Highway Projects Won’t Save the Rust Belt

But does highway expansion actually create long-term economic value? There is a lot riding on the question for the Rust Belt. Our two “Highway Boondoggles” reports (a third is due out next month) have included a surprising number of projects in and around Rust Belt cities: the $331 million “Opportunity Corridor” highway in Cleveland; the proposed $2.7 billion widening of I-94 through the heart of Detroit, a $429 million bypass now under construction around the southern Ohio city of Portsmouth, and the proposed $2.1 billion Mon-Fayette Expressway through the “Steel Valley” outside Pittsburgh.

Economists generally believe that construction of the Interstate Highway System did increase economic productivity in the decades after World War II. But evidence has mounted that the economic boost from highway construction was a one-shot deal, and that we have long since entered the era of diminishing returns. The main effect of present-day highway construction, it is now believed, is to redistribute economic activity -- from city centers to new-build suburbs or from one town to another – not create it. In a region like western Pennsylvania, which has been hanging on by its economic fingernails for decades, spending more than $2 billion on a road like the Mon-Fayette Expressway would likely result in simply redirecting economic activity from one location in the region to another.

Now, if you are a business leader or a mayor in a struggling, formerly industrial town, that may still sound pretty OK -- except for two things. The first is that highway construction often undermines the existing working economic assets of a community. Evidence for this comes from the federal government’s half century-long (and counting) experiment with using highway construction as a vehicle for economic development in Appalachia. A 2012 study of those efforts by the Appalachian Regional Commission and researchers at the University of Tennessee found that:

“Although transportation-focused efforts encourage business development in some areas, they often have a negative impact on the vitality of downtown areas, existing business districts and adjacent neighborhoods. While better roads improve access and can reduce isolation, they cannot by themselves transform failing schools or resolve long-standing community conflicts.”

The second problem is that highway construction comes with a heavy opportunity cost. Money spent on highways may not be immediately transferrable to other purposes, but the increasing amount of general fund money now being funneled into highways in the United States is money that could clearly be spent on other, more pressing needs. Most Rust Belt metropolitan areas have been stagnating in population for decades, with levels of traffic congestion that may be annoying but are unlikely to get much worse. Meanwhile, crises in education, housing, opioid addiction, the fiscal viability of local governments, and the basic maintenance of streets and other public infrastructure cry out for resources and attention.