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Transit and Regional Economic Development

The types of jobs locating near transit are changing, and the ones that have grown are the places where our economy is likely to continue adding jobs such as professional sectors. However, even as jobs have grown near transit, they've grown faster away from transit over the past decade. This is mostly because we don't actively think about where jobs are located in planning for economic development.


In many regions throughout the country, the fastest growing employment centers are now located in auto-oriented suburban communities at the edge of metropolitan regions.1 From a public transportation perspective, dispersed and low-density employment centers are very difficult to serve through fixed-guideway transit.2 The location of new jobs at the edge also has important equity implications, as low-income residents have difficulty accessing jobs in auto-oriented suburbs from their inner city, urban, or rural neighborhoods. This can result in a significant cost to households and individuals as they spend more time and money commuting to work.3 Furthermore, there are important environmental impacts from job sprawl, including an increase in land consumption, and greater pollution and greenhouse gas emissions.

In order to promote more sustainable and equitable regions, many policy makers at the local and regional levels are working to find ways to concentrate future employment growth in higher density mixed-use districts. Transit is seen as a central mechanism for facilitating increased densities in the core, countering dispersal trends. At the same time, transit agencies are increasingly focusing efforts on providing transit corridors that serve major existing employment centers in order to promote ridership and sustain healthy operations.

A closer look at employment decentralization patterns by industry sector reveals that there are important nuances within the overall trends towards job sprawl. Research indicates that some types of firms may have a preference for higher-density urban locations, and can benefit from agglomeration. For example, a recent Brookings study showed that of all employment categories, manufacturing jobs were the most suburbanized, with 77 percent located more than five miles from city centers; by contrast, skill-intensive jobs were the least suburbanized, at 67 percent.4

This paper examines the composition of existing employment in areas served by fixed-guideway rail transit5, and explores how industries vary in their proclivity to locate in higher density, transit-served locations. It also assesses which industries have experienced recent growth near transit in absolute numbers, even though they may have a declining share of total employment in transit areas. The outcome of this analysis is a better understanding of the types of industries that may have a greater propensity to be transit-oriented. This paper is intended to provide a framework for how the coordination of regional economic development, land use and transportation planning efforts can better promote healthy, high-functioning regions.

This effort is a companion to CTOD’s report, “Transit-Oriented Development and Employment” which explores the need to consider regional employment centers in planning transit systems, and discusses how destinations and workplaces can be better incorporated into the discussion of transit-oriented development (TOD). This paper builds on the findings of that document, while focusing primarily on the location decisions of employers. Specifically, this report explores the differential benefits of density near transit to various industries. This frame is used to analyze the degree to which different industry sectors are currently attracted to transit-rich locations and to examine the character of employment clusters that are located near transit.

The analyses of this paper engage the question of how employment patterns relate to transit. It further assesses how regional economic development and land uses policies can leverage the location preferences of specific industries in order to foster economic growth near transit, rather than in auto-dependent locations. Findings from this paper will be of interest to regional economic development planners working to build long-term structural capacity for economic growth. It will also be of interest to transit planners that seek to maximize regional employment access and achieve high levels of ridership. Policymakers and planners will be able to use this paper to identify which industries currently express the greatest affinity toward transit and, thus, may be most appropriate to target for recruitment or retention in transit-oriented locations. The findings of this paper may also be help to make more cost-effective transit investments to better serve transit-oriented businesses and their employees.

Summary of Key Findings

Although employment has been sprawling away from central business districts for the past century, jobs have not dispersed evenly, either in terms of geography or industry. Certain high-skill “knowledge-based” industries, which include Professional, Scientific and Technical services, Information, Finance, and Insurance sectors, are more likely to locate in central business districts and higher density regional employment areas.

Approximately one quarter of the jobs in the 34 transit regions studied are located near transit.6 In 2008, 23 percent of all employment in the transit regions was located within a half-mile of existing fixed-guideway transit stops. This accounts for more than 14 million transit accessible jobs nationwide.

System size is a critical factor driving the share of employment located near transit. The greater the number of stations in a region’s transit system, the greater the share of its jobs were accessible by transit. For example, regions with large systems had 20 percent of jobs near transit, while regions with extensive systems had 45 percent of jobs in transit locations. This finding suggests that the benefits of a transit-oriented location for businesses are strongly related to the extent of the accessibility that the system can confer.

Recent trends indicate that transit areas are growing in total employment. Station areas exhibited an overall one percent increase in absolute employment. Sectors that exhibited especially strong growth within station areas over this period were: Arts, Entertainment, and Recreation and Food and Accommodation (each grew by 14 percent); Health Care and Social Assistance (which grew by 10 percent); and (which grew by 9 percent). At the same time, there was also a 22 percent drop in manufacturing jobs within these transit zones, some of which can be attributed to the displacement of these uses to other locations, as well as the conversion of industrial lands to other higher-density residential and commercial office uses.

Some industry sectors have a greater propensity to locate near transit. The government sector has the greatest affinity for transit locations of any industry sector analyzed. In 2008, with 42 percent of all public sector jobs were located in transit zones. Firms in knowledge-based industries were also more likely to be attracted to transit-rich areas. About 36 percent of jobs in Professional, Scientific, and

6 These 34 regions are metropolitan areas in the U.S. with fixed-guideway transit (defined as commuter rail, light rail, trolley, streetcar, and bus rapid transit (BRT) corridors with designated lanes. The regions and transit systems are listed in Appendix B.

Technical services are located within a half mile of a transit station. Retail and Production, Distribution and Repair industries were also well-represented in transit areas.

Transit areas are generally losing the share of total regional employment in most industry sectors. Although the transit areas experienced absolute growth in jobs from 2002-2008, these station areas contained a declining share of regional employment for every industrial sector, except for Utilities, Information, and Arts, Entertainment, and Recreation. This implies that much of the metropolitan job growth is occurring in auto-oriented locations.

There appears to be a relationship between employment density and the sectoral mix found in a transit area. The sectoral mix of jobs within a station area skews to more knowledge-based firms when station areas have higher employment densities. Knowledge-based industries compose 45 percent of jobs in transit zones with very high employment density, compared to only 15 percent in very low density transit areas. Similarly, public sector employment also comprises a higher share of the industry mix in higher density station areas. Conversely, Retail and Production, Distribution, and Repair employment declines as the area’s employment density increases. Most other industry groups are less sensitive to the employment density.

Employers value access to transit, and this is reflected in the growth of jobs in transit areas. The number of jobs in transit locations is growing, especially in high-skill sectors like knowledge-based industries. This suggests that there continues to be demand for infill locations, especially in downtowns and higher density employment centers. Therefore, there may be further opportunities for planners and policymakers to capitalize on this demand and work to encourage specific types of businesses to locate and expand near transit. This effort will require strong coordination between metropolitan planning organizations, regional economic development agencies, transit agencies, and local jurisdictions to enact policies that can support and encourage both existing and future employment uses in transit-rich locations.



1 This topic is discussed in detail in CTOD’s white paper, “TOD and Employment.”

2 Fixed-guideway transit includes commuter rail, light rail, trolley, streetcar, and selected bus rapid transit (BRT) corridors.

3 Ibid

4 Raphael, Steven and Michael Stoll, Job Sprawl and the Suburbanization of Poverty, the Metropolitan Policy Program at Brookings, March 2010

5 This data was collected using the CTOD Database of transit areas in 34 transit regions in the United States, described in more detail in Appendix B.