Personal and public expenditures on transportation amounted to almost $805
billion in 1998.¹  The vast majority, 84 percent, came out of the pockets of individuals. Households spent more than five times as much of their own money on transportation, more than $675 billion in 1998, than the government spent on all roads, highways, and transit systems combined ($128 billion). These two figures are not independent: Government investments in transportation have a direct bearing on what families end up paying to move around their communities. In this report, we focus on personal expenditures, and on how decisions about growth and the public investment in transportation have influenced how, and how much, Americans spend on transportation each year.

Within the family budget, transportation looms large. Transportation, including the ownership and operation of vehicles and expenses for public transit, is the second largest expense category for most American households. According to the U.S. Bureau of Labor Statistics’ Consumer Expenditure Survey, out of every dollar American households spend annually, almost 18 cents go to getting around in their communities. Only shelter eats up a larger chunk of expenditures (19¢), with food a distant third place (13.7¢).²  (See Figure A)

What Households Buy with their Transportation Dollar

In 1997 and 1998, the typical American household spent an average of $6,312 out-of-pocket per year on transportation. The vast majority of that expense, almost $6,200, went towards buying, fueling, and maintaining personal cars and trucks. Vehicle purchases, both new and used, comprise 46 percent of transportation expenditures. Seventeen percent of transportation expenditures went to gasoline, motor oil, and taxes on those products. Vehicle insurance, at twelve percent, takes the next largest chunk, followed by maintenance and repairs at ten percent. In all, about 98 percent of all personal transportation expenses goes toward automobiles. The smallest piece of the pie went to public transportation, which made up just two percent of personal transportation expenditures. This analysis, which focuses on everyday travel, excludes air-fare and cruise ship expenses.

Once car ownership is a necessity, it is relatively difficult to bring down transportation expenses. The costs of owning and driving a personal vehicle do vary for different car models: the American Automobile Association finds that it costs between 43.9 cents and 61.7 cents per mile, depending on car size and type, to own and operate a car.³  But beyond this initial choice of the type of car to buy, costs are hard to control. According to the Federal Highway Administration, vehicle operation costs, which vary with the amount of driving, account for just one-quarter of total auto costs. Three-quarters of all automobile expenses stem from the fixed cost of simply owning a car. While a few places are experimenting with ways to bring down these fixed costs (see Appendix B), the need to own a car leaves many people with few ways to save.

High Transportation Costs Hit Poor Families the Hardest

Forty percent of American households spend more than one-quarter of their income on transportation, and most of that expense goes to vehicles. The Consumer Expenditure Survey shows the lower the household income, the greater the portion of income that is devoted to transportation. Households earning between $12,000 and $23,000,spend 27 cents of every dollar they earn on transportation. For the very poor, transportation costs are an even greater burden; these households spend 36 cents of every dollar they earn on transportation, most of it on vehicles. Sixty-two percent of households in this group own at least one automobile. Households in the highest income group, those making at least $60,500 per year, spend just 14 percent of their income on transportation.

Transportation Costs Are Rising

When looked at over time, the data show a disturbing trend of increasing transportation expenses. Since the early 1990’s, the Consumer Expenditure Survey has shown that the portion of total spending devoted to transportation has increased steadily.  During the eight-year period between 1990 and 1998, the portion of total expenditures going to transportation grew by an average of 8.1 percent in the metro areas surveyed, from 16.8 percent of expenditures to 18.2 percent. Meanwhile, the portion going to shelter also increased, but at a lower rate (6.7 percent). If this trend continues, spending on transportation could surpass spending on shelter.

In a handful of metro areas – Houston, Dallas-Fort Worth, Pittsburgh, Atlanta, St. Louis, Minneapolis-St. Paul, and Kansas City – this is already the case (see Table 1). Households in Houston, for example, spent more than $8,800 on transportation in 1998, while they spent not quite $6,500 on shelter. One might expect that this gap reflects Houston’s cheap housing stock. The gap actually reflects just how expensive transportation is in Houston – Houston households spent almost 27 percent more than the national average on transportation, and only two percent less than the national average on shelter. We’ll discuss why this might be the case in Chapter Three.

Other analysis, conducted independently, reaffirms this assertion. A recent report by the U.S. Department of Housing and Urban Development found that a six-fold increase in the amount of driving between 1950 and 1993 resulted in an increase in transportation costs in many cities, although less so in communities with strong public transit systems⁴.