Study of U.S. 80 Corridor Between Mississippi and Georgia
January, 2004 - produced by AECOM Consulting in association with Alabama State University
Project Type: Connectivity between cities or between a city and production area through a generally rural area
Project Objectives: Promote and accommodate commercial development within a major corridor and at both ends of the corridor
Outcomes Metric: Potential developable sites, interest in existing employers to expand capacity, investment leveraging considerations, tax base effects.
Economic Environment: Rural interspaced with urban areas.
Economic History: Declining population (outward migration) and high unemployment
Distinguishing Features: Adjacent to the Montgomery metropolitan area, this deeply impoverished, largely rural area is working to identify new types of industrial growth in order to transition away from its reliance on resource-related industry.
I. Existing Conditions
The seven counties of the U.S. 80 corridor are among the most economically disadvantaged in the U.S. On average, 30 percent of corridor residents live on an income that falls below the poverty line, according to the 2000 Census; this is more than twice the national average rate of poverty. Reflecting more than just an extraordinary value on a single economic indicator, the region's economic deprivation is borne out by a broad set of indicators that collectively describe the persistent economic hardship faced by residents of the U.S. 80 corridor.
Five of the seven corridor counties experienced population losses in the decade ending in 2000, even as the State of Alabama and the U.S. posted population gains. As a place where a significant share of the population is facing economic hardship, the number of people who are leaving these counties exceeds the number that is added due to in-migration and natural increase. Not only did the population decline, the magnitude of the decline was particularly marked in Perry and Sumter Counties, matching or exceeding 7 percent. Information on the absolute and percentage change in corridor counties' population is provided in Exhibit 1. In addition, the percentage growth rates are ranked in terms of all Alabama counties and all U.S. counties. Six of the seven corridor counties ranked in the bottom third of Alabama's 67 counties for population growth. While the corridor counties are less concentrated in the bottom third when ranked among all 3,341 U.S. counties, only two could be considered average and most would still be considered weak performers in terms of population growth.
Exhibit 1: Population Size and Growth Rates U.S., Alabama and Seven Counties
| Location | Census Population | Change, 1990 to 2000 | Rank (of 67 Alabama counties) | Rank (of 3,141 U.S. counties) | ||
|---|---|---|---|---|---|---|
| April 1, 1990 | April 1, 2000 | Number | Percent | |||
| U.S. | 248,709,873 | 281,421,906 | 32,712,033 | 13.2 | ||
| Alabama | 4,040,587 | 4,447,100 | 406,513 | 10.1 | ||
| Dallas | 48,130 | 46,365 | -1,765 | -3.7 | 65 | 2,789 |
| Hale | 15,498 | 17,185 | 1,687 | 10.9 | 23 | 1,314 |
| Lowndes | 12,658 | 13,473 | 815 | 6.4 | 38 | 1,793 |
| Macon | 24,928 | 24,105 | -823 | -3.3 | 64 | 2,772 |
| Marengo | 23,084 | 22,539 | -545 | -2.4 | 61 | 2,692 |
| Perry | 12,759 | 11,861 | -898 | -7.0 | 66 | 2,937 |
| Sumter | 16,174 | 14,798 | -1,376 | -8.5 | 67 | 2,982 |
Source: Census Bureau, 2000
Note: 1990 populations shown in this table were originally published in 1990 Census reports and do not include subsequent revisions due to boundary or other changes.
Consistent with the region's high poverty rate, unemployment is much more prevalent in the study corridor than in the nation as a whole. Average annual unemployment rates for the U.S., Alabama and the seven-county region are presented in Exhibit 2. The average unemployment rate in Alabama, from 1990 to 2001, was slightly higher than the national average unemployment rate. As shown in Exhibit 2, the unemployment rates in the seven counties remained higher than both the U.S. and Alabama statistics for the same period. Most striking of all, the rate in three counties was over 10 percent at the end of the longest and strongest national economic expansion on record. One in ten residents who wanted a job could not find one suggesting that the economic prosperity of the 1990s left the U.S. 80 corridor behind.
