Economic Development White Paper Draft 03-06-08 - 201211081657343678

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Transportation Plan Update

White-Paper Series
Economic Development
Introduction
Economic development is understood in many different ways, but regardless of

one’s concept, it is clear there has always been a close and vital linkage between
transportation infrastructure and civilization’s economic relationships. The Puget Sound
region, more than most other areas, specializes in producing transportation-related goods
and services. This paper, one in a series of white-papers exploring the multi-faceted
nature of our transportation infrastructure, will take a broad view of that infrastructure.
Traditionally, the County has had responsibility for only a portion of the overall mix of
transportation infrastructure. But to understand the economic impacts of transportation it
is important to recognize the interrelationships between transportation modes. For
example, Puget Sound ports support thousands of jobs throughout the region and are
dependent upon county road networks, state and interstate highways, railroads and air and
sea transportation. Decisions made at the local level regarding county infrastructure can
impact their ability to effectively use all other transportation modes.
This paper will narrow the definition of economic development and provide some
historical context from which to view its relationship to transportation. It will also
provide estimates of direct economic impacts of transportation as an industry and as an
activity, and discuss how transportation decisions impact the economy more broadly. It
will discuss the importance of a few selected transportation projects for the future of
economic development in Pierce County. Finally, it will lay the foundation for
developing policies which can be incorporated into the decision-making process for
future transportation projects.
Focus and Role of Economic Development
What Economic Development Is
The term “economic development” is used in many different situations to describe

many different activities. Finding an agreed-upon meaning is sometimes elusive. For
some people it is a broad concept that encompasses any type of economic activity.
Others simply equate growth with development. But to be applied in a meaningful way,
the term requires a higher degree of precision in definition.
Starting with a dictionary definition of the components of “economic
development” we find that “economic” is concerned with the “production, distribution
and consumption of wealth” and is concerned with the “satisfaction of the material needs
of people.” Thus, “economic” implies the relationships between people that involve trade
and commerce and have as their object the goals of meeting people’s material needs and
creating wealth. We then find that “development” involves the notion of growth, but
adds a qualitative component to it, as in “to become larger, fuller, better, etc.; to grow, to
evolve.” Development, then, implies improvement, not just growth. When combined,
the terms suggest not just an increase in the number of trading relationships but also in
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the quality of those relationships and an improvement in our ability to meet our material
needs.
“Growth and development may be competitors in the near term but are usually
compliments in the long term. Over the long term, growth provides the resources
needed for development; development generates new technical, organizational,
behavioral, or legal structures that facilitate growth. Growth increases output by
mobilizing more resources and utilizing them more productively; development
changes the output mix by devoting local resources to doing different kinds of
1
work.”
Similarly, the United States Economic Development Administration finds that

“Economic development is fundamentally about enhancing the factors of productive
capacity - land, labor, capital, and technology - of a national, state or local economy,” 2
and the International Economic Development Council (IEDC) describes economic
development as “a process that influences growth and restructuring of an economy to
enhance the economic well being of a community.” 3 Perhaps the simplest and most
focused description, and the one used for the purposes of this white paper is:
Economic development is the process of raising the level of

prosperity and material living in a society through increasing the
productivity and efficiency of its economy. 4
What Economic Developers Do
Most economic development professionals recognize the distinction between

growth and development. As a result their work involves more than just attracting the
next big employer, or simply increasing the number of jobs in the community. Their
concern is also with increasing the quality of jobs available in the community. Doing so
requires working to improve the operating environment in which businesses function.
People working in the field of economic development address a wide range of issues.
Outwardly it may appear they only spend their time courting major businesses, or are
content to simply increase the number of jobs in a region regardless of job quality, in
reality they are also concerned with and involved in issues of:
o labor force quality and quantity;

o transportation and utility infrastructure;
o education and business technical assistance;
o physical, psychological, cultural, and entrepreneurial environment;
1
Malizia, Emil E. and Edward J. Feser; Understanding Local Economic Development; Rutgers, The State
University of New Jersey; 1999; (21).
2
Vaughan, Roger and Peter Bearse, "Federal Economic Development Programs: A Framework for Design
and Evaluation," in Robert Friedman and William Schweke (editors), Expanding the Opportunity to
Produce: Revitalising The American Economy Through New Enterprise Development (Washington: DC,
1981), 309. http://www.eda.gov/Research/EcoDev.xml
3
International Economic Development Council web site, http://www.iedconline.org/?p=Guide_Overview
4
Spero, Joan and Jeffrey Hart. The Politics of International Economic Relations; Indiana University,
Bloomington, IN; 1999; http://www.indiana.edu/%7Eipe/glossry.html
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o economic structure and efficiency, and;
o institutional capacity to support economic development and growth. 5
Primary Industry and Economic Base
This broad base of interest is driven by a belief that development will only occur
through trade with other regions, and that trade is dependant upon leveraging local
competitive advantage by strengthening all the competitive factors. Trade is critical
because it leads to inflows of new money into a region and allows for generation of
wealth throughout the community. That is why most economic development programs
are so concerned with increasing the community’s proportion of “primary industry” jobs
– jobs in those industries that exploit a regional competitive advantage to export goods
and services to other regions and therefore import new money into the region. Examples
of primary industries in Pierce County are:
• the military
• Port-related industries such as storage, wholesaling and transhipment
• manufacturing, especially aerospace, wood products and metal fabrication
• health Care, at least that portion that serves retired and out-of-county clients
• business services
Implications for Planning
This view of economic development has implications for the provision of services
by governments, and the distinction between “growth” and “development” can provide
guidance for how we think about infrastructure and plan for the future of the community.
By applying what is known about the relationship between firm size and job creation, job
quality and job stability, we can begin to set priorities for economic development efforts.
We know that small firms create more net jobs than do large firms, but large firms
provide better wages, benefits and stability. 6 We also know that across the nation as a
whole, more jobs are created through expansion of existing firms than through relocation
of large facilities, but attracting one new large facility can have tremendous impact on
economic activity and opportunities in any given community. 7 And we know that
innovations are often brought to market by small firms, but they rely on the research and
development capacities of larger firms to reach that stage. Taken together, this suggests
that a balanced approach to economic development that focuses on primary industries and
encourages the “organic growth” of existing firms while responding to opportunities to
host new companies will yield the greatest benefits. More specifically, it suggests the
5
This broad scope of concerns for economic development professionals is in the tradition of the late Daisy
Stallworth, founder of Pierce County’s Economic Development Division, who subscribed to the American
Economic Development Council’s definition of economic development as “the process of creating wealth
through the mobilization of human, financial, capital, physical and natural resources to generate marketable
goods and services.” Economic Development Today: A Report to the Profession; American Economic
Development Council; 1984.
6
Edmiston, Kelly. “The Role of Small and Large Businesses in Economic Development”; Economic
Review; 2nd Qtr. 2007; Federal Reserve Bank of Kansas City.
7
Ibid.
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most broadly-based improvements in the community will accrue from infrastructure
investments that support the growth of existing firms (encouraging small businesses to
grow and provide the benefits associated with larger size) and which make areas suitable
for large-scale facilities “shovel ready” for the next big opportunity.
But this is certainly not the only option. A community can choose growth without
development. One could also argue that if Community A is in proximity to its neighbor,
Community B, which has a large base of employers, then residents of A could commute
to B (therefore exporting B’s labor force) and bring home paychecks (therefore importing
money from A). This model, the “bedroom community” model, also imports new money
into a community (although not into the region) and has implications for the provision of
services. For example, support of the bedroom-community model would require
substantial investment in transportation infrastructure to export its commuter workforce
in a timely and reliable manner.
Neither model is “right” or “wrong,” but each requires an explicit
acknowledgement of the community’s preferred course if planning is to be effective.
When Pierce County adopted its Comprehensive Plan under Washington’s Growth
Management Act, it included language in sections addressing land use, transportation and
public facilities that encourage activities “to transform Pierce County from a commuter
economy to a jobs-based economy.” 8 Thus, the County has made the explicit choice to
be a community of export-focused primary-industry jobs rather than a bedroom
community.
Historic Relationship of Transportation and Economic Expansion
The history of economic expansion and the history of transportation infrastructure

