full speed ahead freight trains for a green economy

8/9/2019 Full Speed Ahead Freight Trains for a Green Economy

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Full Speed Ahead:Creating Green Jobs Through

Freight Rail Expansion


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Full Speed Ahead: Creating Green Jobs

Table of Contents:

Executive Summary

The Challenges ...................................................................... 1

A Jobless Recovery? ..................................................... 1

Decline in Goods-Producing Jobs ................................. 1

Inrastructure Investment, Foreign OilDependence and Climate Change ................................ 1

Future Demand and Freight Rail Capacity ..................... 2

The Freight Rail Solution ...................................................... 2

Freight Rail Jobs are Green Jobs ........................................ 3

Addressing Other Environmental Concerns ...................... 5

Freight Rail Creates EmploymentThroughout the Economy..................................................... 5

Investment and Economic Impact ................................. 5

How Many Jobs? .......................................................... 6

Direct and Indirect Job Creation .................................... 7

Additional Employment Impacts Induced Jobs .......... 8

What Kinds o Jobs? ..................................................... 8

Caveats to Using Economic Models ............................. 8

Recommendations ................................................................ 9

Conclusion............................................................................ 11

Executive Summary

America is experiencing a jobless recovery rom a pronounced andprolonged recession, which resulted in the attrition o millions oAmerican jobs across all sectors o the economy. At the same time,the nation sends massive amounts o money overseas to support ourdependence on oreign oil, while transportation represents a signicantcomponent o this oil dependence and consequent greenhouse gaspollution.

Moving to a clean energy economy that reinvests in American industriesand prioritizes ecient energy use and pollution reduction represents asignicant opportunity to create jobs and promote sustainable economicgrowth. The reight rail industry can be a part o this transition, havingdemonstrated its green potential by making signicant strides ineciency, limiting pollution and creating and sustaining quality jobs.

Economic models estimate about 7,800 green jobs are created orevery billion dollars o reight rail capital investment. Furthermore, theindustry has nearly doubled the amount o goods it has shipped withoutincreasing uel consumption over the past three decades, and createsa raction o the pollution o other transport modes such as truckingand aviation. Its continued growth will generate green jobs, reducedependence on oreign oil and contribute to solving climate change.

As the U.S. economy gets back on track, reight movement will expand,requiring corresponding inrastructure investment. By growing capacity,the reight rail industry can seize signicant opportunities to meet

projected demand or shipping cargo, save energy, reduce pollution andcreate tens o thousands o new jobs throughout the economy.

Freight rail invests more than our times the proportion o revenues intocapital investment than most other industries, and creates public benetsby returning a high level o economic output, oering an alternativeto other modes o transport that can reduce congestion and improveproductivity, serving as the backbone or national passenger rail andachieving eciencies that signicantly reduce energy use and pollution.

Public policy should account or these public returns and supplyincentives that will help the industry maintain economic viability whiledelivering even greater economic and environmental benets movingorward.


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Table 1: U.S. annual oil imports from 1990-2009

(millions of barrels)

3,500

3,000

2,500

2,000

1,500

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

Source: U.S. Energy Inormation Agency

1

The Challenges

A Jobless Recovery?The American economy is showing signs o recovery rom the

deepest recession in seven decades. While unemployment rateshave crested, surpassing 10 percent in recent months but nowslowly retreating, new approaches and investment are needed to getmore Americans back to work and invigorate the U.S. economy.

The country continues to ace severe economic challenges, bothcyclical and structural. Since the beginning o the recession inDecember 2007, the labor market has shed 8.2 million jobs. Inorder to keep pace with population growth, during this period itshould have added 2.8 million jobs, meaning that the economyis eectively 11 million jobs below its pre-recession employmentlevels. To achieve this level within the next three years, the economywould have to add on average 411,000 jobs each month or 36consecutive months. To illustrate just how unprecedented thisjob growth would be, in the peak year o job growth during the

1990s expansion (1997), only 280,000 jobs were added onaverage each month.ii

In other words, it will take the economy, which entered a recessionmore than two years ago, at least a ew more years beore it ullyrecovers, i not longer.

Decline in Goods-Producing JobsIn previous decades, the U.S. economy has experienced amarked shit away rom goods-producing jobs, such as those inthe manuacturing, construction, natural resources and miningindustries. From 1979 to 2007, the share o goods-producing jobsell rom 27.8 percent o total nonarm employment to 16.1 percent.Despite the American workorce growing by over hal during thatperiod, in 2007, beore the recession, there were 25.5 percent ewergoods-producing jobs in the U.S. than there were in 1979.iii

While goods-producing jobs constituted about 16 percent o jobs atthe start o the recession, they accounted or nearly hal o the jobslost through February 2010. This shit has signicant implicationsor the economy moving orward. Manuacturing jobs, and goods-producing jobs more generally, have historically been pathways tothe middle class, especially or the 70 percent o the labor orce thatdoes not have a college degree. For workers with a high schooldegree or less, manuacturing jobs provide on average 9.2 percenthigher wages than the economy-wide average.iv Higher rates ounionization among manuacturing jobs generally lead to betterhealth care benets, pensions, and job security. For workers, these

Economic models estimate about 7,800 green jobs are createdor every billion dollars o reight rail capital investment.

characteristics make manuacturing jobs a vital rung in the climb upthe socioeconomic ladder, and their demise is widening the incomegap in America.

In March 2010, President Barack Obama announced a goal o

reversing the decline o goods-producing industries and doublingthe value o American exports by 2015. Such an undertaking, whichcould create 2 million new American jobs, would also ideally promptexpansion o the reight rail system to move more goods, with theadded benet o creating jobs in the manuacture o the rolling stockand machinery requisite to grow the American rail network.

