Blog

Personal Income Rides Off Into the Sunset

By Danny Devries, Data Analyst

As home to the “Big Three,” Detroit is the Motor City, the modest region that drives the world. But what drives Detroiters? Cars, cars, cars. Sure, we have our SMART and DDOT buses, but according to the OneD Scorecard, Detroit has the sixth highest percentage of people who drive alone to work out of fifty-four metro areas with more than one million people. Anyone who has ridden the People Mover could tell you that Detroit ranks fiftieth out of fifty in light rail ridership. After all, cars put Detroit on the map, so why bite that hand that feeds you?

Actually, there’s good reason to present residents with an alternative to commuting by car. According to the NHTS, Metro Detroiters spent an average of $3400 on gas annually in 2009, up from $1700 in 2001. That’s well above the national average for urban areas, which was $1200 in 2001 and $3000 in 2009. Governor Rick Snyder recently said that “continued failure is not an option” for regional transit in southeast Michigan, home of the only major metropolitan area in the nation without a high-capacity rapid-transit system.

For several years, there has been talk of building the M1 Light Rail Line, originally envisioned to travel from Downtown to New Center (3.8 miles), but now slated to travel to Eight Mile Road, staying well within Detroit city limits. A regional transit system, not unlike a unicorn, is something I’ve always wanted to see in my lifetime, but I’ve never seen much evidence that either would be showing up in my neighborhood anytime soon. But the new talk of expanding the M1 Rail Line north to Maple Road in Birmingham has given new hope that our region might finally get its collective act together. [1] And this hope couldn’t come at a better time.

According to data recently released by the U.S. Bureau of Economic Analysis, personal income is up 2.2% in the six counties that make up metro Detroit, unadjusted for inflation [2]. This is below the 2.9% average for metropolitan areas nationwide, but nevertheless a needed boost for a region that’s taken more than its fair share of punches during the recession. In 2009, personal income plummeted 4.6%, the tenth largest drop of all 366 metropolitan areas. In fact, personal income in the region is still down 3.5% from the 2008 peak, and we haven’t caught up to where we were in 2007.

If this isn’t depressing enough, the change in personal income does not take inflation into account. The bad news is that inflation in Southeast Michigan has been 4.2% over the past 12 months vs. 3.6% nationally [3]. This means that the 2.2% nominal increase in personal income in the metro Detroit will feel like a 2.0% decrease! Driving this high inflation rate is the 35% [4] increase in fuel prices across the country. Despite a relative stabilization of the local economy, metro Detroiters are pumping their increased earnings straight into their cars. Run-away fuel prices are pushing real personal incomes to a low that we haven’t seen since 1997 [5, 6]. Talk about a “lost decade.”

But there is hope. Fuel prices, of course, are set by the international markets. Even though there is little the region can do to affect the price of gas (besides building more fuel-efficient cars, but that’s another post!), we can help reduce the pain at the pump with a regional transport system that gives people an alternative to filling the tank every week. Riding the M1 Light Rail from Birmingham to Campus Martius in Downtown Detroit can save a commuter thirty-four miles of driving round-trip, five days a week. That’s 8,500 miles a year, translating to well over a thousand dollars a year in savings.

There are plenty of reasons to build an integrated region-wide public transportation network. It will increase regional integration, reduce traffic, create jobs, reduce pollution, promote tourism, and give Detroiters something new to complain about when it doesn’t run on time. But it will also help riders of the rail line combat the rising price of gas, leaving them with more of their income to spend in Southeast Michigan to get our local economy back on track.


[1] http://www.freep.com/article/20110808/NEWS05/108080326/Suburbs-looking-get-board-light-rail
[2] http://www.bea.gov/regional/index.htm
[3] http://bls.gov/eag/eag.mi_detroit_msa.htm
[4] http://bls.gov/news.release/cpi.nr0.htm
[5] http://www.bea.gov/iTable/iTable.cfm?reqid=70&step=1&isuri=1&acrdn=5
[6] http://data.bls.gov/pdq/SurveyOutputServlet