are one and the same. They are inseparable. Without transportation routes, the economy
we know today would not exist and without trade and commerce our transportation
system would be vastly different. From the earliest human efforts to cross geographic
barriers to trade with neighboring groups, to the creation of trade routes across Asia and
Europe, to the advent of maritime transportation of goods, to the creation of rail systems,
air transportation and hi-speed freeways, our material well-being has increased in direct
relation to the transportation options available.
When human settlement patterns changed about 10,000 years ago during the
agrarian revolution, from nomadic hunter-gatherer clan-based societies to agricultural-
based fixed-place communities, transportation became the key to material well being.
People soon realized that natural endowments of their chosen place facilitated the
production of some goods but not others. Therefore, they could produce more of their
specialty goods than they could consume, and could trade the excess with neighboring
communities for those goods they were lacking. This specialization of place was
dependant upon transportation routes between communities, and the increased demand
for transportation improvements drove innovation in the building of transportation
infrastructure. The economic specialization of places is evident today and is reflected in
the economic development strategies of many communities as they focus on encouraging
clusters of industries where they have a competitive advantage. The Central Puget Sound
8
Pierce County Code, Title 19A.30.020(A); see also PCC 19A.30.030(A), PCC 19A.80.100(X)(3)(b), PCC
19A.100.010(D)(2)(c)((2))((e)), and PCC 19A.100.010(E)(2)(b).
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area’s Prosperity Partnership effort is one such example. The Prosperity Partnership has
identified “clusters” of economic activity and developed regional strategies for
strengthening those clusters. Regional cluster efforts related to transportation involve
advocating for transportation funding, communicating the need for regional approaches
to infrastructure development and studying how peer regions have addressed their
transportation challenges. Other regional economic development partnerships are also
working to improve transportation in the Puget Sound region.
“The Freight Action Strategy for the Everett-Seattle-Tacoma Corridor (FAST
Corridor) is a partnership of 26 local cities, counties, ports, federal, state and regional
transportation agencies, railroads and trucking interests, intent on solving freight mobility
problems with coordinated solutions. They have shared information and funding
resources - sometimes shifting funds from projects that were delayed to those that were
ready to begin - to benefit the program as a whole. Because of this team approach,
projects were built which otherwise might never have been completed. Since 1998, the
partners have identified and assembled $568 million of public and private funding to
build nine strategic infrastructure improvements and start four more.” 9 The FAST
Corridor approach has been hailed as an example of how local jurisdictions working
together can achieve more congestion relief and freight improvements that benefit the
entire region than if they each worked individually on their own piece of the puzzle. The
economic strength of the region is closely tied to its competitive position in moving
freight. The FAST Corridor is a competitive advantage that is allowing the region to
solidify and enhance its position as a national leader in logistics and international trade.
Similarly, the Regional Access Mobility Project (RAMP) “is a regional coalition
including business, labor, public and private organizations and citizens dedicated to
improved mobility in the South Sound and Washington State. Its mission is to ensure a
healthy regional economy associated with the development of an effective, efficient
transportation system and the resources to sustain it. RAMP seeks to engage all local
jurisdictions in a consensus-building process to develop and support regional priorities
while recognizing local interests.” 10 Project partners use consensus to facilitate project
funding from Central Puget Sound, state and federal sources. They also support continued
efforts by the Regional Transportation Improvement District (RTID) to raise additional
funds regionally for significant transportation projects. RAMP supports a number of
significant projects that focus on relieving congestion and separating vehicle traffic from
rail traffic.
Economic Impacts of the Transportation Industry
Background
Given the integrated connection between trade and transportation throughout

history, it is no surprise that transportation represents a major component of our
economy. However, the development of transportation as an economic sector in and of
itself is a fairly new phenomenon. Throughout much of history, transportation was a
means to an end. Merchants and traders generally carted their goods from the point of
9
http://www.psrc.org/fastcorridor/index.htm
10
http://www.tacomachamber.org/page.asp?view=284
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production to their customers as a function of the transaction – it was something
necessary to accomplish the deal. It was not until development of transportation
infrastructure specifically for trade became a capital-intensive but lucrative proposition,
and markets that could provide that capital were developed, that a “transportation
industry” developed.
The technological advances of the industrial revolution occurred concurrently
with institutional developments in capital formation. Building railroads and oceangoing
vessels made it possible to move huge amounts of goods, but doing so meant spending
enormous sums of money up front. “By the 18th century, banks and mines, as well as
transportation companies that built toll canals and toll highways, were selling stock. By
the 19th century, exchanges became the engine of growth for new ventures that needed
huge amounts of capital: railroads, steamship companies, steelmakers and other industrial
concerns.” 11 It is significant to note that every year for the past 50 years, between 4 and
6 of the 10 largest US companies have been directly tied to transportation, with primary
operations involving oil refining or vehicle manufacturing.
Because transportation is so integrated into the structure of our economy it
presents difficulties when trying to capture its full economic impacts. There are many
ways to discuss the role of transportation in the economy, among them are:
o Employment and earnings at companies that provide transportation

services for hire;
o Employment and earnings at companies that supply transportation
equipment and infrastructure;
o Sales taxes generated by transportation-related retail businesses;
o The role of transportation in current business models and the reliance of
major employers on transportation infrastructure;
o The importance of large transportation-related employers.
Transportation as Industry
Firms which provide transportation services account for about 2.4% of

employment nationally and 2.2% of wages (see Tables 1 & 2). In Washington State the
proportions of employment and wages are 2.4% and 2.6% respectively, and in Pierce
County transportation services provide 3% of employment and 3.9% of wages. This
indicates that transportation industries account for a greater share of both employment
and wages in Pierce County than in the rest of the state and the nation as a whole, and
that those industries provide better wages locally than in other areas. In 2006, while total
wages for transportation industries were just over $390 million, total earnings (which
includes employee benefits and proprietors income) was about $575 million (see Table
3). Employment in these industries increased by 25% from 2002 through 2006, while the
overall number of jobs in all industries increased by 11%. Taken together, that means
that transportation industries are a fairly small portion of the overall employment
11
McGee, Suzanne; “Trading Places” in “The Millennium: One Thousand Years of Finance and
Companies”; Wall Street Journal Interactive Edition; 1999;
http://interactive.wsj.com/public/current/articles/SB915727719755335000.htm.
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situation in Pierce County, but they are growing in importance, and provide earnings that
are 59% higher than the average of all industries as a whole.
Table 1
Total Employment
NAICS Industry 2002 2003 2004 2005 2006
Pierce County Total All Industries 238,442 243,088 249,387 257,644 265,719
481 Air Transportation 12 (D) (D) (D) (D)
482 Rail Transportation 523 532 563 609 633
483 Water Transportation (D) (D) (D) (D) (D)
484 Truck Transportation 3,308 3,360 3,492 3,938 4,069
485 Transit and Ground Passenger Transportation 587 579 492 568 654
487 Scenic and Sightseeing Transportation (D) (D) (D) (D) (D)
488 Support Activities for Transportation 1,946 2,190 2,158 2,682 2,601
Total Transportation Industries 6,376 6,661 6,705 7,797 7,957
Transportation as % of All Industries 2.67% 2.74% 2.69% 3.03% 2.99%
Washington Total All Industries 2,643,715 2,653,776 2,694,148 2,766,721 2,850,986

481 Air Transportation 13,642 12,913 12,376 11,634 11,077
482 Rail Transportation 4,951 4,982 5,137 5,275 5,496
483 Water Transportation 3,039 3,147 3,175 3,226 3,358
485 Transit and Ground Passenger Transportation 5,496 5,524 5,631 5,598 5,928
487 Scenic and Sightseeing Transportation 594 632 650 616 592
United States Total All Industries 130,341,000 129,999,000 131,435,000 133,703,000 136,174,000
484 Truck Transportation 1,339,300 1,325,600 1,351,700 1,397,600 1,437,200
487 Scenic and Sightseeing Transportation 25,600 26,600 27,200 28,800 27,000
Total Transportation Industries 3,104,300 3,055,200 3,095,500 3,157,000 3,205,100
Sources: U.S. Bureau of Labor Statistics, OES and CES programs; U.S. Railroad Retirement Board; WA Employment Security Dept., LMEA.
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Table 2
Total Wages (in thousands of $)
NAICS Industry 2002 2003 2004 2005 2006
Pierce County Total All Industries 7,750,988 8,178,585 8,976,550 9,338,777 10,014,205
481 Air Transportation 470 (D) (D) (D) (D)
483 Water Transportation (D) (D) (D) (D) (D)
487 Scenic and Sightseeing Transportation (D) (D) (D) (D) (D)
Washington Total All Industries 101,105,678 103,552,340 106,017,699 112,619,063 122,254,442

United States Total All Industries 4,714,374,741 4,826,251,547 5,087,561,796 5,351,949,496 5,698,475,020
481 Air Transportation 30,180,386 28,015,558 27,867,834 26,209,543 26,991,400
483 Water Transportation 2,793,556 2,958,937 3,224,500 3,459,016 3,800,246
484 Truck Transportation 46,824,531 47,391,757 50,538,978 54,025,353 57,627,333
485 Transit and Ground Passenger Transportation 7,787,298 8,007,866 8,317,793 8,694,193 9,164,773
488 Support Activities for Transportation 19,328,529 19,980,976 21,545,838 23,326,316 24,964,299
Sources: U.S. Bureau of Labor Statistics, OES, QCEW and CES programs; U.S. Railroad Retirement Board; WA Employment Security Dept., LMEA.
Table 3
Total Earnings - Pierce County
2002 2003 2004 2005 2006
Total Earnings from Transportation Industries* $ 397,367,000 $ 407,985,000 $ 449,003,000 $ 536,412,000 $ 575,197,251
Total Employment in Transportation Industries 6,376 6,661 6,705 7,797 7,957
Average Earnings per Job $ 62,322 $ 61,250 $ 66,965 $ 68,797 $ 72,288
Total Earnings from All Industries $ 9,085,833,000 $ 9,651,841,000 $ 10,722,287,000 $ 11,215,484,000 $ 12,117,187,789
Total Employment in All Industries 238,442 243,088 249,387 257,644 265,719
Average Earnings per Job $ 38,105 $ 39,705 $ 42,995 $ 43,531 $ 45,602
*Not including Pipline Transportation
Source: Bureau of Economic Analysis; WA Employment Security Dept.
Transportation as Activity
Examining industries that provide transportation services is interesting, but misses