Infrastructure Investment, Foreign Oil Dependence,

and Climate ChangeRight now, the U.S. is being outpaced by the global competition interms o inrastructure investment. Overall inrastructure investmentin the U.S. is estimated at $150 billion per year through the nextdecade, while the European Union expects to invest nearly $300

billion per year and China, $200 billion per year through the sametimerame.vii

At a time when domestic investment is desperately needed, Americasends more than $1 billion each day to oreign countries to purchaseoil. American imports o oreign oil have risen by nearly 40 percentsince 1990, and currently imports supply the bulk (57 percent) oAmerican oil use.viii


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Transportation, meanwhile, accounts or two-thirds o U.S. oilconsumption, and uels derived rom oil currently drive nearly alltransportation activity (98 percent). Within transportation, suracereight movement (including trucking, water-borne reight and reightrail) represents a considerable segment o energy usage, consumingthe equivalent o the amount o oil we import rom Saudi Arabia,Nigeria and Venezuela annually.ix

Corresponding with reliance on ossil uels is the production ogreenhouse gases (GHGs) that contribute to climate change.Currently, transportation accounts or nearly a third o Americas

GHGs, necessitating more ecient approaches across alltransportation modes i the sector can become part o the solutionor achieving energy independence and addressing the impacts oclimate change.

Future Demand and Freight Rail CapacityCurrently, the nations reight rail network is relatively uncongested.Trac will grow as the national economy gains traction, however,and over the next three decades demand or reight rail is projectedto nearly double.x

Freight rail hosts passenger rail on its trackage, meaning increaseddemand or reight rail could also disrupt passenger rail trac. Thiswould be especially unortunate given that the passenger rail industryis increasing capital investment to deliver higher and high-speedrail service, bolstered by multi-billion dollar investments set orthin the American Recovery and Reinvestment Act and subsequentederal budgets. Lower passenger rail eciency could lead toadditional congestion on our highways and air corridors, and alsoundercut eorts to bring the American passenger rail system onpar with the higher speed networks beneting other advancedeconomies. Conversely, strengthening our reight rail networksthrough expansion would create new synergies by reducing cargotrac among reight modes and allow reight rail to capitalize on thegrowing intermodal market, which transports more than 12 millionintermodal (ship, train and truck-compatible) containers annually.xi Itwould also increase the ability o higher and high-speed rail to movepeople more eciently and reduce congestion on our nations roads.

Freight rail capital investment is almost exclusively unded throughindustry revenues. Overall, the reight rail industry has invested $460billion in revenues back into capital needs and expansion since 1980.These investments have continued through the recent economicdownturn; in 2008, Class I railroads (the seven major national reight

railroads, and Amtrak, which own and operate the majority o U.S.rail track) spent more than $10 billion on capital improvements (toinclude $2.6 billion on rolling stock and equipment, and $7.9 billionon roadway and structures). However, an additional $1 to $2 billiono annual capital investment is estimated as necessary to keep pacewith growing demand or shipping in the years to come.xii

These projections actor current market trends and do not accountor concerted eorts undertaken to combat oreign oil dependenceand the eects o climate change. Given transportations impact onboth o these ronts, making progress on oil savings and reducingGHGs will accelerate the need to capitalize on eciencies alreadyachieved within the reight rail industry. Expanding reight rail capacitywill not only help achieve energy savings and pollution reductions

within the sector, but also guarantee that other industries are not letto carry additional burdens o emissions reductions to meet overallclimate change goals.

The Freight Rail Solution

Americas reight rail networks, comprising about 140,000 miles,move more than 2.2 billion tons o reight annually. Among the50,000-plus miles o primary rail corridors in the U.S., up to140 trains per day move commodities such as crops, ore, andmanuactured goods or processing and distribution.xiii

Freight rail is a ar more ecient mode o transporting bulk goodswhen ranked against trucking and aviation, especially over long

distances, by moving a ton o reight 480 miles per gallon o uelconsumed.xiv On a per-ton basis, trucking uses on average ourtimes the energy to transport reight versus rail.xv While trucks are

Source: Bureau o Transportation Statistics

Table 2: 2005 U.S. petroleum-based fuel consumption

by transportation mode (millions of gallons)

2 Full Speed Ahead: Creating Green Jobs

n Aviation

n Passenger cars

and trucks

n Freight trucking

n Transit

n Freight rail

n Water-borne

(incl. reight)

Table 3: 2003 Rail versus truck fuel savings

per distance segment

Fuel savings per carload (gallons)

Distancerange(miles)

0 200 400 600 800 1000 1200

2000

1000

500

300

0

Source: ICF International

2,117

4,098 8,445

139,504

15,300

33,453


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necessary to carry goods over the last mile rom local andregional distribution centers to market reight rail is the mostecient means o moving reight medium and long distances romports and inland terminal centers.xvi

Advances in locomotive and rail system eciency have increasedsubstantially in the past two decades, with the reight rail industryhaving increased its uel economy 38 percent since 1990, comparedto 11 percent or trucks through the same period. In recent years,railroads have implemented advanced monitoring systems toimprove engineers ability to drive at speeds that maximize uelsavings. Railroads have also invested in lighter reight cars and moreecient locomotives to reduce uel consumption. These eciencygains have allowed the reight rail industry to double the numbero ton-miles traveled without increasing energy use over the lastthree decades. In 1980, reight rail transported 919 billion ton-mileso cargo; by 2008 this increased to 1.8 trillion ton-miles, and uel

consumption remained steady at nearly 4 billion gallons over thosethree decades.xviii

Energy savings ostered by transporting reight via rail results inlower GHGs. While accounting or nearly hal o total U.S. reightton-miles, rail currently contributes only about 11 percent o reight-related carbon dioxide pollution.xix Furthermore, in 2010 the U.S.Environmental Protection Agency proposed that shiting ve percento truck reight to reight rail would signicantly contribute to reducinggreenhouse gas emissions to levels that would help solve climatechange.