Exhibit 2: U.S., Alabama and the Seven US 80 Counties Unemployment Rate
Source: Alabama's Comprehensive Labor Market Information System. http://www2.dir.state.al.us/aclmis/
Consistent with high joblessness and corresponding poverty, there is a wide discrepancy between the national and state per capita incomes and those in the seven counties. Exhibit 3 shows the per capita income for Alabama, each of the seven corridor counties, the metropolitan and non-metropolitan portions of the state and the nearby Montgomery MSA as a share of the U.S. per capita income. For example, in 2001, the value for Alabama is 80 percent, meaning that Alabama's per capita income is just 80 percent of the U.S value. Put another way, the average Alabama resident lives on an income 20 percent below that of the average U.S. resident.
Exhibit 3: Alabama Per Capita Income as a Share of U.S. Per Capita Income, %
| Area Name | 1990 | 1991 | 1992 | 1993 | 1994 | 1995 | 1996 | 1997 | 1998 | 1999 | 2000 | 2001 | Change in Share | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 1990-1995 | 1995-2001 | 2000-2001 | |||||||||||||
| Alabama | 81 | 82 | 83 | 83 | 84 | 84 | 83 | 82 | 81 | 81 | 80 | 80 | 3 | -4 | 0 |
| Dallas | 63 | 66 | 66 | 66 | 69 | 69 | 68 | 68 | 67 | 67 | 67 | 66 | 6 | -2 | -1 |
| Hale | 57 | 57 | 58 | 60 | 61 | 60 | 58 | 58 | 59 | 59 | 58 | 57 | 3 | -2 | -1 |
| Lowndes | 55 | 58 | 57 | 56 | 56 | 55 | 55 | 56 | 54 | 55 | 55 | 57 | 0 | 0 | 2 |
| Macon | 55 | 58 | 58 | 58 | 60 | 61 | 60 | 58 | 55 | 55 | 53 | 53 | 6 | -8 | 0 |
| Marengo | 67 | 70 | 71 | 72 | 74 | 73 | 73 | 72 | 72 | 75 | 72 | 74 | 6 | -1 | 2 |
| Perry | 52 | 55 | 57 | 56 | 57 | 55 | 55 | 55 | 54 | 56 | 55 | 54 | 3 | 0 | -1 |
| Sumter | 56 | 57 | 59 | 59 | 59 | 59 | 58 | 58 | 58 | 59 | 56 | 55 | 3 | -3 | -1 |
| Alabama Metropolitan Portion | 87 | 88 | 89 | 89 | 89 | 90 | 89 | 88 | 87 | 87 | 86 | 87 | 3 | -4 | 1 |
| Alabama Nonmetropolitan Portion | 68 | 70 | 70 | 71 | 71 | 71 | 70 | 69 | 68 | 68 | 66 | 66 | 3 | -5 | 0 |
| Montgomery, AL (MSA) | 90 | 91 | 91 | 91 | 92 | 92 | 91 | 90 | 89 | 89 | 88 | 88 | 2 | -4 | 0 |
Source: U.S. Bureau of Economic Analysis
Per capita incomes in the non-metropolitan portion of the state are lower still, averaging just 66 percent or two-thirds of the average U.S. income. The per capita incomes of the corridor counties are lower still than the state and non-metropolitan averages, ranging from a low of 53 percent to a high of 74 percent of the U.S. average. The average resident of Macon County Alabama lives on an income roughly 50 lower than the average U.S. resident. Residents of Perry, Hale and Lowndes Counties have average incomes that are less than 60 percent of the U.S. average. Not only are the low incomes among the corridor counties emblematic of their economic disadvantage, they limit the economic potential of consumer-oriented industries. The spending power of local residents is much less than in other areas of the U.S., making the corridor less attractive for consumer-oriented industries such as retailers, restaurants, and travel services to locate here in order to serve the local market.