an important component of the value generated by transporting goods. Industry-based
accounts “identify only transportation that is provided on a for-hire basis – that is,
services provided by common carriers of freight and passengers – but not those that are
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provided by business for its own use – for example, delivery of furniture by a retailer
using either an owned or leased truck.” 12 Thus, a significant portion of economic impact
is missed when examining transportation as an industry rather than as an activity.
Attempts to estimate the true economic output of transportation services throughout the
economy have shown that when own-account transportation is factored in, the impact
may be as much as 40% higher than when estimating transportation industry impacts
alone. It follows then that in Pierce County, where economic output from transportation
industries in 2004 was about 3.97% of total output throughout the economy, when own-
account transportation is factored in, that proportion may be as high as 5%, or a total of
about $1.9 billion. 13
Transportation-related Impacts
Even factoring in the value of own-account transportation greatly underestimates

the true significance of transportation on the overall economy. A whole range of
industries and activities exist solely to serve transportation needs. From road
construction to gasoline sales to driving schools to ambulance services to vehicle
manufacturing, transportation-related activities represent a huge portion of our economy.
These industries don’t directly provide transportation, they support it. For example, gas
stations don’t provide transportation, but our entire transportation system depends on
them. From road construction to auto sales, a whole range of industries are necessary to
support modern transportation. Table 4 shows that industries related to transportation
account for another 8% of employment and 10% of wages in Washington State. When
added to employment and wages in industries which provide transportation services, it
shows that about 11% of all employment and 13% of all wages are directly related to
transportation. In Pierce County, total employment in transportation-related industries is
a slightly lower proportion than the state as a whole, at about 6.5%. That is due largely to
the statewide impact of Boeing employment which has a lower concentration of workers
in Pierce than in King and Snohomish Counties. But even without the pronounced
Boeing effect here, the strong economic influence of the Port of Tacoma leads
transportation and transportation-related industries to still account for nearly 10% of total
employment in Pierce County, and $6 billion or 16% of total economic output when
multipliers for indirect and induced impacts are added. 14
12
Fang, Binsong, Xiaoli Han, Ann M. Lawson, and Sherlene K.S. Lum; “U.S. Transportation Satellite
Accounts for 1992”, in Survey of Current Business; Bureau of Economic Analysis; April, 1998 (16-27).
13
Estimates developed using IMPLAN and are based on results presented in Fang, Binsong, Xiaoli Han,
Sumiye Okubo and Ann M. Lawson; “U.S. Transportation Satellite Accounts for 1996”, in Survey of
Current Business; Bureau of Economic Analysis; May, 2000 (14-22). Estimation of economic output uses
input-output analysis to describe inter-firm relationships. Input-output tables use a complex set of
algorithms to estimate the interdependencies of industries with other industries and are presented in a series
of matrices. These matrices are widely used by economists to help them understand and explain the flow of
money through the economy, the value added by production, and estimates of Gross Domestic Product.
The Transportation Satellite Accounts rearrange those matrices and were developed to estimate the value of
intra-firm as well as inter-firm transportation services.
14
Pierce County employment at the detailed industry level cannot be presented here because of disclosure
and confidentiality requirements. The source for this data is Washington State Employment Security
Department and the Puget Sound Regional Council. Multipliers and induced/indirect impacts were derived
by analyzing firm-level employment data at the detailed industry level using IMPLAN.
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Table 4
Washington Transportation Related Industries Employment and Wages
2002 2003 2004 2005 2006
Avg Avg Avg Avg Avg
NAICS Transportation-Related Industry* Employment Total Wages Employment Total Wages Employment Total Wages Employment Total Wages Employment Total Wages
23731 Highway, St reet, and Bridge Construction 6,032 $ 292,580,664 6,176 $ 305,874,383 6,497 $ 341,300,428 7,061 $ 381,707,292 7,427 $ 424,999,437
32411 Petroleum Refineries 2,181 $ 158,601,825 2,116 $ 165,362,724 1,771 $ 171,256,585 1,771 $ 172,354,555 1,867 $ 197,537,141
324121 Asphalt Paving Mixture and Block 168 $ 7,383,876 172 $ 7,487,109 185 $ 8,673,298 214 $ 11,649,763 246 $ 15,934,266
336 Transportation Equipment Manufacturing 86,440 $ 5,826,254,567 76,213 $ 5,224,984,764 73,294 $ 5,247,439,556 78,428 $ 6,052,440,253 86,685 $ 7,178,176,318
42311 Motor Vehicle Merchant Wholesalers 2,299 $ 86,100,217 2,259 $ 87,081,163 2,216 $ 88,823,870 2,261 $ 96,351,473 2,374 $ 102,254,355
42312 New Motor Vehicle Part Merchant Whsle 2,924 $ 110,013,987 3,104 $ 121,206,747 3,174 $ 128,511,271 3,312 $ 138,190,455 3,308 $ 144,682,026
42314 Used Motor Vehicle Part Merchant Whsle 473 $ 11,545,711 483 $ 12,477,860 479 $ 13,053,938 457 $ 12,965,182 446 $ 13,284,567
42386 Other Transport Goods Merchant Whsle 1,533 $ 97,145,960 1,434 $ 107,439,642 1,474 $ 126,676,994 1,487 $ 137,678,916 1,828 $ 195,655,522
42471 Petroleum B ulk Stations and Terminals 615 $ 23,079,387 595 $ 23,812,078 575 $ 24,747,109 497 $ 24,390,657 599 $ 29,271,920
42472 Other Petroleum Merchant Wholesalers 1,218 $ 45,647,283 1,240 $ 45,425,192 1,214 $ 45,640,425 1,254 $ 50,922,472 1,309 $ 57,087,797
441 Motor Vehicle and Parts Dealers 39,629 $ 1,489,389,001 39,776 $ 1,531,930,849 40,418 $ 1,584,123,194 40,803 $ 1,665,929,615 40,860 $ 1,716,619,116
447 Gas Stations 14,507 $ 216,918,910 14,820 $ 228,426,353 14,769 $ 232,604,353 14,547 $ 232,209,850 14,284 $ 233,148,309
493 Warehousing and Storage 7,559 $ 241,374,606 7,411 $ 247,566,945 8,455 $ 294,330,209 8,811 $ 326,999,421 10,226 $ 400,188,876
532111 Passenger Car Rental 2,525 $ 66,541,627 2,527 $ 65,593,048 2,594 $ 72,029,459 2,798 $ 78,514,569 2,766 $ 76,259,402
532112 Passenger Car Leasing 86 $ 3,042,792 83 $ 2,785,120 78 $ 2,775,063 71 $ 2,773,332 65 $ 2,498,067
53212 Truck, Trailer and RV Rental and Leasing 820 $ 23,941,645 816 $ 24,250,949 834 $ 25,418,193 887 $ 28,573,270 884 $ 30,288,961
532411 Transportation Equipment Rental/Leasing 216 $ 22,043,114 286 $ 30,503,025 291 $ 28,361,215 198 $ 44,185,684 146 $ 13,750,080
56151 Travel Agencies 3,623 $ 380,519,750 3,435 $ 583,169,664 3,463 $ 443,634,802 3,751 $ 295,918,888 3,988 $ 315,117,264
56152 Tour Operators 720 $ 26,016,554 728 $ 25,428,957 805 $ 27,476,528 838 $ 30,001,581 832 $ 35,099,497
561591 Convention and Visitors Bureaus 197 $ 5,242,134 229 $ 5,770,457 225 $ 6,114,535 199 $ 6,349,774 177 $ 6,218,060
561599 All Other Travel Arrangement Services 759 $ 17,593,111 488 $ 12,870,275 593 $ 17,001,097 790 $ 25,812,419 789 $ 25,884,056