To the extent reight rail investments improve the movement o reightand passengers, we will also have the added benet o oil savingsand GHG reductions rom better intercity passenger rail services.

Freight Rail Jobs are Green Jobs

Green jobs are those jobs which help achieve goals to reduceclimate impact, save energy, encompass waste reduction andrecycling, conserve water, lower carbon pollution, producerenewable energy, recycle resources and goods and remediateenvironmental problems. Freight rail jobs, key to reducing carbonand saving energy in the transportation sector, meet this standard.

This assertion is reinorced by emerging standards o economistsand labor market analysts who are at the beginning stages ocodiying working and workable denitions o green jobs.

The transition to a low-carbon economy is a dynamic processand green jobs will evolve along an ever-improving continuum. Todate, perhaps the most comprehensive labor market analysis ogreen jobs has been developed by authors writing on behal othe Occupational Inormation Network (O*NET), which prepared a2009 report or the U.S. Department o Labor entitled Greening othe World o Work. This report analyzes the impact o the growinggreen economy on occupational requirements and on the broadersystems o industrial and occupational categorization used byworkorce and economic developers to track industry demandor specic occupations, as well as the wages earned and skillsrequired by workers in those occupations. These systems, the NorthAmerican Industrial Classication System (NAICS) and the StandardOccupational Classication (SOC), dont recognize separate greencategorizations or either industries or occupations. Thereore, thereport is necessarily crosscutting in its approach, not least in thedenition it oers o the green economy, which spans multiple

industries and is analogous to the denition oered above:

The green economy encompasses the economic activity related toreducing the use o ossil uels, decreasing pollution and greenhousegas emissions, increasing the efciency o energy usage, recyclingmaterials, and developing and adopting renewable sources oenergy.

Expanding capacity would allow freight rail to

capitalize on the growing intermodal market, which

transports more than 12 million containers annually.

3

Source: Bureau o Transportation Statistics

Table 4: 2007 U.S. total surface freight ton-miles by mode

(trillions of ton-miles)

n Trucking

n Freight rail

n Water-borne

reight

1.30 1.40

0.17


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The report goes on to dene twelve broad industry sectors thatmeet this denition. One o those sectors is transportation, whichis dened as ollows:

This green economy sector covers activities related to increasingefciency and/or reducing the environmental impact o variousmodes o transportation, such as trucking, mass transit, reightrail, and water.

The report then develops a typology o dierent green joboccupational categories, organized by the skills required or thesejobs and the degree to which these are new skills. This typologyillustrates how most green jobs are, in act, current occupations inpresent-day industries:

1) existing occupations expected to experience primarily anincrease in employment demand;

2) existing occupations with signifcant change to the work andworker requirements; and

3) new and emerging green occupations.


In 1980, reight rail transported 919 billion ton-miles ocargo; by 2008 this increased to 1.8 trillion ton-miles,

and uel consumption remained steady at nearly 4 billiongallons over those three decades.

The report goes on to give examples o transportation sector jobsthat are green increased demand jobs the rst o the threecategories as they correspond with O*NET-SOC occupations.These include a number o rail jobs:

Railroad Engineers O*NET-SOC: 53-4011.00

Rail-Track Laying and O*NET-SOC: 47-4061.00Maintenance Equipment Operators

Railroad Conductors and Yardmasters O*NET-SOC: 53-4031.0

Greening o the World o Workthus contextualizes green jobs withinthe systems used or industry and occupational analysis and clearlyidenties rail jobs as part o the categorization they oer or greenoccupations.

Building on this work, the Department o Labors Bureau o LaborStatistics (BLS) is in the process gathering data about green jobs inorder to develop a denition o green industries and green jobs thatis comprehensive and robust enough to serve as the basis or uturepolicymaking and labor market analysis.

Accompanying their notice o solicitation o comments publishedin the Federal Register in March 2010, BLS proposed a list o

industries that should be considered green. One o the industriesproposed is Line-Haul Railroads (NAICS Code # 482111), whichNAICS denes as: primarily engaged in operating railroads or thetransport o passengers and/or cargo over a long distance within arail network

While BLS is not clear at their present stage o analysis about howhigh up the supply chain, or how broadly, to label manuacturingindustries as green, the list does includes Railroad Rolling StockManuacturing (#336510) as a proposed green industry.

Furthermore, supporting industries that lay the oundation o reightrail inrastructure play a large part in contributing to transportationeciency, and as such, could meet the standards as currently

In March 2010, President Barack Obama announced a goal odoubling the value o American exports by 2015, which ideallywould prompt expansion o the reight rail network to movemore goods.

72%

5%

21%

3%

Source: U.S. Environmental Protection Agency

Table 5: 2007 U.S. transportation greenhouse gas

emissions by mode

n Trucking

n Freight rail

n Other reight

(incl. water-borne)

n Passenger

transportation


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Freight Rail Industry Profle:

TTX Company

Headquarters: Chicago, IL

Total employees: 867

Locations: Jacksonville, FL; Joliet, IL; Waterord, MI;

North Augusta, SC; TTX Company also has

employees located at 33 major rail acilities

throughout the United States.

Company description: TTX maintains and supplies large

pools o railcars which are shared among the railroads and rail

shippers. Unlike cars owned by the individual railroads, TTX

Company railcars do not have to be returned empty to the owning

railroad ater being unloaded by another railroad. Instead, the

railcars can be reloaded and transported to any other destinationby any railroad.

This practice prevents more than 2.5 billion empty miles per year,

saving more than 167 million gallons o uel annually.

Supporting clean energy: TTX provides numerous car types

or the transportation o blades, towers, nacelles, hubs, and other

wind power generating equipment. Moreover, TTX Companys

engineers possess substantial expertise in modiying railcars

or this service in conjunction with engineering rms and wind

turbine manuacturers that design and manuacture the xtures

that apply the components to the railcars.

