NewGeography.com blogs

Andy Kunz of the U.S. High Speed Rail Association commented to Fox Business News on the recently announced record ridership on Amtrak that, "At the very least, the increased demand offers another sign travelers are getting fed up with soaring airline fares and fight cancellations."  In the article, which read more like an Amtrak or high speed rail press release than a news story, reporter Jennifer Booton made what Gulliver, in The Economist, called "a fairly convincing argument that Americans are turning to trains as an alternative to driving and air travel." The Economist should have known better.

Yes, Amtrak ridership is up and airline patronage has been up and down in recent years. But, trains as an alternative to air travel? In fact, Amtrak's ridership is so small that distinguishing between the bottom of the graph below and the Amtrak ridership is difficult (see Figure). While Amtrak ridership rose five percent last year, the same number of new airline passengers would have constituted only 0.06 percent increase (or nearly 1/100th the impact on Amtrak). Amtrak's ridership is so low that the monthly change (increase or decrease) in airline patronage has exceeded  total 2011 Amtrak ridership in 120 of the last 125 months.

Booton and Gulliver may imagine business travelers abandoning frequent airline service to board trains slower than cars that run once daily. Or perhaps they imagine faux-high speed rail service that will still be too slow or too infrequent. Airline executives aren't losing sleep over potential losses to trains.

We overheard this phone conversation recently between tea party activist Bill Francis and his 19-year-old daughter and Wall Street occupier Serena: 

Bill:  I understand why you’re protesting but I think you’re missing the point.

Serena:  What’s that?

Bill:  You’re mad at rich people and upset that you can’t get a job.

Serena:  True.

Bill: And you think that by camping out on the street you’ll get attention?

Serena: We’ve already made a difference.

Bill: Tell me how?

Serena: The media is talking about our issues.

Bill: They’re just using you.

Serena:  So what.

Bill: Liberals like the idea of class warfare.

Serena:  You used the media.

Bill:  We knew what we were doing.

Serena: You were rude.

Bill:  We made our point.

Serena: You called Obama a socialist.

Bill: He is.

Serena:  What do you mean by that?

Bill: He wants the government to run our lives.

Serena: Who do you think is running your life now?

Bill: That’s the point.  We want to control our own lives.  That’s what being an American means.

Serena: I think the corporations are in charge and you don’t even realize it.

Bill: Listen, honey, I can ignore the corporations – I don’t have to buy what they sell.  I can work for anyone I choose.

Serena: You’re not facing facts.  Corporations and banks are telling politicians what to do.  And they’re moving jobs to other countries.

Bill: That’s because of taxes.

Serena:  What’s because of taxes?

Bill: Jobs leaving the country.

Serena: Dad, they barely pay any taxes.

Bill: The point is that they’re free to do business wherever they want.

Serena: You don’t want to see how much power they have over us.

Bill: I agree there’s corruption.

Serena: And greed.

Bill:  That’s human nature.

Serena:  Now you’re going to tell me that corporations are people.

Bill: I just don’t like that you’re sleeping in a tent every night, that’s all.

Serena:  Don’t worry Dad, I’m safe.  You taught me to take care of myself.

Bill: I still don’t understand what you’re trying to accomplish.

Serena:  We’ll figure it out as we go.

Bill: But, anyway, as long as you’re coming home to take showers and wash your clothes, I suppose it’s o.k.

Serena: Got to go.  Love you dad.

Bill: Love you too honey.

This first appeared at LaborLou.com.

By Hank Robison and Rob Sentz

We recently observed that there are only about 50 manufacturing sectors out of 472 (6-digit NAICS) that actually gained jobs over the past 10 years. This made us wonder because we keep hearing that manufacturing output is actually improving. Politicians and policymakers tend to assume that an uptick in output would naturally result in an uptick in employment. So we investigated.

What we found

We placed national export data on top of job totals for each of the 472 manufacturing sectors, and found that manufacturing exports (inflation-adjusted) actually grew by 56% from 02-10 while manufacturing jobs contracted by 23%. Growth in exports have clearly not resulted in more domestic jobs. See the interactive graphic at the bottom of this post for a visualization.