561613 Armored Car Services 412 $ 12,355,291 462 $ 14,172,641 473 $ 14,745,148 465 $ 14,760,280 491 $ 15,434,517
56192 Convention and Trade Show Organizers 592 $ 16,481,884 587 $ 16,104,420 639 $ 17,352,546 734 $ 24,475,174 648 $ 25,349,170
611512 Flight Training 714 $ 31,131,181 708 $ 27,663,776 664 $ 27,647,528 539 $ 21,643,506 522 $ 19,576,955
611692 Automobile Driving Schools 280 $ 4,303,928 292 $ 4,188,615 298 $ 4,386,023 318 $ 4,785,820 388 $ 6,076,333
62191 Ambulance Services 1832 $ 53,641,734 1,795 $ 55,250,372 1,841 $ 59,859,162 1,911 $ 64,223,237 1,921 $ 68,333,032
721 Accommodation 26,995 $ 489,614,365 27,520 $ 516,438,479 28,072 $ 548,831,067 28,532 $ 580,399,084 29,761 $ 637,138,901
811111 General Automotive Repair 6804 $ 196,626,744 6,683 $ 196,226,960 6,450 $ 194,206,866 6,344 $ 194,103,355 6,282 $ 201,274,053
811112 Automotive Exhaust System Repair 426 $ 12,478,350 415 $ 12,360,254 425 $ 12,850,821 403 $ 12,589,738 376 $ 11,513,461
811113 Automotive Transmission Repair 711 $ 23,189,649 674 $ 22,306,292 672 $ 22,375,945 682 $ 23,384,730 661 $ 23,547,530
811118 Other Automotive Mechanical Repair 1,048 $ 30,342,427 976 $ 28,276,480 959 $ 28,742,946 912 $ 27,433,232 829 $ 25,775,151
811121 Automotive Body and Interior Repair 4,984 $ 169,243,330 4,788 $ 163,561,256 4,806 $ 168,918,738 4,821 $ 172,958,519 4,915 $ 183,478,597
811122 Automotive Glass Replacement Shops 1,466 $ 41,231,745 1,392 $ 37,819,196 998 $ 30,453,823 965 $ 30,609,501 880 $ 28,394,464
811191 Automotive Oil Change/Lubrication Shops 1,769 $ 31,600,214 1,731 $ 31,713,957 1,722 $ 32,446,679 1,742 $ 33,510,802 1,818 $ 36,612,976
811192 Car Washes 1,903 $ 27,085,657 1,678 $ 23,678,957 1,824 $ 25,693,755 2,036 $ 29,899,062 1,979 $ 31,091,508
811198 All Other Aut omotive Repair/Maintenance 567 $ 15,721,772 580 $ 15,898,661 623 $ 17,330,878 608 $ 17,292,462 607 $ 18,730,210
81293 Parking Lots and Garages 2,067 $ 41,086,288 2,110 $ 42,801,625 2,213 $ 42,100,596 2,302 $ 45,797,495 2,390 $ 47,273,670
Total Employ ment in Transportation-Related I 227,094 $ 10,347,111,280 216,782 $ 10,067,909,245 216,083 $ 10,177,934,643 223,749 $ 11,113,785,418 235,574 $ 12,593,555,565
Total All Industries 2,643,715 $ 101,105,677,809 2,653,776 $103,552,340,049 2,694,148 $ 106,017,698,578 2,766,721 $112,619,062,754 2,850,986 $122,254,442,343
Transportation-Related Industry % of Total 8.59% 10.23% 8.17% 9.72% 8.02% 9.60% 8.09% 9.87% 8.26% 10.30%
* Private only, not government provided such as road maintenance, air traffic control, port operations, drivers license administration, etc.
Source: WA Employment Security Department
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Sales-tax Revenue
In addition to the jobs, wages and earnings created by transportation related industries,
they also generate a significant amount of sales tax revenue for state and local
governments. As shown in Table 5, total taxable retail sales for transportation-related
industries in all of Pierce County topped $2 billion in 2006, and generated $219 million
in sales tax revenue. Even though the sector accounted for 16% of total economic output,
transportation-related industry retail sales accounted for 21% of total retail sales, with
most of that, almost 74%, coming from Motor Vehicle and Parts Dealers. From 2002
through 2006, total taxable retail sales for transportation-related industries increased by
22%. However, taxable retail sales for all industries increased by 37%, and as a result,
transportation’s share has fallen from almost 24% of the total to 21% in that period.
After vehicle sales, the largest transportation-related generators of retail sales tax are
Automotive Repair and Maintenance, Gas Stations, Highway Street and Bridge
Construction, and Accommodation.
Table 5
Pierce County Taxable Retail Sales (including cities and towns)
Taxable Retail Sales
NAICS Industry 2002 2003 2004 2005 2006
23731 Highway, Street, and Bridge Construction $50,698,819 $66,128,306 $100,711,665 $124,109,407 $139,426,749
32411 Petroleum Refineries $11,275,396 $15,554,077 $18,179,704 $33,758,568 $31,189,985
324121 Asphalt Paving Mixture and Block $0 D D $0 D
336 Transportation Equipment Manufacturing $7,428,693 $10,477,988 $12,157,624 $14,790,649 $18,288,565
42311 Motor Vehicle Merchant Wholesalers $46,438,960 $56,628,821 $54,769,183 $49,659,385 $38,177,533
42312 New Motor Vehicle Part Merchant Whsle $7,069,370 $9,927,386 $9,878,812 $11,041,805 $11,200,917
42314 Used Motor Vehicle Part Merchant Whsle $3,186,415 $3,601,566 $3,323,783 $3,234,551 $2,514,385
42386 Other Transport Goods Merchant Whsle $2,839,338 $2,043,803 $1,732,177 $1,323,503 $1,623,560
42471 Petroleum Bulk Stations and Terminals $0 $370,190 $944,503 $1,986,319 $1,104,469
42472 Other Petroleum Merchant Wholesalers $5,191,738 $5,190,334 $4,205,286 $5,047,022 $4,967,302
441 Motor Vehicle and Parts Dealers $1,570,682,663 $1,617,900,391 $1,722,541,645 $1,867,694,927 $1,899,568,650
447 Gas Stations $107,830,534 $113,754,367 $124,531,948 $145,445,002 $167,588,910
481 Air Transportation D D $90,725 $146,588 $116,529
482 Rail Transportation D D D D $4,505,190
483 Water Transportation D $0 D D D
484 Truck Transportation $4,492,786 $6,960,219 $5,614,923 $5,564,800 $6,328,205
485 Transit and Ground Passenger Transportation $1,087,395 $911,937 $1,233,222 $1,001,517 $1,002,100
487 Scenic and Sightseeing Transportation $165,532 $196,941 $173,673 $517,289 $379,745
488 Support Activities for Transportation $26,174,378 $34,665,254 $38,138,125 $26,297,531 $28,915,123
493 Warehousing and Storage $215,901 $111,512 $227,272 $873,733 $841,455
532111 Passenger Car Rental $3,530,018 $3,609,760 $4,009,676 $5,078,665 $4,894,315
532112 Passenger Car Leasing $39,378,832 $36,438,096 $39,822,320 $42,556,268 $43,480,290
532411 Transportation Equipment Rental/Leasing $3,931,855 $4,816,213 $4,799,040 $11,223,707 $6,949,359
53212 Truck, Trailer and RV Rental and Leasing $21,491,483 $22,660,597 $27,001,813 $26,837,978 $28,868,387
56151 Travel Agencies $165,886 $189,195 $175,381 $136,686 $20,266
56152 Tour Operators D D D $0 D
561591 Convention and Visitors Bureaus $0 $0 $0 D $18,903
561599 All Other Travel Arrangement Services $155,622 $170,519 $218,724 $232,433 $230,213
561613 Armored Car Services D D D D D
56192 Convention and Trade Show Organizers $843,832 $0 $578,600 $784,106 $668,158
611512 Flight Training $397,262 $392,419 $49,572 $82,303 $86,666
611692 Automobile Driving Schools D $80,606 $73,374 $79,023 $6,150
62191 Ambulance Services $0 D D D D
721 Accommodation $64,202,353 $64,158,184 $64,849,018 $69,596,111 $74,502,420
8111 Automotive Repair & Maintenance $183,165,223 $188,172,504 $196,229,093 $210,297,032 $223,670,329
81293 Parking Lots and Garages $5,293,922 $5,283,300 $5,145,421 $5,708,902 $6,056,122
Total - All Transportation and Related Industries $2,105,359,991 $2,188,712,102 $2,322,514,933 $2,507,237,835 $2,576,574,216
Total All Industries $8,849,045,351 $9,498,215,148 $10,123,073,882 $11,266,230,629 $12,154,468,767
Total Sales Tax Revenue from Trans. (at 8.5%) $178,955,599 $186,040,529 $197,413,769 $213,115,216 $219,008,808
Source: Washington State Department of Revenue
D = industry data cannot be disclosed but is included in total; $0 = either sales w ere $0 or the information w as missing
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Transportation in Business Models
Aside from the direct contributions to the economy provided by jobs in

