New AAR report cites freight railroad industry's economic impact

Seven of the largest U.S. railroads' spending created $274 billion in economic activity, generated nearly $33 billion in state and federal tax revenue and supported 1.5 million jobs nationally in 2014, the Association of American Railroads (AAR) announced this morning as it released its second "State of the Industry Report" of 2016.

Citing new research from Towson University's Regional Economic Studies Institute (RESI), the report is the first of its kind to quantify the economic impact of investments by Class I railroads with U.S. operations, AAR officials said in a press release.

The report's second edition features articles that support RESI's research and analyze the impact on the national economy, customers, consumers and public policy.

"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," said Daraius Irani, lead researcher and chief economist at RESI. "Railroad spending means job growth, dollars to communities and global competitiveness."

According to AAR, key points cited in the report include:
• $28 billion in spending 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.
• One job at a freight railroad supports nine others touched by the rail industry, including retail, manufacturing and transportation and warehousing.
• The rail industry's state and local tax generation is greater than the taxes collected by 30 individual states in 2014.

"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," wrote AAR President and Chief Executive Officer Edward Hamberger in the report.

Hamberger and other economists cited in the report take the position that the freight-rail industry's economic impact requires "smart public policy that does not impeded day-to-day operations or diminish continued private capital investment," according to the press release.

In addition to Towson University's research, the report includes information from the Brookings Institution, Competitive Enterprise Institute, the University of Oregon and R Street.