Across the manufacturing sectors we are actually seeing a predominantly inverse relationship between jobs and exports. To explore this further, we placed each of the 472 industries into one of four categories (again see the graphic):
1) Those that gained both exports and jobs,
2) Those that gained exports but lost jobs,
3) Those that lost exports but gained jobs, and
4) Those that lost both exports and jobs.

Some observations

Those advocating for increased exports as a way of resuscitating jobs in manufacturing need to look at this data. Only 11% of all manufacturing sectors showed gains in jobs and exports, which is not a huge surprise given manufacturing decline. 19% lost jobs AND exports at the same time. Now here is the stat really worth noting — 71% of all manufacturing sectors increased their exports while decreasing their domestic workforce.

There are some political ramifications here. The Obama Administration has proposed exports as a key to kick-starting the U.S. labor market (see this post from Brookings). Economists and policy experts as well as all of us here at EMSI are huge fans of improving exports. Exports are a principal source of foreign exchange and an important driver for U.S. goods. Export industries also tend to pay higher wages and connect with the rest of the economy through greater multiplier effects, which mean they are key for income and job formation.

However, as the data suggests things are not that simple. Domestic manufacturers appear to be outsourcing large parts of their work to foreign suppliers. In the process, they employ fewer domestic workers but become more competitive in foreign markets. As a result, exports go up while employment goes down. This is something that policymakers need to consider before pinning too much hope on exports as a way of reviving manufacturing sector employment.

Conclusion

There may be a conflict of goals here. On one hand we want high-wage, high-benefit jobs; on the other, “full employment.” But in manufacturing can we have both? If wages, and benefits are pushing producers to outsource then either wages go down (an unattractive prospect), or we adopt policies that spawn productivity growth needed to support high-wages. Are there any other choices?

Data Graphic

In this interactive graphic, you can explore EMSI’s data on manufacturing jobs and exports. The data is based on 4-digit NAICS manufacturing sectors. NOTE: 6-digit data was used in the previous analyis.

Click on the chart to highlight an industry or use the drop-down box. Data in the top half of the graphic shows percentage change in jobs (on the y-axis) and exports (on the x-axis). The bottom line graph simply compares manufacturing jobs and exports over time.

As we highlighted above, 71% of all manufacturing sectors increased their exports while decreasing their domestic workforce from 2002 to 2010.

For more information, email Rob Sentz.

The government of the Hong Kong Special Administrative Region has outlined plans to create a "second central business district" at Kai Tak in eastern Kowloon, site of the now former international airport. Kai Tak airport was abandoned in 1998 when the new Hong Kong International Airport at Chep Lap Tok opened.

Kai Tak is in the middle of the most dense urban development in the high income world. The government intends that the development will have 43 million square feet of office space (4 million square meters) and will cost HK$100 Billion (approximately $13 billion).

The development would be served by a monorail, which would connect with MTR (metro) lines at Kwun Tong and to a proposed central link MTR line to the new town of Sha Tin.

Photo: Kai Tak Airport and East Kowloon (by author)

The state of Michigan recently announced record ridership on three routes supported by Michigan taxpayers. Records mean little when the numbers are insignificant.

That, to say the least, is the situation with Amtrak in Michigan. For example, the additional passengers (this year versus last) on the Pere Marquette (between Chicago and Grand Rapids) was small enough to be carried in a once daily round trip by an airport shuttle van. The additional passengers on the Wolverine, which operates from Detroit to Chicago would not have filled a single intercity bus operating each way on a daily basis. The same is true of the Blue Water, which operates between Port Huron and Chicago.

But there's more. High quality bus service, featuring on-board high speed wireless internet (wi-fi), costs passengers less between Detroit and Chicago and takes about the same time. There is a big difference, however. Train riders are subsidized by taxpayers, while bus riders pay their full fare. Even so, the unsubsidized bus fares are lower than the subsidized train fares.

In a nation that needs to cut spending, unnecessary transportation subsidies, such as for intercity rail services should be at the top of the list.