transportation-related industries, or the revenues generated by them for local
governments, there are systemic features of the transportation system that also contribute
to the overall economic situation. The point has been made here several times that
economic activity and transportation are inseparable. This is true to the point that
transportation is a crucial variable in the development of business models. As a
consequence, the efficiency of the transportation system has bottom-line impacts for
firms. 15 Costs associated with congestion are both direct and indirect. Excess fuel and
unproductive employee time represent significant costs of doing business. In the U.S. in
2003, the total cost for all travelers (not just businesses) amounted to $63 billion,
involving 3.7 billion hours of travel delay and 2.3 billion gallons of wasted fuel. 16
Indirect costs associated with congestion are less obvious but often have a greater impact
on business success. The ability to move goods and people around the region will greatly
influence:
• The effective size of the available workforce;

• Worker compensation;
• Size of local market;
• A firm’s ability to benefit from advances in logistics technology;
• Costs of production related to travel.
Firms compete for workers just as they compete for customers. Traffic
congestion effectively reduces the size of the labor pool available to a given firm. People
generally have an upper limit to how far or how long they are willing to commute, and
several studies have fixed that limit at about an hour for work-related travel. 17 Thus, all
other considerations held equal, the more congestion an area experiences, the less
distance a worker can cover in an hour, and therefore the smaller the area from which an
employer can draw workers. The more specialized an industry’s workforce needs, the
greater will be the competition for skilled workers between firms in that industry. As
industries that use lower-skilled workers increasingly move operations to other countries,
the importance of a skilled workforce will become more and more important, and
congestion impacts will become more pronounced.
Not only does reducing the labor shed (the area from which workers may be
drawn) reduce the number of workers available to a firm, it also increases compensation
costs. As with any market, the relationship between supply and demand is expressed in
prices. Where there is more demand and less supply, the cost of goods will rise. The
same holds true for workers. Where there is more demand for workers than there is
supply, labor costs will increase. Hence, the smaller the area in which firms compete for
15
For a full discussion of this issue, see Weisbrod, Glen, Donald Vary and George Treyz; “Economic
Implications of Congestion”; NCHRP Report 463; National Academy Press, Washington D.C.; 2001.
16
Schrank, David and Tim Lomax; The 2005 Urban Mobility Report; Texas Transportation Institute, Texas
A&M University System, Austin, Texas; May 2005.
17
Lay, Maxwell G.; Ways of the World: A History of the World’s Roads and of the Vehicles That Used
Them; Rutgers University Press, Brunswick, N.J.; 1992; (311).
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workers, the greater will be the demand for a fixed supply of labor, and therefore labor
costs will increase.
The same phenomenon applies to other production inputs and outputs as well.
Congestion reduces the market area from which a firm can obtain factors of production
such as raw materials or services, and therefore increases the costs of those factors. It
also limits the size of the local market for finished goods, and therefore reduces the
volume of production to serve the local area. Since the volume of production is
associated with productivity increases due to economies of scale, a firm with less output
due to decreased demand from a smaller market area will generally have lower net
income than a similar firm serving a larger market area. Add to that the higher input
costs caused by the smaller market area, and congestion becomes a clear impediment to
the regional competitiveness of firms.
Congestion also serves as a negative feedback for growing firms wishing to
maximize net income. As transportation costs rise, they must be balanced against other
factors of production when making choices about expanding in their current location or
moving to a less congested market. Hence, as congestion increases so does instability in
the economy as firms choose to move to less congested areas. This instability and limited
access to production inputs reduces the productivity gains accruing from industrial
agglomeration, making it a barrier to development of industry clusters. 18 In other words,
congestion works directly against the development of industry clusters and therefore
against the goals of the Puget Sound Regional Council’s Prosperity Partnership goals.
Logistics costs and the ability to take advantage of new technology and business
processes are especially impacted by congestion. Much of the robust growth in the U.S.
economy over the past several years has been attributable to productivity gains. That
productivity has been enabled partly by automation, but also by reduced inventories and
“just-in-time” (JIT) production strategies. “As producers learned to lower costs by
reducing inventory, the need for high-value, time-sensitive shipments has grown
geometrically.” 19 Time has become an important competitive factor for intermediate
producers as well as for retailers. Amazon.com and Dell Computers have based their
entire business model on the ability to deliver goods extremely quickly to consumers
without the use of stores, and Wal-Mart’s growth and market dominance can be directly
attributed to efficiencies of inventory control. For manufacturers, inventory holding costs
are a significant portion of total production costs, and can therefore impact decisions
ranging from where to locate facilities, to production levels, to employee compensation.
In addition to direct production costs associated with congestion, unreliability of JIT
scheduling causes uncertainty in terms of a firm’s ability to meet production and delivery
deadlines. Firms incur opportunity costs as they adopt strategies such as off-peak
delivery times, price incentives and consolidated shipments to hedge against the
possibility of missed shipments or deadlines. But even those strategies may not be
available to firms that trade in goods that are perishable (such as fruits and vegetables or
information) or that can rapidly change in value (such as electronics). For those firms,
18
In addition to Weisbrod, see also Venables, Anthony J.; “Trade, Location and Development: an
Overview of Theory” prepared for the “Patterns of Integration in the Global Economy” project; World
Bank; 2001.
19
“America’s Freight Challenge”; American Association of State Highway and Transportation Officials;
May, 2007.
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reliability of the transportation infrastructure can mean the difference between success
and ceasing to exist.
Transportation and Major Regional Employers
Special mention must be made regarding the role transportation plays in the Puget
Sound region due to the influence of several dominatingly large employers. Boeing, the
Ports of Tacoma and Seattle, and the military account for a huge portion of the regional
economy, and each is directly tied to transportation, albeit in different ways. Boeing, the
largest producer of commercial aircraft in the world, is also the largest private employer
in the region. Every downturn in the aviation industry – an industry that exists for the
sole purpose of providing transportation – reminds us how economically dependent we
are on the aerospace giant. It’s true the advent of new companies like Microsoft and
Starbucks have diversified the region’s economy and softened the impacts when there is
weakness in aerospace. Still, Boeing employs over 60,000 people in the region and with
an employment multiplier of about 2.56 accounts for total employment in the state of
around 154,000. As the saying goes, the local economy will continue to “catch a cold
whenever Boeing sneezes” for a long time to come. One way Boeing is maintaining its
leadership position is by outsourcing production of subcomponents to companies
throughout the world and assembling the final product in the Puget Sound area. While
this creates efficiencies for the company, it also increases their reliance on the multi-
modal transportation infrastructure of the region, making them not only a producer of
transportation equipment, but also a major consumer of transportation services and
infrastructure.
Puget Sound ports are also both producers and consumers of transportation.
Combined, ports from Port Angeles to Olympia moved nearly 46 million metric tons of
goods in 2005, with most of that moving through Seattle and Tacoma. In terms of
container traffic, the combined facilities of Seattle and Tacoma are third behind only Los
Angeles/Long Beach and New York in the amount of cargo they move. 20 Firms
operating or associated with port facilities employ nearly 7,000 people in Pierce County
and account for over $1 billion in economic output or about 3% of total output here.
Companies that support port operations employ another 2,300 in the County. Combined,
direct and indirect port employment accounts for $414 million in total personal income,
which comes to about $45,000 per job annually. 21 The Port reports that an additional
3,500 jobs are supported by Port employment, and there are and estimated 33,000 jobs in
Pierce County at firms that use Port services or directly benefit from proximity to the
Port. These are firms that are able operate more competitively because of their
relationship with the Port than if they had to go elsewhere for similar transportation
services. In all of Washington State, the total jobs at firms that benefit from Port of
Tacoma activities may be as high as 117,000, or about 4% of the state total.
The success and economic impact created at the Port of Tacoma, and all Puget
Sound ports, is directly tied to the region’s transportation infrastructure. The geographic
endowments of deep-water ports are complimented by rail, air and interstate highway
20
U.S. Department of Transportation, Maritime Administration
21
Analysis of data provided in The Economic Impact of the Port of Tacoma; Martin Associates, Lancaster,
PA; May, 2005, performed using IMPLAN.
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connections. The ability to move containers directly between ship and rail, or to quickly
access air cargo facilities, means efficiency and competitive advantage for firms moving
goods to and from the nation’s interior. Access to the port by importing/exporting firms
serving the northwestern U.S. depends on the region’s highway and local road system to
provide that same efficiency for their market areas. Nationally, the reliance on efficient
and un-congested transportation infrastructure around port facilities is rapidly increasing
in importance. Whereas prior to the mid-20th century foreign trade accounted for less
than 10% of total economic activity, from 1970 to 2004 that share grew from 11.15% to
26.05% of total Gross Domestic Product. 22 And that reliance is projected to keep
growing as international container volumes are expected to triple today’s level in the next
20 years. Movement toward that increased activity is evident at the Port of Tacoma,
having recently announced a long-term agreement with NYK Line that will increase
container volume through the port by 60 to 70 percent over today’s level when a new
facility is opened in 2012. 23 Recognizing the importance of transportation infrastructure
capacity and the costs of congestion, the Port recently passed a resolution in support of a
transportation improvement package going to voters, expressing their opinion that “the
state and regional transportation system has failed to keep pace with our growing needs,
and that our economic vitality depends on significant and immediate improvements to
increase safety and capacity.” 24
Another sector that is vital to the region’s economy, especially in Pierce County,
and inextricably tied to the transportation infrastructure is the military. The same natural
endowments that lead to successful ports are also beneficial to national defense. The
combination of protected deep-water ports, rail access, the highway network and
relatively un-congested airspace, all in one area strategically located in the upper left
corner of the continental United States, closer to Asia then any other point, makes the
region an obvious choice for projecting America’s military strength. As has been the
case since the beginning of human history, the ability to quickly and efficiently move an
army is vital to protecting sovereignty. Accordingly, the region is home to air-, land- and
sea-based assets vital to military operations and dependent upon multi-modal
transportation infrastructure operating at peak performance.
Just as the U.S. depends on the military for its national security, Pierce County
depends on the military for its economic security. Sometimes overlooked because it is
somewhat insular and not in the private sector, the military constitutes the single most
important actor in the local economy. In 2004, direct uniformed and civilian military
employment in Pierce County was over 34,000, with an annual payroll of about $1.9
billion. Military retirees in the county collected another $525 million, payments to
private medical providers exceeded $30 million and contracts to Pierce County vendors
for a variety of goods and services were in excess of $25 million. 25 Since then, troop
strength at Fort Lewis has increased and will continue to do so for the next several years
as the Department of Defense (DoD) restructures bases around the world and transforms
its war-fighting equipment and tactics to meet 21st-century threats. Statewide, DoD
22
U.S. Department of Commerce, Bureau of Economic Analysis.
23
Port of Tacoma news release, July 26, 2007.
24
Port of Tacoma Resolution 2007-05; July 10, 2007.
25
Sommers, Paul; “Ft. Lewis and McChord AFB in Pierce County”; Economic Impacts of the Military
Bases in Washington; Washington State Office of Financial Management; July, 2004.
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employment is near 100,000 making it a larger employer than Boeing, with a budget of
nearly $10 billion, and $3.3 billion in contracts to Washington firms.
Since it is not in the private sector, the military is less impacted by business cycles
than most other large employers. As a result, areas like Pierce County which have a
strong military presence tend to suffer less when there is a recession (but also derive less
benefit from business-cycle peaks). As shown in Table 6, employment in the State and
King/Snohomish Counties showed strong growth during the boom years of the late
1990’s and large declines during the recession of the early 2000’s, including 3 years of
job losses for King/Snohomish, with steep declines in 2002. During the same period,
Pierce County job growth was slower but steady and still strong through the 90’s, only
showing losses in 2001. In fact, in 2002 when the state and the King/Snohomish metro
had its largest decline in employment, Pierce County actually gained jobs.
Table 6
Change in Total Employment
Seattle/Everett/Bellevue
Washington Tacoma MSD
MSD
Employment % Change Employment % Change Employment % Change
1990 2,143,000 1,107,100 194,700
1991 2,177,400 1.61% 1,112,200 0.46% 196,200 0.77%
1992 2,222,400 2.07% 1,126,400 1.28% 200,400 2.14%
1993 2,253,000 1.38% 1,136,400 0.89% 206,600 3.09%
1994 2,304,300 2.28% 1,145,400 0.79% 212,300 2.76%
1995 2,346,900 1.85% 1,168,200 1.99% 217,200 2.31%
1996 2,416,000 2.94% 1,211,500 3.71% 221,600 2.03%
1997 2,514,700 4.09% 1,280,400 5.69% 229,400 3.52%
1998 2,594,800 3.19% 1,339,600 4.62% 235,500 2.66%
1999 2,648,700 2.08% 1,372,700 2.47% 239,400 1.66%
2000 2,711,300 2.36% 1,402,300 2.16% 244,400 2.09%
2001 2,697,000 -0.53% 1,384,600 -1.26% 243,900 -0.20%
2002 2,654,100 -1.59% 1,337,400 -3.41% 244,300 0.16%
2003 2,657,500 0.13% 1,322,100 -1.14% 248,300 1.64%
2004 2,701,000 1.64% 1,334,100 0.91% 255,300 2.82%
2005 2,777,100 2.82% 1,369,900 2.68% 263,800 3.33%
2006 2,859,400 2.96% 1,417,000 3.44% 271,700 2.99%
Source: Bureau of Labor Statistics, Current Employment Statistics
One final economic sector that is directly tied to transportation and deserving
mention is tourism. Locally, attractions such as the Puyallup Fair and Mt. Rainier bring
millions of visitors to our county and through our communities. As shown in Table 7,
statewide, direct spending on travel and tourism in 2005 amounted to $12.7 billion, and
supported employment of nearly 143,000 people, or 5.2% of all jobs, with $3.8 billion in
annual earnings. In Pierce County, spending was $786 million, 6.2% of the statewide
total, and accounted for over 4% of county employment with $202 million in annual
earnings. From 2000 through 2005, a period when tourism in general has faced a number
a challenges, spending in the county grew by 21.7%, outpacing the state rate of 20.9%. 26
26
Dean Runyan Associates; Washington State County Travel Impacts 1991-2005; Washington State
Department of Community, Trade and Economic Development; September, 2006 and Dean Runyan
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While average wages are lower in the travel industry than other sectors of the
economy, it is still important for a number of reasons. As natural-resource-based
industries such as timber harvesting decline in importance, rural communities struggle to
find opportunities for economic growth. For many communities, recreation-related
tourism represents the most immediate option available to take advantage of their natural
surroundings without destroying the resource, while still attracting new dollars from
outside the community. Other benefits from the tourism industry include:
• “The travel industry ranks among the leading export-oriented industries in