For instance, TTX has converted hundreds o 89-t fat cars and

ormer intermodal spine cars (each spine car is at least 260-t

long) to handle wind turbine blade xtures. Likewise, these and

other cars transport the tower sections as well. Additionally, TTX

Companys large feet o heavy-duty fat cars, bulkhead fat cars

and 89-t, 110-ton fat cars are all suited to carry heavy nacelles

and hubs.

Union support: TTX Company has 357 employees that are

members o the Brotherhood o Railway Carmen.

A TTX employee perorms repairs on a coupling to helprecondition a reight railcar.

55

proposed. These existing occupations such as constructiontrades that lay track and build supporting inrastructure and railequipment manuacturers generate and sustain employmentbased mostly, i not entirely, on capital investments that enhancereight rail eciency.

Freight rail and supporting industry jobs are green jobs, and theemerging consensus suggest this will be the case as the denitionis urther rened. Labor market analysts, advocates, workorce andeconomic development practitioners can all build on this oundation.

Addressing OtherEnvironmental Concerns

While reight rail expansion is part o the move to a clean energyeconomy, this is not to be broadly interpreted that all reightrail activities are benecial to the environment. Like most otherindustries, there are areas where better practices can be developed

and employed to oset negative environmental impacts.

For example, while the reight rail industry has made signicantprogress in improving uel eciency, ossil uels are the basis olocomotive energy and pollution is inevitably created. In Caliornia,communities are concerned about the concentration o dieselemissions produced by trucks, trains and cargo-handling equipmentin rail yards, which some say result in high cancer risks orneighboring communities.

Progress in areas such as this is necessary to truly capitalize onthe green potential o reight rail. Pro-active eorts on the part othe industry, such as working with the Caliornia EnvironmentalProtection Agencys Air Resources Board to solve communitypollution issues, are steps in the right direction. The railroads alsohave extensive programs in place also to limit pollution related touel and industrial processes, and to reward complying with andexceeding local, state and national environmental standards.

Federal policy holds potential to promote substantial emissionsreductions across the industry: in March 2008, the EPA issuednew locomotive emissions standards, eective in 2015, that willcut particulate emissions by up to 90 percent and nitrogen oxideemissions by up to 80 percent. The reight rail industry is committedto meeting these mandates and supportive o ederal emissionstandards, as they align with the industrys ongoing eorts toadvance system eciency and invest in uel-ecient vehicles andequipment.

Freight Rail Creates EmploymentThroughout the Economy

Investment and Economic ImpactCoast to coast, the reight rail industry links commerce and helpsdrive the American economy. The reight rail industry is a signicanteconomic engine, contributing nearly a quarter o a trillion dollarso total economic activity annually, and is supported directly andindirectly by about 1.2 million workers. As such, the reight railindustry and its supportive sectors comprise a value-add to theeconomy, representing 1 percent o the U.S. workorce that creates2 percent o output within Americas $14 trillion economy.xxii


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Within the industry itsel, capital investment in reight rail presents asignicant opportunity or American job creation. In 2008, the Class Irailroads spent more than $10 billion on inrastructure and equipmentinvestment, and historically, the industry directs more than our timesthe proportion o revenues into capital investment compared to other

industrial sectors.xxiii

In addition to benets accruing rom energy eciency and pollutionreduction, investments in reight rail create quality jobs that onaverage are better paying and more accessible than jobs in thebroader economy.

Specically, Americas reight rail providers comprise a $65 billion ayear industry, with reight rail employees directly representing about180,000 jobs. Rail employees, the majority o whom are unionized,earn on average 30 percent more than the mean U.S. annualincome and 74 percent more than workers in the transportationsector as whole.xxiv

How Many Jobs?

To estimate the types o jobs that are directly and indirectly createdby investment in reight rail, we use a model that merges industrialdata on input-output relationships with household-level data ondemographic and labor market variables. We nd that:

$1 billion o rail capital investment creates about 7,800 green jobs,which we dene as jobs created in direct and supplier industriesas a result o reight rail spending. These industries include:

Manuacturing locomotives, reight railcars, shop machinery

Construction rail roadway buildings, warehouses, grading

Iron and steel industries rail and over-the-road track materials

Others communications and computer support, timber orrailroad ties, quarrying or rail ballast

Rail capital investments create and sustain proportionatelyewer low-wage jobs and more medium-wage jobs comparedto the broader economy. They also benet those hardest hit bythe recession, providing a higher proportion o employment toworkers without a college degree.

Including the re-spending eects, $1 billion o rail investmentscould create anywhere between approximately 12,300 to 26,600total jobs throughout the US economy.

Calculating what mix o jobs would be supported by higher railinvestments involves three steps. The rst is translating a packageo capital investment (based on actual 2008 reight rail capitalexpenditures, which include equipment and inrastructure),into spending fows that match up with one or more o the202 industries in the BLS 2008 nominal domestic employmentrequirements matrix.xxv

Second, these spending fows are equated into employment impact.The BLS matrix shows how demand in a given industry is supportedby employment in both that industry (the direct job impact) and other

supplier industries (the indirect job impact).

For example, $1 billion o demand in the construction industry hasimpacts outside o the BLS-dened industry as well. For example,$1 billion in demand in any given industry would sustain jobs withinthat BLS-dened industry (the direct job impact), and also jobs inretail trade, health care, and a variety o other industries throughoutthe economy.

Freight rail jobs, key to reducing carbon in the transportationsector, meet the standard reinorced by economists and labor

market analysts who are codiying working and workable defnitions o green jobs.


Occupation Mean HourlyWage

Mean AnnualIncome

All occupations $20.32 $42,270

All transportationand material moving occupations

$15.12 $31,450

All rail transportation occupations $26.33 $54,760

Locomotive engineers $25.71 $53,470

Locomotive frers $25.46 $52,950

Rail yard engineers, dinkey operators,and hostlers

$16.76 $34,850

Railroad brake, signal, and switch operators $23.75 $49,400Railroad conductors and yardmasters $26.02 $54,120

Freight Rail Employee Profle

Lyle Staley, a ourth generation railroader,

began his rail career in 1969, served in the

Navy and has since dedicated a total o 39

years to railroading with the Toledo, Peoria and

Western (TP&W) Railroad.

