The Economics of Traffic and Shifting Business Norms

Brand Story - Breaking down the economic impacts of traffic congestion and advantages of new business norms illuminated by the COVID-19 crisis.

COVID-19 put society at a standstill — emptying cities and quieting freeways like never before. While this moment gives us a glimpse of a commute-free world, it does not necessarily impact our long-term traffic issues. One reality, however, remains starkly obvious: Traffic and the economy are inextricably linked.
 
“As populations and jobs grow, especially in key urban places like Portland, traffic increases,” explains Matthew Kitchen, senior economic advisor at ECONorthwest, an organization providing analyses on policy and investment decisions. “But it’s not necessarily a one-to-one relationship.”

Therein lies part of the problem. When volumes of vehicles go up by between 1% and 2%, traffic levels spike far beyond that as seen in Portland, Seattle and other cities with strong economies.

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Though 5p.m. gridlock indicates an employed workforce, it also reveals an inefficient one. Traffic equals real economic costs on a macro, business and individual level. Some of these costs are often overlooked. They include delays in freight and service delivery, lost productivity and inefficient use of workforce, not to mention the environmental impacts that come with increased emissions.

While society collectively bears much of the brunt, businesses must compensate for operational inefficiencies related to traffic that directly impact the bottom line. Some businesses have changed freight schedules to avoid peak traffic and extra labor and fuel costs. Others keep increased inventories on hand that represent lost opportunities from other investments that otherwise could have been made.

Plus, there’s the toll traffic congestion takes on the workforce. Getting stuck in traffic reduces employee productivity and job satisfaction. Employees can get drained by their commutes before they show up to work. Commute pains are so great to have even impacted the ability of employers to attract and retain top talent.

So, is it possible to reap the benefits of a booming economy without suffering the consequences of congestion?

“Traffic congestion is a classic example of what economists call a negative externality. A growing economy leads to increased traffic, but the individual and social costs of getting out on the road are misaligned,” says Dr. Adam Domanski, senior economist at ECONorthwest. “The key would be to find a way to decouple traffic growth from economic growth.”

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Faced with rising traffic across the state, the Oregon Department of Transportation (ODOT) looks at the congestion dilemma through the perspective of business and transportation choices.

“It’s hard to change cultural norms and break habits. Old ways have worked to get the job done. People just habitually get into their cars to get to work. But it doesn’t have to be like that,” explains Stephanie Millar, senior planner and transportation options program manager at ODOT. “I think we can come out of COVID-19 and get ahead of traffic congestion problems with new mindsets and habits.”

Through Get There, ODOT and its partners are helping shift business practices and workplace habits. It’s not trying to encourage everyone to ride a bike or take the bus, but to consider what travel options work for different trips and different days. It’s also about remote work or telework strategies and doing more business virtually. The aim is to change mindsets and behaviors to help businesses and workers alike realize the benefits of reduced costs and increased productivity among other gains.

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“None of us like the ailment, but the question is, do any of us like the remedies?” Domanski notes. “We complain about traffic, but tend to dismiss the options.”

To diminish that resistance, the accessible Get There tool makes it easy (and enjoyable) to weigh options — providing carpool matching, transit connections, rides for one-time trips, calories burned, carbon emissions, cost savings, commuter challenges and event planning integration. For example, events can integrate carpooling into their planning, which is helpful for venues with limited parking.

“Many people are going to and coming home from work during peak traffic times. Thirty minutes to an hour in traffic is 30 minutes to an hour in productivity loss. Even when traffic isn’t bad, they plan their day as if there might be, and that’s also productivity loss. We know that this all effects the labor market,” Kitchen says.

Businesses that prioritize optimal transportation and remote work options for their employees enjoy real bottom line benefits in terms of talent recruitment and retention, productivity and reduced overhead costs. Get There aids businesses statewide by providing free resources and business consulting on how to facilitate more satisfying employee transportation experiences, which ultimately helps them cut costs.

It remains to be seen which business norms and work habits will stick and which will recede as the impacts of the COVID-19 crisis fade. Regardless, current behaviors leave room for improvement. With guidance from Get There, ODOT and its partners hope that remote work/telework strategies will become more the norm and, when life picks up again, businesses and individuals will emerge with a willingness to reconsider their transportation choices.  

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Stay tuned for the rest of this four-part series exploring how Oregon can rewrite the future of traffic, work life and business to sustain economic growth and improve our quality of life.

 


Brand stories are paid content articles that allow Oregon Business advertisers to share news about their organizations and engage with readers on business and public policy issues. The stories are produced in house by the Oregon Business marketing department. For more information, contact associate publisher Courtney Kutzman.

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