atlanta's, don't all work downtown or near their homes. Many of them commute from one end of Compactville to another. But in a 220-square-mile region, most residents of the north end of Compactville will be a closer to the south end (and to public transit that can take them to the south end) than in Atlanta, which, bus and train speeds being equal, means that more of them will be able to use public transit than in Atlanta, which in turn means that nondrivers are not shut out of the labor market to the same extent as in Atlanta. Thus, Compactville's lack of sprawl actually expands the local labor market.

Similarly, Compactville's lack of sprawl expands the retail market as well. Pisarski suggests otherwise, writing "If you want a loaf of Wonder Bread, there's a 7-11 down the street; if its ciabatta with sun-dried tomatoes there's this really great place I know a few miles off of exit 29." But in a more compact metropolis, more people will be within walking distance of that ciabatta - and the people that aren't will be within transit-riding distance. By contrast, in sprawling cities, the only way for most people to reach that ciabatta is to take the freeway, because low densities and pedestrian-hostile environments mean that very few people will be within walking distance of that ciabatta.



(1) http://www.newgeography.com/content/001865-livability-and-all-that  

(2) This is not Pisarski's only argument; however, many of his other assertions have been criticized elsewhere. See http://newurbannetwork.com/news-opinion/blogs/robert-steuteville/13540/livability-means-being-poor-and-eating-only-one-kind-let  

(3) I note in passing that Pisarski's description of Atlanta as a "great economic engine" is a bit out of date. Metro Atlanta's unemployment rate is 10 percent- higher than that of the nation as a whole, and higher than that of numerous less-sprawling places. See http://www.bls.gov/web/metro/laummtrk.htm ; see also Nelson D. Schwartz, Modernizing as a road towards recovery, International Herald Tribune, Feb. 5, 2010 (unemployment rate is 4 percent in Netherlands, 5.4 percent in Austria).

(4) http://mobility.tamu.edu/ums/congestion_data/tables/atlanta.pdf


Michael Lewyn is an assistant professor at Touro Law Center in Long Island.



it is of course a silly proposition...

that complex labor markets require sprawl. one need only look to europe as a counterfactual. one could also look to the SF Bay Area, which arguably has one of the more dynamic and complex labor markets in the country, but is also at the leading edge of America's slow but gradual transformation to a compact development pattern.

IS Europe really all that much of a counterfactual?

What is really remarkable about most cities in Europe, is just how little they have achieved in terms of planners stated objectives relative to the USA. Even with gas taxes at the level they are, there is surprisingly little difference in VMT's between Europe and the USA. The high gas taxes have changed people's choices of automobiles significantly, but the high gas taxes and tougher urban planning have had surprisingly LITTLE effect on VMT and "location efficiency" of households and businesses.

The academics CHESHIRE AND SHEPPARD are the furthest ahead of anybody I know, at studying the benefit-cost of urban planning in the British context.

"The Welfare Economics of Land Use Planning"


"This paper presents an empirical methodology for the evaluation of the beneÞts and costs of land use planning. The technique is applied in the context of the Town and Country Planning System of the UK, and examines the gross and net beneÞts of land use regulation and their distribution across income groups. The results show that the welfare and distributional impacts can be large......"

And the last sentence of the paper:

"......Smart growth over 50 years of British experience appears to
have imposed substantial net costs."

That was in 2001. More recently:


The "Net welfare LOSS effect" over 50 years, is equivalent to a "3.9% income tax".

Where I think Cheshire and Sheppard and everyone else with the exception of Alain Bertaud, have so far failed to look, is at the DECREASED CHOICES of "location efficient" options for households and businesses when land values are inflated. Yes, convenient locations go way, way up in price and the planners pat each other on the back and talk about the "utility value" they have created, when in reality what they have created is like a large de facto gated community for the wealthiest people only, close to the CBD and actually NOT AS DENSE as it could have been had land values been kept lower and affordable to the bulk of people.

I keep saying this because it is important that it sinks in to planners heads: look at all the "Smart growth" cities and you will find unnaturally high density happening FURTHER AWAY from the urban centre, which has INCREASED average VMT's compared with "natural" free market cities where density curves have a consistent slope from centre to fringe. Worse still, you get "leapfrogging" commutes from distant lower-cost areas outside the metro altogether. I have no doubt that this force has more than negated the "benefit" of "Smart Growth", and explains partly at least, the Cheshire and Sheppard findings.

Highway and labor market.

Not to mention that, of course that Mr Pisarsky wants to justify his job. Also this way he will stay in the heart of all the highway engineers and other people who elected him at the first place. They know it is pretty easy to get subventions from the government for new highways, its been that way for so long. In fact it was a good idea to built collector roads with croked streets and cul de sac at first, this way of building unefficient roads was a sure way to give yourself more jobs in the future.

Planners and price signals: never the twain shall meet? (sigh)

"Imagine Compactville"

Michael, I have admired your open-mindedness in the past. Please consider the following.

I recently discovered THIS paper that says 90% of what I have been saying along the lines that "the effect of planning on LAND VALUES REALLY, REALLY MATTERS".

And these guys wrote the following paper back in 2003......!

"The introduction of price signals into land use planning decision-making: a proposal"
Paul Cheshire, LSE
Stephen Sheppard, Williams College
Department of Geography and Environment
London School of Economics
Published: December 2003


"......The paper starts by characterising the basic features of the British planning system and explains in brief outline how it works viewed from the resource allocation point of view of an economist. A conclusion is that the system explicitly EXCLUDES any price signals.
The next section sets out a way in which by using the price premiums of neighbouring parcels of land zoned for different uses, information generated by price signals COULD be integrated into the decision-making processes of the planning system.
The third section summarises the analysis and evidence supporting the need for such an adaptation of the planning system and explains the main PROBLEMS that have arisen as a RESULT OF EXCLUDING price information in determining land supply."

(End of quote).

Hopefully, you can reach an understanding of WHY a PLANNED "Compactville" is an economic IMPOSSIBILITY. Manhattan is the result of geography, centuries of history, and centuries of free market function.

Alain Bertaud's paper, "Cities Without Land Markets" is also an education into the outcomes of planners being granted omnipotence in the former USSR. They TRIED to create what you call "Compactville". Even without pesky land markets to contend with, even with omnipotence over the lives of their fellow citizens, the result was unmitigated economic disaster.

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