Staley joined TP&Ws Environmental/Hazardous

Materials Department in 1994, and among his many certications and

duties, he developed a system-wide process to review energy usage,

contributing greatly to the railroads ability to determine, report and

model emissions. Staley has also worked to transorm locomotive

pre-startup and ueling procedures, uel leak prevention and training

programs to promote signicant energy savings and reduce pollution.

For these and many other eorts, Staley won the rail industrys North

American Environmental Employee Excellence Award in 2008 or

environmental stewardship in executing his responsibilities.

Source: Bureau o Labor Statistics

Table 6: 2008 Rail wages versus U.S., transportationoccupations (mean hourly wage and annual income)


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7

Direct and Indirect Job Creation

Lastly, demographic and labor market data rom the U.S. CensusBureaus Current Population Survey (CPS) are actored to calculate

the share o each industrys employment by relevant categories(gender, race, ethnicity, wage levels, etc.), reerencing data rom2005 and 2007 to ensure the largest sample size possible.

A crosswalk approach matches up the CPS data on demographicand labor market variables with the BLS data on industry input-output relationships. This crosswalk* is easy to construct as itmatches up both the CPS and the BLS industry codes to a thirdclassication system, the NAICS, that maps onto both the CPSand BLS data.

By then multiplying the number o jobs created in each industry(either through direct spending or through supplier eects) byindustry demographic shares and then summing these up acrossindustries, we get the total number o jobs in each industry category

(both direct and supplier jobs) that are created through a givenamount o inrastructure spending.

O these direct and indirect jobs, we can impute a number odemographic attributes:

Table 7: U.S. job creation, by industry type, resulting fromfreight rail capital investment

Source: Economic Policy Institute

40%

19%

10%

7%

5%

5%

4%

2%

2%2% 1% 1%

1%

Manuacturing - Total Leisure and Hospitality

Construction Financial Activities

Natural Resources and Mining Retail Trade

Proessional and Business Services Inormation

Wholesale Trade Government - Total

Other Services Utilities

Transportat ion and Warehousing Education services

Percentages do not total 100 percent due to rounding.

Job Characteristics DirectIndirect

(% of total) TotalOverall

Economy

Totals 45% 55% 100%

Gender

Male 88% 69% 77% 60%

Female 12% 31% 23% 40%

Race

White 74% 70% 72% 67%

Black 7% 10% 9% 11%

Hispanic 16% 15% 15% 15%

Asian 1% 3% 2% 4%

Other 1% 2% 2% 2%

Education

Less than High School 20% 14% 17% 11%

High School Only 41% 35% 38% 31%

Some College 26% 27% 27% 30%

BA or greater 12% 24% 18% 28%

Wage Quintiles

First (lowest) 12% 18% 15% 19%

Second 24% 20% 22% 21%

Third 25% 22% 24% 20%

Fourth 22% 21% 22% 20%

Fith (highest) 16% 19% 18% 20%

Region

Northeast 18% 16% 17% 18

Midwest 23% 25% 24% 23

South 39% 36% 38% 35

West 20% 23% 21% 23

Central City status

In central city ometro area

16% 23% 20% 27%

In metro area, notcentral city

39% 42% 41% 44%

Not in a metropolitan area 31% 19% 24% 14%

Not Identifed 15% 16% 15% 14%

Source: Economic Policy Institute

Table 8: Demographics of direct and indirect job creationfrom U.S. freight rail capital investment

* This crosswalk is available rom the authors upon request.


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Additional Employment Impact:Induced Jobs

Rail investments tend to create quality employment opportunities.

Re-spending or induced jobs will also be created in theindustries in which workers in the direct and indirect industries

choose to spend their additional income. This can include anything

rom housing, education, ood, recreation and other consumer andbusiness spending made possible through rail-derived income.

Because we cannot predict what types o purchases workers will

make, it would be inappropriate to label the entire job impact as

consisting o green jobs.

The model only predicts direct and indirect job impact, but by

applying a standard economic multiplier one can determine

a rough estimate o the total job impact, one that includesre-spending eects.

Economic multipliers are estimated by looking at historical data and

attempting to link a single policy change with their economic impact.As such, estimates produced by this modeling should be considered

guides rather than direct measures since all other variables are held

constant (in order to isolate the policy eect) and also compensate

or the act that most policy changes are themselves responses toeconomic conditions. For these reasons, multiplier estimates tend to

vary widely.

On the low end, Mark Zandi (chie economist at Moodys Economy.

com) estimates that each dollar o inrastructure investmentproduces 57 cents o induced output throughout the rest o

the economy (with a total economic multiplier o 1.57). The

Congressional Budget Oce publishes a broad multiplier or

purchases o goods and services by the ederal government,which it uses to calculate the economic impact o inrastructure

investments. This multiplier is a range, rom 1 (no induced economic

impact) to 2.5 ($1.50 o induced output or every dollar). On the

higher end, the U.S. Department o Commerces RIMS II (RegionalInput-output Modeling System) employment model estimates that

the multiplier or reight rail capital investments specically is 3.4.xxviii

Applying these economic multipliers suggest reight rail capital

investments would produce anywhere rom 12,300 to 26,600 total

jobs (direct, indirect, and induced) per billion dollars o investment.

What Kinds of Jobs?Rail investments tend to create quality employment opportunities.