Both a reflection the region's sparse economic opportunity and a contributor to the region's difficulty in attracting industry that would improve that economic opportunity, the educational attainment of the corridor's residents lags the national average by a significant margin. For the nation as a whole, 24.4 percent of people aged 25 or more have graduated from college. Macon County, home of Tuskegee University and many of its faculty, leads the corridor with just under 19 percent of its residents aged 25 or more holding a college degree. The comparable percentages for the balance of the U.S. 80 corridor counties are far lower: Dallas (13.9), Sumter (12.4), Marengo (12.1), Lowndes (11.0), Perry (10.0) and Hale (8.1).
This low level of educational attainment places the region at a comparative disadvantage with competing regions for attracting industrial expansions and relocations. This is part of an on-going cycle in that the region's lack of success in attracting business limits the economic opportunities that are available locally, and widens the opportunity gap between the region and the rest of the U.S-triggering an out-migration of the region's best workers, a brain drain. This latter trend was noted by local stakeholders in interviews.
The industrial base of the corridor is sparsely developed. Analysis of the state's industrial database (provided by the Alabama Development Office (ADO)) indicates that of the total 5,761 industrial firms located in the state, just 157 operations (2.7 percent of the state total) are located in Dallas, Hale, Lowndes, Macon, Marengo, Perry and Sumter counties. The greatest concentration of industrial firms is in Dallas and Marengo Counties. Nearly two thirds of the corridor's industrial base is found in these two counties, highlighting the severe limit on economic opportunity in the remaining counties.
There are several industrial parks along U.S. 80 in the region with available space for new development; three industrial parks are in Dallas County, one in Lowndes County, three in the city of Demopolis, three in Perry County and two in Sumter County. There are six industrial parks in Montgomery County. The majority of these industrial parks have located on, or within 4 to 23 miles of U.S. 80. While there are no industrial parks in Hale and Macon counties, there is one commercial site in Macon County, Cloughs/McGhar, which is located on U.S. 80 and within 4 miles of Interstate 85.
Notwithstanding the presence and location of these industrial parks in the corridor region, the corridor economy's current comparative advantage is in natural resource-intensive industries. These industries are food and kindred products, timber intensive production operations, and paper products (timber intensive). The spatial pattern of development in these export-oriented industries (producing for consumption beyond local corridor needs) is particularly uneven because of their link to natural resources. Given this historical industrial trend, without substantial improvement in the infrastructure, additional industrialization would inevitably occur in proximity to these natural resource-intensive areas. Even were the U.S. 80 improvements made, the areas within the corridor with the greatest density of business would be the most likely areas for additional investment; the road investment would thus raise the odds, but not guarantee business investment and economic opportunity by extension, becoming more spatially distributed throughout the corridor.
II. Highway Project
The highway project would expand the U.S. 80 corridor, extending from Sumter County, AL (Mississippi State Line), to Russell County AL (Georgia State Line) as shown in Exhibit 4. The U.S. 80 highway is two-lane for 22.5 miles from Cuba to Demopolis (Marengo County) and four-lane from Demopolis to Selma and Montgomery (with the exception of cities of Demopolis and Uniontown). From Tuskegee, U.S. 80 continues east principally as a two-lane highway for 33.5 miles to the Phenix City-Columbus metro area.
Exhibit 4: US 80 Corridor and Major Highways and Interstates in Alabama
Source: AECOM Consult Inc.
Upgrades to U.S. 80 between Cuba and Montgomery are already planned, namely, Demopolis and Uniontown bypasses. Construction of the Demopolis bypass is currently scheduled for completion by 2012. The construction completion for the Uniontown bypass is scheduled for 2006. Current plans do not call for expansion of the remaining sections of U.S. 80 in Alabama [1] .
III. Objectives of the Project
The objective of the highway project is to provide continuous four-lane highway access between Alabama's metro areas and the impoverished rural areas of the U.S. 80 corridor. The expectation is that improved connectivity will foster commercial development within the seven-county study region, specifically around four regional industrial parks in Demopolis (Marengo), Selma (Dallas), Montgomery (Montgomery), and Tuskegee (Macon).