Washington in terms of its contribution to Washington Gross State Product
(GSP). Travel industry GSP was $4.8 billion in 2003. Of the leading
industries with which the travel industry was compared, only the Software
industry had a significantly higher impact ($13.2 billion). The other industries
with which the travel industry was compared were aerospace ($5.7 billion),
computer/electronics manufacturing ($2.5 billion), agriculture and food
processing ($5.6 billion), and forestry and wood products ($3.9 billion).
• A high proportion of travel industry GSP is comprised of payments to
employees (78 percent). This is higher than any of the other industries
compared in this report except aerospace. The travel industry generates a large
number of entry level positions and opportunities for small business
ownership in relation to its overall Gross State Product.
• The travel industry also generates a high proportion of tax revenue in relation
to its Gross State Product (11 percent). None of the other industries is
comparable with respect to taxes. Furthermore, visitors pay most of these
taxes and many of the benefits directly accrue to local governments.” 27
Table 7
Travel Industry Economic Impacts
Washington Pierce County
Direct Travel Travel Industry Travel Industry Direct Travel Travel Industry Travel Industry
Spending Employment Earnings Spending Employment Earnings
% % % % % %
$-Million Change Total Change $-Million Change $-Million Change Total Change $-Million Change
2000 $ 10,504 139,900 $ 3,167 $ 646 10,910 $ 175
2001 $ 10,480 -0.23% 141,900 1.43% $ 3,320 4.83% $ 640 -0.91% 10,910 0.00% $ 174 -0.74%
2002 $ 10,362 -1.13% 137,300 -3.24% $ 3,330 0.30% $ 644 0.64% 10,220 -6.32% $ 177 1.49%
2003 $ 10,846 4.67% 140,800 2.55% $ 3,516 5.59% $ 674 4.63% 10,490 2.64% $ 183 3.45%
2004 $ 11,654 7.45% 140,700 -0.07% $ 3,672 4.44% $ 729 8.18% 10,570 0.76% $ 191 4.49%
2005 $ 12,701 8.98% 143,700 2.13% $ 3,833 4.38% $ 786 7.86% 10,820 2.37% $ 202 5.97%
Change
2000-2005 20.9% 2.7% 21.0% 21.7% -0.8% 15.4%
Source: Washington State Department of Community, Trade and Economic Development and Dean Runyan Associates
Associates; Washington State Statewide Travel Impacts and Visitor Volume 1991-2006p; Washington
State Department of Community, Trade and Economic Development; September, 2006.
27
Dean Runyan Associates; The Economic Significance of the Travel Industry in Washington;
Washington State Department of Community, Trade and Economic Development; November, 2004.
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Just as moving goods as efficiently as possible through the County is vital to the
Port of Tacoma’s success, efficiently moving people around the County is vital to the
tourism industry’s success. Whereas the Port’s critical benchmark is reliability, for
tourism it is the visitor experience. That experience includes more than viewing a
dazzling display of glass art, taking in the sights and sounds at the Fair or hiking through
vast fields of wildflowers. It also includes the journey to and from the event. Rural areas
of the County, with infrastructure built to serve rural needs, sometimes experience urban-
level traffic on peak days. The majority of the 2 million visitors which annually enter Mt.
Rainier National Park travel either SR-7 or SR-410 through Pierce County. But those
visits are not spread equally throughout the year. Rather, they are concentrated during
the summer months, and particularly on summer weekends, adding to already heavy
traffic in urban areas, and making for clogged roads and traffic back-ups in the outlying
areas of the County. The thousands of visitors who come to the Renaissance Fantasy
Faire, held on three successive weekends every August on the Key Peninsula, near Gig
Harbor, must endure the bottleneck on SR-302 in Purdy before they can enjoy the revelry
at the Faire. From the marked increase in community fairs and celebrations to
development of new museums and attractions to increasing recreational opportunities, the
tourism industry is rapidly expanding throughout the County. The success of that
industry is dependant upon providing a high-quality visitor experience, and an important
part of the experience involves just getting there.
Evaluation of Transportation Decisions
Planning for the development, operation, maintenance and preservation of the

transportation infrastructure involves many considerations. Given the close connection
between transportation and economic development, it makes sense to consider the
economic implications inherent in any transportation decision. This paper has
highlighted a number of salient points regarding economic development which can be
used to help make transportation decisions:
• Economic considerations have played into decisions about transportation