Relative to the overall economy, a disproportionately small amount o

these jobs are low-wage, with more jobs created in the middle o the

wage distribution. Over the past ew decades hourly wage inequalityhas risen dramatically, becoming the single largest impediment to

raising the living standards o average American workers. Much

(though ar rom all) o this rise in wage inequality is attributable to

the de-unionization o the workorce and growing wage advantageaorded to those with a college degree, actors also perpetuated in

part by the loss o manuacturing jobs in the economy.xxix

The model suggests jobs that support the reight rail industry tend

to be slightly more unionized when compared with the generaleconomy (13 percent or industries directly or indirectly supporting

the reight rail industry, versus 12 percent or the economy as a

whole)**, a condition that oten coners higher benets and greaterjob security to workers. Finally, a much larger share o these jobs areavailable to the 70 percent o workers without a our-year

college degree.

Caveats to Using Economic Models

Using an economic output multiplier to calculate re-spending jobs

produces only a rough estimate. Implicit in this calculation is theassumption that the ratio o economic output to jobs or, in other

words, worker productivity is the same in the broader economy

(in which direct and indirect workers are re-spending their incomes)

as it is in those direct and indirect industries. I, or example,

productivity were lower in the re-spending industries compared tothe direct and indirect industries, it would suggest that the economic

multipliers actually understate the re-spending job impact.

These estimates are based on currently existing patterns o

employment across sectors. As such, the nal results suggest

how many and what kinds o jobs would be created within the

economy. However, to the extent that new investments are aimed

at transorming the economy or labor market, the results are



Keith Brinker has served CSX or 28 years, and

works or the railroad in Jacksonville, Florida as

manager o environmental remediation.

When Brinker transitioned to a position in

Georgia, the railroad was not consistently using

the same chemicals, cleaners and petroleumproducts. Brinker led an eort to reduce the number o chemicals and

cleaners in use rom 65 to 16, lowering concentrations o potentially

harmul chemicals and reducing employee exposure, generation o

hazardous waste and the chemical load on the railroads wastewater

treatment plants. His eorts and introduction o saer chemicals

eliminated the use o chlorinated solvents system-wide.

For this and an outstanding track record o environmental excellence

throughout his career, Brinker won the rail industrys North American

Environmental Employee Excellence Award in 2006.

** While the majority o railroad employees are unionized, these workers are part o

a subset o transportation and warehousing occupations, which only make up ourpercent o industries directly and indirectly supporting the reight rail industry, as

described in Table 7.


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not precisely indicative o the true impact. For example, policy

restrictions on the kinds or quality o jobs created and specic policy

targeting o job creation would lead to dierent outcomes than

estimated here. The numbers presented here compose an estimatedbaseline or policy makers to consider.

Recommendations

There are several policy approaches that would bolster the reight

rail industrys ability to create jobs to support a rebounding American

economy. Continued and expanded investment in rail inrastructure

would also capitalize on potential or much greater transportationeciency and reduced pollution rom the transportation sector.

Tax incentives reduce the cost o investments, helping economically

viable projects get built sooner and thereby accelerate employmentcreation and public benets. By targeting specic outcomes, such

as generating levels o employment or expanding transportation

system capabilities, policymakers can limit the scope and duration

o tax credits to achieve the intended eect. Furthermore, tyinginvestments to outcomes would help remove much o the risk o

wasting incentives on economically unjustied projects.

We propose the ollowing set o policy recommendations tohelp the reight rail industry expand and meet the demands o a low-

carbon economy:

A tax credit for rail capital investments. Ideally, all businesses

that make capacity-enhancing rail investments, in addition to therailroads, would be eligible or these incentives. While tax credits

would oset potential government revenues, U.S. Department

o Commerce data suggest that every $1 o rail inrastructure

investment generates more than $3 in economic output.xxx Such

a tax credit could be targeted to support reight rail capacity

expansion specically, which in recent years represents about

25 percent o total reight rail capital investment. The economicmodel detailed in this report suggests approximately 7,800 green

jobs, and a total impact o 12,300 to 26,600 jobs are generated or

sustained per billion dollars o capital investment.

Renewal of the expired short line tax credit for short lineand regional railroads. This existing tax credit, which lapsed

in 2009, has created or sustained more than 125,000 jobs, and

enabled $330 million in short line track upgrades necessary or

regional carriers to match reight cars with the larger, heavier carsutilized by Class I railroads or long-distance hauls. This credit

also supports thousands o jobs in the steel and rail construction

industries.

Develop public-private partnerships between freight

railroads and passenger rail. These partnerships can greatly

expand the use o rail with responsibility shared between

two entities government paying only or public benets,

and railroads paying or the business benets they gain rom

improvements to the rail network. For example, some projectsmight deliver public benets such as decreasing highway

congestion by taking trucks o the road, or oster higher and

high-speed intercity passenger rail (which would increase travel

options and also contribute to a lower carbon transportationsystem), as well as private benets or reight rail by enabling

aster, more reliable train operations.

In other cases, a public entity may contribute a portion o the initial

investment required to make a project easible, with the railroad

responsible or unding all uture maintenance and operationsto sustain the project over time. In all cases however, we must

ensure oversight is in place to ensure public nancing is tied to

public benet outcomes.

9


John Rebillet is a pipetter or the Burlington

Northern Santa Fe railroad (BNSF) and member

o the Sheet Metal Workers International

Alliance (Local 259). He has worked or BNSF

or 19 years and is currently employed at

the Alliance Mechanical Facility in Alliance,

Nebraska.

Rebillet enjoys keeping up with the changes

in locomotive technology and also serves as

the unions Local Chairman to advance the interests o his ellow

railway workers.

The Alliance Mechanical Facility is one o the largest repair

acilities within the BNSF system, with about 600 employees who

perorm scheduled and unscheduled maintenance on the railroads

locomotives. Keeping locomotives in good repair has been crucial in

helping the reight rail industry achieve a 38 percent increase in uel

eciency since 1990. Freight rail carries twice the tonnage now as it

did in 1980 without increasing system-wide uel consumption (nearly

4 billion gallons annually).