There are two channels along which this development might occur. First, the presence of the highway could expand the market range of existing businesses, translating into local hiring to serve this expanded demand. Second, as the highway improvement expands the size of the market that is accessible from the corridor, new industries not currently represented in the local employer base may now find the corridor an attractive location to do business. This would not only increase local hiring but expand the diversity of the corridor's economic base.
VI. Coordination of Project with Other Economic Development Strategies, Plans and Opportunities: Stakeholders Perspectives
The research team, through four focus group meetings, sought local community leaders' views on the possible economic impact of expanding U.S. 80. The team invited local elected officials (city mayors and councils, county commissioners and probate judges, and elected officials from the House of Representatives and Senate), paid association executives and elected leadership from the local Chambers of Commerce, banking executives, economic development leaders, tourism leaders, and key community representatives to participate in the focus groups. Key points of the discussions for the tourism industry and for broader economic development in the region are provided below.
Tuskegee Results (March 14, 2002)
Tourism: Participants in the Tuskegee meeting indicated that history is their city's biggest tourist asset. Among the undeveloped tourism opportunities are a Center for Civil and Human Rights; the Tuskegee Airmen Museum (being developed by the U.S. National Park Service); antebellum homes; African-American history including Rosa Parks' birthplace, and the homes of Booker T. Washington and George Washington Carver.
Economic Development: Respondents indicated that abundant natural resources-forests, the Tallapoosa River, underdeveloped land and gravel-is the basis for potential economic development opportunities in their community. Respondents were in agreement that commercial and retail (gas, food, convenience) operations along the two-lane stretches of U.S. 80 have failed because of a lack of traffic. Respondents believed that the existing industrial parks (currently empty) would be more attractive to industry if transportation were better.
Demopolis Results (March 18, 2002)
Tourism: Participants in Demopolis counted the river and history (particularly antebellum architecture) as their most attractive tourist draws. They further cited U.S. 80 as the "natural" East-to-West corridor to bring tourists to their community. They regarded themselves as struggling because the corridor is not completely four-lane.
Economic Development: The participants considered themselves "ready" for growth in industry; however, they see a need for improvements driven by future growth. Despite abundant natural resources and an industrial park, Demopolis leaders find it challenging to attract new business.
Selma Results (March 19, 2002)
Tourism: Selma's historic district is the largest in Alabama to be included on the National Register of Historic Places. Civil War and Civil Rights history, architecture, and retirement tourism are among the attractions that participants listed in Selma. Despite the attractions located here, the focus group participants said it is hard getting tourists to Selma. Hotel occupancy averages approximately 65 percent.
Economic Development: A Chamber representative said Selma has an airport industrial park with an 8,000-foot runway and other industrial parks. This respondent indicated that time after time the absence of an east-west corridor for getting goods to the west has limited the community's development initiatives. He said manufacturers, who cannot get their products to market, would not locate in Selma. One participant indicated that several distribution centers have failed to locate in Selma because of poor East-to-West and North-to-South transportation. This participant indicated that improvements in U.S. 80 would improve the chances of having distribution centers locate in Selma.
Montgomery Results (March 20, 2002)
Tourism: Respondents cited Southern pride, heritage and history as major tourist draws for Montgomery.
Economic Development: Montgomery has several industrial parks with sewer and water capacity. The respondents see no limitations on infrastructure. Respondents reported that to four-lane U.S. 80 or extend Interstate 85 to Meridian, Mississippi would positively impact manufacturing, food, retail (food and other services), distribution, trucking, energy, tourism and hospitality.
V. Methodology
In order to estimate the likelihood that improvements to U.S. 80 will facilitate the clustering of industries in the study region, the study team interviewed representatives of existing industries in the region, which was defined to include Montgomery County along with the seven-county study region. Montgomery County was added to the seven-county region in order to capture a contiguous economic region, spanning Lowndes and Macon counties. Interviews focused on ex-ante and ex-post analysis of the impact of U.S. 80 improvements on businesses in the region. This was accomplished by collecting information from telephone interviews of local businesses in the region on how U.S. 80 improvements would impact their growth and that of the region.