infrastructure since the earliest days in human history;
• Economic development is a qualitative improvement in economic relations
and material well being and is different than growth;
• Primary industries that import new money into the area facilitate that
qualitative improvement better than industries that re-circulate existing
money;
• Regions have competitive advantages which lead them to be more successful
in some industries than in others;
• Geographic location in the northwestern United States, on Puget Sound,
makes the region highly competitive in industries closely tied to
transportation;
• Congestion has direct and indirect costs which impact any industry’s degree
of competitive advantage.
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Following from those points, a number of questions can be asked of any proposed
transportation decision, and the answers to those questions can guide decision makers.
Clearly, the investment of time, money and labor that goes into any transportation project
demands that decisions be based on a wide range of factors. And it is unlikely that any
project will maximize the benefits for all factors. Rather, project decisions are more
likely to involve a balancing of interests, costs and benefits. However, the focus of this
paper is strictly on the economic impacts of transportation decisions. Accordingly, the
following questions disregard all other considerations and focus solely on how projects
will manifest within the economic structure of the region. Also, it is unlikely that any
project will rank highly on all factors, and some factors may contradict others. The point
of asking these questions is to gain a better understanding of the economic implications
of transportation projects and how those projects relate to overall County goals. 28 As
such, they can provide a foundation for setting policy goals.
• What economic sectors are most likely to benefit from this improvement?
It would be easy to claim that any transportation project will have economic
benefits. However, understanding that some industries are more significant to the
regional economy than others, it is important to know which sectors will derive the most
benefit from a project. Those projects that benefit primary industries to a greater degree
are preferred over those that provide less benefit.
• Does the improvement benefit Prosperity Partnership industry clusters, and if so, to
what degree?
Industries of greatest significance to the regional economy have been identified

by the Puget Sound Regional Council’s Prosperity Partnership initiative and are the focus
of efforts by economic development organizations in Pierce County. Those efforts seek
to strengthen a number of primary industries that are enmeshed in “clusters” of economic
activity. 29 Projects that provide benefits to Prosperity Partnership clusters are preferred
over those that do not, the more clusters a project serves the greater its preference, and
the greater the benefit to any of the clusters the greater its preference. The clusters,
which can be traced to the region’s competitive advantages, include (strength clusters for
Pierce County are underlined):
28
One approach to using these questions to rank projects is presented in Appendix A.
29
In Economic Analysis of the Central Puget Sound Region Part III: Puget Sound’s Industry Clusters,
prepared for PSRC and the Prosperity Partnership, the Economic Competitiveness Group and Global
Insight offer the following definition: “Clusters are geographically concentrated cooperation networks of
interdependent firms, research and development institutions, and other intermediary actors (such as
universities, economic or regional development agencies, chambers, etc.), where the close contacts of the
members and the continuous, fast knowledge exchange between them contribute to the competitive
increase of both the members and the whole region.”
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1. Aerospace 9. Logistics & International Trade
2. Boat Building 10. Long Term Care
3. Business Services 11. Military
4. Electronic Shopping 12. Sound Recording
5. Environment & Alternative Energy 13. Specialty Foods
6. Head Offices 14. Tourism
7. Information Technology 15. Wood Products
8. Life Sciences
• Does the improvement facilitate logistics, particularly for primary industries?
Logistics is one of the industry clusters identified by the Prosperity Partnership,

but nearly every firm is impacted by logistical considerations. Businesses receive
deliveries and make shipments. They have employees and customers that must access
their place of business. They have deadlines to meet that are seldom flexible and
constraints on inventory capacity that leave little room for scheduling problems. Projects
that improve the reliability or capacity of the transportation system are preferred over
those that do not, and greater preference is given to projects that provide the greatest
improvement for primary industries.
• Does the improvement enhance the multi-modal capabilities of the region?
The Port of Tacoma and the military are vital components of the local economy.
Both rely heavily on multi-modal transportation linkages and derive great competitive
advantage from the linkages already in place here. Projects that enhance the region’s
multi-modal transportation linkages are preferred over those that address single
transportation modes.
• Does the improvement facilitate worker flow to employment centers within Pierce
County versus increasing out-of-county commuting?
Even though workers have developed a certain level of tolerance for spending
time commuting to work, most would prefer to spend less time and would consider a
commute reduction an improvement in their life. Pierce County benefits most from
primary industries that operate in Pierce County. According to the 2000 Census, nearly
30% of the labor force in Pierce County commuted to jobs outside the county. Projects
that facilitate worker access to concentrations of primary-industry employment within
Pierce County are preferred to those that encourage commuting across County lines.
• Does the improvement reduce direct and indirect transportation costs for businesses,
and if so, to what degree?
Congestion is expensive. Direct costs include increased fuel and employee

compensation while workers sit in traffic. Indirect costs come from reduced access to
markets and specialized labor, penalties for missed shipments, increased inventory
carrying costs to hedge against delivery interruptions, and increased wages to compensate
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employees for commuting. Congestion that is predictable, while expensive, can be
compensated for to some degree. Congestion caused by random events such as accidents
or weather can be especially problematic and costly. Projects that reduce congestion are
preferred over those that do not (whether the reduction comes from capacity
improvements which address predictable congestions, or safety improvements and
weather-related operations improvements that address random events), and the greatest
preference is given to those that provide the greatest reduction in congestion and greatest
increase in system reliability.
• Does the improvement positively impact the visitor experience for tourists transiting
through the county?
Tourism is growing in importance as a component of Pierce County’s economy,

especially in rural areas. Improving the visitor experience while traveling to attractions
here will improve overall prospects for further tourism development. Projects which
impact tourism may go beyond adding capacity or reducing congestion, but may also
include beautification and way-finding enhancements.
• Does the improvement increase redundancy in the freight-transportation network?
A transportation network that functions well during normal circumstances can

easily be disrupted during an emergency. Disruptions can occur from natural or man-
made events. Pierce County is susceptible to earthquakes, lahars, flooding and other
weather events which can all cause widespread interruptions in the transportation system.
Equally debilitating for individual businesses can be localized occurrences such as traffic
accidents or even road construction projects, each of which can clog normally smooth-
flowing routes. Projects that increase the ability of businesses to use alternate routes
while maintaining transport schedules are preferred over those that do not.
Based on the preceding discussion, the following transportation policies are offered:
• Projects which connect Employment Centers should be given priority over other
projects;
• Projects which include grade-separations and other freight-mobility improvements,
including creating network redundancy, should be given priority over other
projects;
• Projects which reduce congestion in freight corridors should be given priority over
other projects;
• Projects which more fully develop the County’s internal road network and increase
system efficiency between population-dense areas and Employment Centers should
be given priority over other projects.
Maps showing the locations of firms in Prosperity Partnership industry clusters