Rebillet also owns a local store, where he recently installed high

eciency rerigeration to save energy, reduce pollution and cut costs.


Donald L. Robey has been in the railroad

industry or 28 years and currently is

director o locomotive engineering or CSXin Jacksonville. Robey designed, piloted

and implemented a horsepower reduction

program or 132 retrotted locomotives.

Over ve years, it is estimated this

technology will reduce uel consumption by 12.5 million

gallons and greenhouse gas emissions by almost 100,000

tons, an achievement or which Robey won the 2007 Chaee

Award, given to rail workers or exceptional individual eorts in

environmental stewardship.


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The Greenbrier

CompaniesHeadquarters: Lake Oswego, OR

Total Employees: 4,174

Locations: Dothan, AL; Pine Blu, AR; Tucson, AZ;

Modesto, CA; San Bernadino, CA; Golden, CO;

Macon, GA; Red Oak, IA; Chicago Heights,

IL; Peoria, IL; Atchison, KS; Kansas City, KS;

Osawatomie, KS; Topeka, KS; Elizabethtown,

KY; Hodge, LA; Kansas City, MO; Omaha, NE;

Portland, OR; Springeld, OR; Lewistown; PA;

Philadelphia, PA; Youngstown, PA; Cleburne,

TX; Corsicana, TX; San Antonio, TX; Van Ormy,

TX; Chehalis, WA; Finley, WA; Tacoma, WA

Company description: The Greenbrier Companies manuacture

new reight cars as well as lease, manage, repair and reurbish

existing reight cars. The company also produces and reurbishes

reight car components. Greenbrier Rail Services oers the

largest network o shops in North America.

Sustainable production: Greenbrier strives to create a healthy

and sae working environment as well as to recycle and conserve

resources and energy at every stage o the product lie cycle.

The company is currently in the process o relocating a hydraulics

acility to Red Oak, Iowa, consolidating two separate acilities into

one to yield a smaller ootprint. New systems have been installedto manage water used in the cleaning process to eliminate

potential environmental contamination. In order to improve air

quality or employees, the acility has internal structures within

the larger acility to house welding units. The air and umes rom

these structures are ltered and decontaminated beore being

converted to heat or the larger acility.

New reight cars: The combination o new high-strength

and lightweight materials, innovative designs and advanced

technologies creates lighter more ecient railcars. These new

cars have nearly 20 percent greater capacity and can save

millions o gallons o uel over their liecycles.

A Greenbrier employee at their Tuscon, AZ acility perormsa repair on a reight railcar.

Americas reight rail providers comprise a $65 billion a yearindustry with 180,000 employees, such as these workers

coordinating train activity at a Union Pacifc dispatch center.

Public-private partnerships are prescribed in the Federal RailAdministrations (FRA) high-speed and intercity passenger rail

programs. Under FRAs guidelines, states applying or ederal

grants or high-speed or intercity passenger rail are required to

have written agreements with host reight railroads on saety,

inrastructure capacity, compensation and liability issues in orderto be eligible or ederal unding. New programs could build upon

this established ramework to greatly expand benets accruing

rom these partnerships.

Ensure policy promotes quality, homegrown employment

opportunities. In order to maximize the economic benet o

these investments and create quality jobs, we should ensure that

any investment o taxpayer unds or reight rail investment include

prevailing wage provisions to ensure that new jobs maintain the

rail industrys relatively high level o pay and expand these benetsto more workers.

To uphold pay and benet standards in the rail sector, the

employees o anyone who owns, operates or maintains raillines should be subject to relevant railroad laws (such as the

Railroad Retirement Act and Railway Labor Act). I public-privatepartnerships and other measures alter employment arrangements,

current collective bargaining agreements must be respected and

successorship rights must be provided.

Also, policy approaches should incorporate domestic sourcing

(Buy America) requirements, which also hold potential to

incorporate prevailing wage standards, to ensure these capitalinusions benet American workers, expand clean energy

manuacturing, and ampliy multiplier eects or both employment

and investment within the domestic economy.



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Reidler DecalCorporation

Headquarters: St. Clair, PA

Total Employees: Fluctuates between 50-180

Locations: Charlotte, NC; Dallas, TX

Company description: The Reidler Decal Corporation,

ounded in 1926, is the oldest and largest abricator o

markings and signage or the railroad industry. Reidler operates

a 60,000-square oot headquarters and actory in St. Clair

(northeastern Pennsylvania), and with the decline o mining in the

region, the company provides new employment opportunities.

The Reidler amily is in the third generation o ownership and

most employees have been with the company or their entire

working lives.

Supporting the rail industry: Rising levels o reight movement

means new car builds and new repairs equating to more

demand or Reidlers services and more employees.

Expanding rail capacity would mean more opportunities or

Reidler Decal, and companies like it, to outt new generations

o specialized cars, as well as acilitate aster, more ecient

movement o reight and access to new markets.

A Reidler Decal employee helps abricate a train markingor a reight railcar.

Conclusion

Over the past two centuries, rail has helped America realize its

potential and become the worlds leading economic power. In

this new century, rails eminence as an economic engine has the

potential to be as great, and also produce signicant energy savings,reduce pollution, move cargo across the country eciently as part o

a multi-modal reight network, and create an estimated 7,800 green

jobs per billion dollars invested.

The recent recession, and the massive job loss that accompanied

it, shows that a status quo approach will not suce i America

is to leave the 21st century stronger than when it entered. A

truly balanced transportation network that achieves highereciencies among passenger and reight modes will help create

an inrastructure platorm that makes America more competitive in

the global economy. Freight rail occupies an important role in this

multi-modal network, and merely maintaining share within a growing

reight market would orego the signicant opportunities presentedby rails demonstrated ability to reduce oil consumption, achieve

system and vehicle eciencies to reduce pollution, as well as create

and sustain quality employment throughout the economy.