A questionaire was distributed to a random sample of 230 existing industrial firms in the expanded region. Information was successfully collected from a total of 64 establishments, of which 60 were industrial establishments. Given the region's industrial establishment population of approximately 400 (seven counties plus Montgomery), information was collected from 15 percent of the total industrial establishment base. Only four industrial sectors were not covered in the data collection phase. They were: SIC 22 (textile), SIC 23 (apparel), SIC 29 (petroleum and coal), and SIC 38 (instruments and related products). In most cases, with exception to SIC 30 (rubber and related products) and SIC 36 (electrical and electrical equipment), the research had more than 10 percent of the industrial firm population in each sector.
Analysis of the interviews showed that:
- Currently, on average, 41 percent of the existing sales of the industrial firms in the region are transported over U.S. 80.
- 37 percent of the respondents reported that more than 50 percent of their raw materials are shipped on U.S. 80.
- The expected average increase in sales due to improvement and expansion of U.S. 80 is estimated to be 8 percent.
- 27 percent of the respondents expect that the expansion of U.S. 80 will lead to an influx of new businesses in the region.
- Only 17 percent of the respondents perceive that expansion of U.S. 80 may result in any cost efficiency gains in terms of lower cost of transporting the raw materials.
- 21 percent of the respondents perceive the likelihood for future business expansion of their current operation to be excellent or good; however, 79 percent of the respondents believe the improvement of U.S. 80 may not result in any future expansion of their current operation.
In terms of gross industrial sales, the greatest relative sales impact of the expansion of U.S. 80 will be felt in SIC-industries 20: Food and Kindred Products, 24: Lumber and Wood Products, except Furniture, and 26: Paper and Allied Products; all these industries are resource-intensive industries. Furthermore, they represent three of the existing six employment clusters in the region.
The expected increase in employment attributable to expansion of U.S. 80 is 2,176 workers, based on the corridor survey. At an average yearly wage of $29,000, this creates $63.1 million in direct earnings. This represents a 7.7% increase in the employment base of the region. The largest employment gain is perceived to occur in SIC industries 20: Food and Kindred Products, 24: Lumber and Wood Products, except Furniture, 26: Paper and Allied Products, mirroring the projected sales impact. In addition, SIC-industries 27: Printing, Publishing and Allied Industries, 34: Fabricated Metal Products, except Machinery and Transportation Equipment, and 35: Industrial and Commercial Equipment and Computer Equipment also see sizeable employment gains.
Based on the results of the interview analysis, as well as the focus groups with regional stakeholders, the research team concluded that relative employment clusters will remain the same after the improvement of U.S. 80. That is, the improvement will likely lead to additional employment in the expanded region; however, the employment gains will occur in those industries that already represent the major employment clusters of the region. The results of the interview analysis suggest that the expansion of U.S. 80 will fortify the shares of these industries, but will not result in a change in the economic dynamics and thus will not lead to formation of new cluster industries in the expanded region.
VI. Results
In order to quantify how the 2,176 jobs directly attributable to the highway's expansion would fuel additional growth as those new workers spend their incomes in the corridor, RIMS II economic multipliers for the eight-county region were purchased from the U.S. Department of Commerce and applied to the results of the survey data. The concept of the contiguous economic region is particularly important in conducting economic impact analysis. Consequently, Montgomery County was included in the analysis. This concept is particularly important because the RIMS II model is estimated based on regional flow of inputs and outputs; therefore, the regional multipliers can logically be applied in a context of a contiguous region. The direct employment and earning figures for the expanded region were applied to the multipliers reported.
According to RIMS multipliers for the eight-county region, including Montgomery County, $63.1 million in direct manufacturing earning and 2,176 in direct employment can lead to $70.7 million of indirect and induced earning and 3,308 of indirect employment. The total impact of the improved U.S. 80 on the region, therefore, could amount to $134.0 million in earnings and 5,484 jobs. The overall multipliers for earnings and employment are estimated to be 2.12 and 2.52, respectively. The average pay for direct manufacturing jobs is $29,000 and for indirect jobs it amounts to $21,400 per employee.