are presented below. Figure 1 shows the distribution of firms by number of employees
for clusters in which Pierce County has a strength, as well as all other PSRC clusters.
Figure 2 shows a similar distribution for 5 key clusters throughout the region.
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Figure 1 -- Industry Clusters by Employer Size and Location, and Industrial-Zoned Areas
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Figure 2 – Distribution of Pilot Clusters Throughout PSRC Region
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Aside from statements about transportation projects in general, a few projects are
of such high profile and currency that they deserve some mention here. “The current
road network in Pierce County is unreliable, unpredictable and highly congested. Trucks
either rely on I-5, which is unpredictable regarding congestion due to accidents and
predictably-congested during peak travel times, or they must travel on smaller highways
and arterials, which are often more congested than the interstate, and provide other timing
obstacles such as traffic lights.” 30 Part of the congestion problem is a lack of connections
between major routes. SR-512 is the only east-west connection between I-5 and large
portions of the County; SR-167 stretches from I-405 in Renton south, through the
warehousing and manufacturing of the Kent Valley and into Pierce County, but stops just
a few miles short of making a connection to the Port of Tacoma. Other congestion issues
arise from road/rail intersections where trains and cars compete for transportation access.
Canyon Road, a major arterial, runs from the manufacturing center in Frederickson north
to Pioneer Avenue near Puyallup and close to a problematic at-grade rail crossing. To
address some of the congestion choke points, provide alternative routes, reduce
automobile/train conflicts, and create connections that will make the road network into a
fuller-functioning grid, there are currently proposals to extend SR-167 into the Port of
Tacoma, create a new connection between central Pierce County and I-5 by building a
new highway along the boundary between Fort Lewis and McChord Air Force Base, and
extend the northern end of Canyon Road to 52nd Ave. East. All three of these projects are
significant for economic development in Pierce County. Figures 4 and 5 show the
network of economic development corridors today, missing important connections, and
what it will look like once planned connections are completed.
The SR-167 project would add a six-lane divided highway from the current end of
the highway to connect with I-5, and four divided lanes which would go on to connect
with SR-509 near the Port of Tacoma. The project will help reduce congestion and
increase safety through Puyallup and around the SR-167/SR-512 interchange, and allow
faster and more efficient freight movement from southern King County and the Puyallup
Valley to the Port of Tacoma. Continued growth at the Port of Tacoma is dependant
upon the ability of transportation firms to move goods quickly and reliably from the dock
to destinations throughout the country. Connecting directly to SR-167 will facilitate that
growth, greatly benefit the Logistics industry cluster, add redundancy and reliability to
the transportation network, and reduce direct transportation costs for firms accessing Port
facilities or other businesses in the tide-flats area.
The SR-704, or Cross-Base Highway, project would connect I-5 at Thorne Lane
to SR-7 at 176th St. South. In addition to 4 through-lanes of divided highway, the project
will improve the intersections at each end of the roadway and provide improved access
between Fort Lewis and McChord, while allowing the military to better control access
into their facilities. This project will provide a vital connection between I-5 and the
fastest-growing part of Pierce County. When combined with additional improvements
slated for 176th St. South, SR-704 will greatly improve transportation access to the
Frederickson industrial area and the Thun Field employment center. The project will
most benefit the Aerospace, Specialty Foods, Wood Products and Military clusters, as
30
Berk and Associates; An Economic Assessment of the SR 167 Extension Project; produced for the
Washington State Department of Transportation; Seattle, WA; April, 2007
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Figure 3 – Significant Economic Development Corridors without Complete Connections
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Figure 4 – Significant Economic Development Corridors with Complete Connections
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well as other primary industries such as manufacturing, will reduce direct and indirect
transportation costs, facilitate worker access to an employment center, increase
redundancy in the road network and will improve the visitor experience by improving
access to the Mt. Rainier area.
Canyon Road currently provides the best connection between Frederickson and I-
5, via SR-512. At its most northerly extent, the road connects to Pioneer Way near
Puyallup. Current project plans call for extending the road to connect to 52nd St. East.
The connection and widening will provide congestion relief to drivers in the area, but not
much in the way of improvements for freight traffic between Frederickson and the Port of
Tacoma or other areas. If at sometime in the future the road improvements were to
connect Canyon with SR-167 it would provide another route for moving freight between
Frederickson and the Port and Kent Valley and add needed redundancy to the road
network. Still, as currently programmed, the project will remove an at-grade crossing
from the Burlington Northern-Santa Fe rail line at 52nd, and therefore will improve rail
access into and out of the Port of Tacoma. The global competitive position of the Port is
entirely dependent upon the ability to move goods quickly to the inland U.S. At-grade
rail crossings are a source of congestion for both automobiles and trains because the two
modes are incompatible – they cannot operate safely in the same space. This project will
benefit the Logistics and International Trade cluster and improve the multi-modal
capabilities of the region. The Canyon Road northerly extension is one of several
projects of regional significance included in the FAST Corridor project list, and all three
of these projects are also supported by RAMP.
One final consideration concerns the design of transportation projects as they
affect economic development. Roadways that are intended to facilitate freight movement
should be designed with that consideration in mind during the entire development
process. Some design elements which are beneficial for traffic control or traffic calming
when used in residential areas present difficulties for industrial traffic. For example, long
trucks, which are generally used for moving raw materials and finished goods to and
from industrial areas, have difficulty navigating roundabouts. Both the traffic behavior
and the intersection geometry are problematic for large trucks. Another example is
planted median strips. The maintenance of planted median strips generally involves
workers closing one or two lanes of traffic while they remove weeds and trim plants
several days per year. The lane closures can cause congestion and disrupt delivery
schedules. Transportation improvements in corridors with large amounts of freight traffic
should be designed to ease the movement of goods and anticipate the impact ongoing
maintenance will have on traffic congestion.
Monitoring
One final consideration for improving the economic contribution of the

transportation system involves monitoring the system to measure whether system
improvements actually demonstrate the anticipated positive impacts. Measures should be
developed which would allow comparisons over time for transportation system
performance. Such measures might include estimates of delay or efficiency on freight
corridors. Measures should monitor the efficiency of all portions of the freight network
and include state-operated facilities as well as rail operations. For example, tracking
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travel-time variance from an expected baseline would give some indication of the amount
of delay caused by congestion (e.g. travel time between 176th and Canyon and SR-512
would be expected to be XX minutes given posted speed limits, but the measured value is
XX plus 25, the implication would be that stretch of road experiences 25 minutes of delay
due to congestion). Other measures might be developed as well. Some information for
such a monitoring system is currently collected on a regular basis, but some new
monitoring would likely need to be developed.
Conclusion
One key to our economic prosperity lies in building, maintaining, operating and
preserving a safe and reliable transportation network. The velocity of our economy is
limited by the speed at which we can move goods and workers through the community.
“Congestion is one of the single largest threats to our economic prosperity and way of
life. Whether it takes the form of trucks stalled in traffic, cargo stuck at overwhelmed
seaports, or airplanes circling over crowded airports, congestion is costing America an
estimated $200 billion a year.” 31
This paper has attempted to describe what economic development is and how
transportation decisions are related to the regional economy. Transportation and the
economy are inseparably linked, and provide the basis for other activities. An effective
transportation system is a necessary, but not sufficient, condition for economic
development. Having good transportation infrastructure does not guarantee economic
success, but not having it guarantees failure. In addition, true economic development
requires a strong education and workforce development system, housing that is affordable
to all segments of the labor force, accessible capital, business development services, a
regulatory environment that encourages innovation and business growth, and a
community that is safe and provides amenities for arts, culture, entertainment and
recreation. There are many roles for the County play in helping shape its economic
destiny, sometimes with direct action and investment and sometimes supporting the
actions of others.
It follows then that Pierce County meeting its goals and responsibilities for its
share of the regional transportation system is also a necessary, but not sufficient,
condition for economic development. Transportation infrastructure involves some issues
which Pierce County cannot directly control, such as I-5, state highways and inter-modal
freight facilities. This suggests that we should exercise our influence to effect change,
and have a strategic direction when working with other entities. Recent improvements to
SR-7 serve as a strong example of how dogged determination to influence State
transportation decisions can pay-off for the community. An approach to transportation in
Pierce County that balances the competing needs for maintaining current infrastructure
and operations, strategically increasing capacity and using our influence to leverage
projects beyond our direct control will provide the greatest economic benefits to the
community.
.
31
Norman Mineta, former U.S. Secretary of Transportation, quoted in “America’s Freight Challenge”;
American Association of State Highway and Transportation Officials; May, 2007.
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Appendix A
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Project Scoring
One possible way to apply the questions presented in the section “Evaluation of
Transportation Decisions” would be to use a scorecard approach that recognizes every
project will provide more benefits in some areas than in others, and that some
considerations are more important to the regional economy than others. The values
presented below are for demonstration purposes only. Actual values could be derived
from surveys which describe proposed projects, then asks respondents to rate how well
they meet the criteria, and the importance of each criteria. The average of all responses
would be used as the “Rank” and “Weight” values for each question in the table below,
and the question score would be the Rank x Weight. The project score would be the sum
of all question scores.
Project Score Card

What economic sectors are most likely to benefit from
this improvement?
Rank 1-10 Question

(1=low 10=high) Weight Score
Does the improvement benefit Prosperity Partnership
8 1.00 8
industry clusters, and if so, to what degree?
Does the improvement facilitate logistics, particularly for
10 0.75 7.5
primary industries?
Does the improvement enhance the multi-modal
7 1.00 7
capabilities of the region?
Does the improvement facilitate worker flow to
employment centers within Pierce County versus 2 1.00 2
increasing out-of-county commuting?
Does the improvement reduce direct and indirect
transportation costs for businesses, and if so, to what 5 1.00 5
degree?
Does the improvement positively impact the visitor
6 0.50 3
experience for tourists transiting through the county?
Does the improvement increase redundancy in the
8 0.75 6
freight-transportation network?
Project Score (60 Points Possible) 38.5
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Transportation Plan Update

Economic development is understood in many different ways, but regardless of

Focus and Role of Economic Development

What Economic Development Is

The term “economic development” is used in many different situations to describe

Similarly, the United States Economic Development Administration finds that

Economic development is the process of raising the level of

What Economic Developers Do

Most economic development professionals recognize the distinction between

o labor force quality and quantity;

Primary Industry and Economic Base

Implications for Planning

Historic Relationship of Transportation and Economic Expansion

The history of economic expansion and the history of transportation infrastructure

Economic Impacts of the Transportation Industry

Given the integrated connection between trade and transportation throughout

o Employment and earnings at companies that provide transportation

Firms which provide transportation services account for about 2.4% of

Washington Total All Industries 2,643,715 2,653,776 2,694,148 2,766,721 2,850,986

NAICS Industry 2002 2003 2004 2005 2006

Washington Total All Industries 101,105,678 103,552,340 106,017,699 112,619,063 122,254,442

Examining industries that provide transportation services is interesting, but misses

Even factoring in the value of own-account transportation greatly underestimates

Aside from the direct contributions to the economy provided by jobs in

• The effective size of the available workforce;

Transportation and Major Regional Employers

• “The travel industry ranks among the leading export-oriented industries in

Evaluation of Transportation Decisions

Planning for the development, operation, maintenance and preservation of the

• Economic considerations have played into decisions about transportation

Industries of greatest significance to the regional economy have been identified

• Does the improvement facilitate logistics, particularly for primary industries?

Logistics is one of the industry clusters identified by the Prosperity Partnership,

• Does the improvement enhance the multi-modal capabilities of the region?

Congestion is expensive. Direct costs include increased fuel and employee

Tourism is growing in importance as a component of Pierce County’s economy,

• Does the improvement increase redundancy in the freight-transportation network?

A transportation network that functions well during normal circumstances can

Maps showing the locations of firms in Prosperity Partnership industry clusters

One final consideration for improving the economic contribution of the

Project Score Card

Rank 1-10 Question

Project Score (60 Points Possible) 38.5

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