Freight rail expansion would create thousands o quality green

jobs and induce overall employment and economic growth while

strengthening many o Americas goods-producing industries.

Furthermore, reight rail has already demonstrated its ability toachieve signicant eciencies resulting in lower uel use and reduced

pollution; increased investment would advance this progress, which

has doubled the overall industrys eciency in a ew decades.

As America moves ull speed ahead to a clean energy economy,reight rails crucial role in that transition can be expanded through

sound policy choices that maximize the public and economic

benets o this industry.

11

By targeting specifc outcomes, such as generating levelso employment and/or expanding transportation systemcapabilities, policymakers can limit the scope and durationo tax credits to achieve the intended eect.


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References

i Positive job growth, but not enough to reduceunemployment rate, Heidi Shierholz/Economic PolicyInstitute, 2 April 2010.

ii Labor market closes 2009 with no sign o robust jobs

recovery, Heidi Shierholz/Economic Policy Institute, 8January 2010.

iii The State o Working America 2008/2009, Larry Mishel,Jared Bernstein, and Heidi Shierholz/Economic PolicyInstitute. Ithaca, N.Y.: ILR Press (an imprint o CornellUniversity Press), 2009, pg. 184.

iv The importance o manuacturing: Key to recovery in thestates and the nation, Robert E. Scott/Economic PolicyInstitute, March 2008.

v Mishel, Bernstein, and Shierholz, pg. 202-203.

vi Capitalizing on the Upcoming Inrastructure Stimulus,CIBC World Markets, January 2009.

vii United States Energy Profle, U.S. Energy Inormation

Agency (U.S. EIA), 18 August 2009; How Dependent AreWe on Foreign Oil? U.S. EIA, 23 April 2009.

viii Biouels: DOE Lacks a Strategic Approach to CoordinateIncreasing Production with Inrastructure Development

and Vehicle Needs, General Accounting Ofce, Reportnumber GAO-07-713, 11 June 2007.

ix U.S. Imports by Country o Origin, U.S. EIA, April 2010;National Transportation Statistics: Table 4-6 - EnergyConsumption by Mode o Transportation, Bureau o

Transportation Statistics (BTS), September 2009.

x Freight Analysis Framework, Federal HighwayAdministration Ofce o Freight Management andOperations, 2006.

xi Rail Intermodal Transport, American Association oRailroads, June 2008.

xii National Rail Freight Inrastructure Capacity andInvestment Study, Cambridge Systematics,September 2007.

xiii Transportation For Tomorrow, National SuraceTransportation Policy and Revenue Commission,December 2007.

xiv Railroad Rate Studies, U.S. Department o TransportationSurace Transportation Board, 2009.

xv Comparative Evaluation o Rail and Truck Fuel Efciencyon Competitive Corridors, ICF International (or the FederalRailroad Administration), November 2009.

xvi National Transportation Statistics: Table 4-14 -Combination Truck Fuel Consumption and Travel, Table

4-17 - Class I Rail Freight Fuel Consumption and Travel,Table 1-46a - U.S. Ton-Miles o Freight, BTS, 2008-2009.

xvii Railroad Rate Studies.

xviii Transportation or Tomorrow.

xix Inventory o U.S. Greenhouse Gas Emissions and Sinks:1990-2008, U.S. Environmental Protection Agency(U.S. EPA), April 2010.

xx EPA Analysis o the Transportation Sector GreenhouseGas and Oil Reduction Scenarios, U.S. EPA,10 February 2010.

xxi Capital Spending R-1 Schedule 330, Column (e); FinalDemand Multipliers, U.S. Department o Commerce,Regional Input-Output Modeling System (RIMS) II.

xxii Current-dollar and real GDP, Bureau o Economic Analysis,March 2010.

xxiii RIMS II.

xxiv Occupational Employment Statistics, U.S. Department oLabor Bureau o Labor Statistics (BLS), December 2008

xxv Nominal dollar based domestic employment requirementstable 2008, BLS, 10 December, 2009.

xxvi Fiscal Policy Roadmap, Mark Zandi/Moodys Economy.com,19 October 2009, pg. 4.

xxvii Estimated Impact o the American Recovery andReinvestment Act on Employment and EconomicOutput From October 2009 Through December 2009,Congressional Budget Ofce, February 2010, Table 2.

xxviii RIMS II.

xxix Since 1979, unionization rates have allen by more thanhal, rom 27 percent o the workorce to 12.3 percent.

Also, college workers earned wages that were 50 percenthigher than those o non-graduates (holding other workercharacteristics constant), while by 2007 that advantagehad risen to 80 percent. Research by DiNardo, Fortin, andLemieux shows how this has led to greater wage inequality:Labor market institutions and the distribution o wages,1973-1992: A semi-parametric approach, John DiNardo,Nicole M. Fortin, and Thomas Lemieux, Econometrica. Vol.64, September 1996, pp. 1001-1044.

xxx RIMS II.

Authors:

Rob McCulloch, BlueGreen Alliance/Legislative Advocate orTransportation and Transit Issues

Ethan Pollack, Economic Policy Institute/Policy Analyst

Jason Walsh, BlueGreen Alliance/Director o Policy and StrategicPartnerships

The authors would also like to thank the ollowing or their editorialand technical assistance:

Brendan Danaher, AFL-CIO Transportation Trades Department/Legislative and Policy Representative

Dave Foster, BlueGreen Alliance/Executive DirectorKate Gordon, Center or American Progress/Vice Presidento Energy Policy

Frank Hardesty, American Association o Railroads/AssistantVice President - Policy and Economics

Daniel Keen, American Association o Railroads/AssistantVice President - Policy Analysis

Deron Lovaas, Natural Resources Deense Council/FederalTransportation Policy Director

Ann Mesniko, Sierra Club/Green TransportationCampaign Director

Kelly Schwinghammer, BlueGreen Alliance/National

Communications Director



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full speed ahead freight trains for a green economy

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