For the comparison purposes only, multipliers were also applied to the estimated direct earning and employment figures for seven-county region. The interview analysis of the existing business base in the corridor found that the seven-county' economy is likely to experience an increase in manufacturing employment of 1,381 jobs based on improvements to U.S. 80 outside of Montgomery. This yields a total employment impact of 3,660 jobs. The average multipliers for the seven county region, excluding Montgomery County, were estimated to be 2.21 for earnings and 2.65 for the employment.
It is worth noting that by interviewing the existing business base, and quantifying the consensus view, the methodology does not take into consideration any dynamic possibilities of the region. For example, but the stakeholders' focus groups and the inventory of the current business base indicated that the existing tourism industry in the region was limited, but that there were assets such as wilderness areas and cultural/historical assets that could be developed and marketed. By providing improved access, the highway investment increases the likelihood that such investment would be made in the future. It also expands the size of the region to which these assets could be marketed. While acknowledging that such possibilities are real, given the nascent nature of the region's non-resource oriented business base, especially in services such as tourism, the economic impact estimates provided here are at best a lower bound on the magnitude of this possibility.
As a supplement to the interview analysis, the research team contacted five hotels in the region and asked their opinion regarding the impact of the expansion of U.S. 80 on their perspective businesses. Admittedly, a sample of five is not sufficient to draw firm conclusions. Rather, the exercise was intended to place some limited bound on the potential impact such an improvement might have. Regional contacts indicated that tourism spending in Dallas, Marengo and Sumter counties would likely increase between 4 percent and 6 percent. This increase is attributable to the improvement of U.S. 80 and does not incorporate any additional investment or improvement in the stock of tourism assets in the region. This expansion implies roughly 100 new jobs in the tourism industry and $1.8 million annual increase in earnings for individuals in the tourism and travel industry in Dallas, Marengo and Sumter counties.
Finally, the cost of using highway investment as an economic development tool was examined. The cost for improving U.S. 80 from Mississippi to Georgia, estimated at $311.9 million was obtained from Alabama Department of Transportation. More specifically, the improvement costs from Mississippi to Montgomery, Montgomery to Tuskegee, and Tuskegee to the Georgia state line are estimated to be $59.6 million, $113.8 million, and $138.5 million, respectively. The improvement cost of U.S. 80 per projected number of increased manufacturing employees attributable to highway expansion, from Mississippi to Georgia, Mississippi to Montgomery, and Mississippi to Tuskegee, was compared to public incentives granted by the State of Alabama in recent recruitments of automobile manufacturing operations.
A weighted average public incentive per employee for the auto industry in Alabama was used as the point of reference. [2] In this context, the most feasible expansion of U.S. 80 is from the Mississippi state line to Montgomery. The relative improvement cost per manufacturing job gained in this segment of the expansion is nearly one-half (0.47) of the recent per employee public incentives offered to the auto industry. However, immediately east of Montgomery there is no estimated increase in employment (Macon County) based on the industry telephone survey. Consequently, the relative per employee cost of U.S. 80 expansion east of Montgomery increases rapidly. The relative per employee cost of U.S. 80 expansion from the Mississippi state line to Tuskegee is nearly 40 percent higher (1.37) than the auto sector cost per direct job. The expansion cost of U.S. 80 from Mississippi to Georgia, is calculated to have a relative per employee cost of nearly 2.5 times higher (2.47) compared to the auto incentive.
VII. Summary
The results suggest that the region would grow more than it would otherwise were highway improvements made to address the lack of four-lane access. However, highway improvements alone will not be a panacea for the region; businesses need more than highways to grow. Highway improvements are part of an initial step that would allow the region to seek development opportunities that are currently unattainable. Tourism, distribution facilities and tenants for the region's industrial parks are possibilities. Yet without highway improvements, it is a virtual surety that none of these developments will occur, or will do slow at an unacceptably slow rate.
[1] (Source: www.aaroads.com/high-priority/corr06.html)
[2] The weighted average per employee incentives granted by Alabama to Mercedes, Honda and Hyundai auto manufacturers to location assembly operations in the State is calculated to be $117,745.
