The Economic Promise of the Gateway Program

The Gateway Program is a series of projects along a ten-mile rail segment between Newark, New Jersey and New York Penn Station (NYP). The Gateway territory is critical to the Northeast Corridor (NEC), connecting the nation’s busiest rail hubs and strongest economic engines. Much of the NEC, which stretches from Washington, DC to Boston is characterized by four to six tracks, yet the critical section between Newark and New York City, which carries over 200,000 passengers on 450 daily trains, is served by only two tracks, one track carrying passengers in each direction. Compounding the problems caused by the bottleneck, the segment between Newark and New York City includes bridges and tunnels in desperate need of repair; the aging infrastructure, much of which dates to the early and middle 20th century when the tracks were owned by the Pennsylvania Railroad, leads to delays in service that disrupt the lives of the hundreds of thousands of people who traverse the NEC.

The Gateway Program is a multi-phase, multi-project program that addresses this deficiency by rehabilitating, modernizing, and expanding the NEC’s century-old rail infrastructure. Through its 11 core projects, the Gateway Program will create track capacity for more frequent and more reliable service for commuter and intercity passengers and bring the infrastructure to a state of good repair. The Program’s aim is to address multiple infrastructure challenges through a systemized, phased approach that will minimize disruptions to existing service while construction is underway. Ultimately, the infrastructure improvements will enable a dramatic growth of commuter and intercity service, through the introduction of new NJ TRANSIT and Amtrak service as well as increased frequencies, thus expanding the role of rail in the region’s transportation network.

The economic analysis shows that implementing the full Gateway Program will generate billions of dollars of economic value for both the region and the country. By expanding the regional labor market, increasing the reliability of daily commutes, reducing travel times, and boosting business productivity, the results of the Gateway Program will create tens of thousands of jobs and stimulate billions of dollars in economic growth. During the construction phase, the Gateway Program will generate $42.8 billion of economic activity in the region. When the construction is completed and the Gateway Program improvements are implemented, the Program will stimulate $230 billion worth of economic activity in the region and another $170 billion in the national economy, in the first 15 years of operation.

The tri-state region, home to just under 7% of the country’s labor force, currently contributes about 9.6% to the gross domestic product (GDP), meaning the region’s workers and job sectors contribute disproportionately to the national economy. From 2023 to 2060, the construction and operation of the full Gateway Program will generate and sustain 24,400 jobs and $7.3 billion in GDP on average per year in the tri-state region.

Average annual economic activity amounts to more than $275 billion in additional GDP over the period studied.

Growing the tri-state region’s economy has outsized positive effects on the nation’s economy.

The aggregate benefits of the Gateway Program are not the simple sum of benefits accruing to commuters, or the expansion of jobs for construction workers or rail operations staff. Those jobs have multiplier effects that create larger impacts; each job created or facilitated by the Gateway Program also has secondary and tertiary positive effects on the regional and national economy.

Heightened economic activity and increased demand for goods and services in the tri-state region will stimulate the economy beyond our borders, resulting in an average of 21,700 newly created and sustained jobs, and $169 billion in GDP outside the region. This activity beyond the tri-state region contributes to a total of 46,100 jobs and $445 billion in GDP nationwide.

In addition to the new capacity, replacement of the 100+ year-old tunnels and other outdated parts of this ten-mile stretch of the NEC increases operational reliability, improves the traveler experience, and enables new NJ TRANSIT services and expansion of Amtrak intercity service to new markets.

Increased rail service enabled by the Gateway Program will greatly expand transportation choices for people in the region.

With proximity to more accessible, frequent, and reliable rail service, local bus or auto trips, and some intercity trips currently taken by plane, bus, or private automobile could shift to rail as trains become a more attractive option.

In some markets, especially those with reduced transfers, traveling by rail will be faster than alternatives like taking the bus or driving, giving commuters more time for leisure, paid work, and other productive activities. In some markets, traveling by rail will be faster than driving or flying, giving long-distance and business travelers more time as well.

Average travel time savings for new NJ TRANSIT riders are projected to be 25 minutes over their next best alternative.

Riders who choose Amtrak will save time by switching to rail from driving, flying, or taking the bus.

Based on Amtrak market research, the study assumes that 58% of new Amtrak passengers would shift from driving and almost 30% would shift from flying. Over 40% of new NJ TRANSIT rail passengers would have otherwise traveled by bus.

In addition to the travel time savings, this mode shift would reduce air pollutants and congestion in the region.

As the Gateway Program expands and improves rail service, more commuters will shift to rail, which will help reduce traffic on already congested streets, reducing delays on trips made by car, bus and truck.

This benefit extends beyond commuters to truck and delivery vehicles, as less personal passenger vehicles are anticipated on the road, creating more efficient travel for delivery workers and skilled tradespeople who rely on vehicles to transport essential equipment. Overall, the expected users and beneficiaries of the expanded service include the millions of residents, workers, and visitors throughout the region who rely on the rail network for safe, convenient travel daily, as well as those who may never directly ride the trains, but who benefit from reduced congestion, cleaner air, and stronger economic growth resulting from other people using transit.

The Gateway Program will provide individuals throughout the region with more reliable service and increased access to jobs, health services, schools, cultural experiences, recreation, and other opportunities.

Economic Analysis

The economic impact of the Gateway Program is based upon the increased productivity and efficiency of the regional economy unlocked by growth in rail access to Manhattan’s central business district and associated transportation benefits, as well as the construction of the Gateway Program projects leading up to the introduction of expanded rail service.

The analysis presented here was conducted using TranSight, an integrated economic and transportation demand modeling tool developed by Regional Economic Models, Inc. (REMI). The analysis focuses on changes in travel costs, labor access, productivity, and capital/operating spending resulting from expanded rail service introduced by the Gateway Program. Changes in travel cost include commuting costs (time saved by commuters and business travelers), accessibility costs (the ability to access a greater array of goods services, employment opportunities for individuals, and a broader labor force for employers), and transportation costs (a measure of savings due to greater efficiency in the overall transport system).

The impacts are measured for the Gateway Program Full Build Scenario, which includes the construction of all Gateway Program projects in development and all Supporting Projects described in the Appendix to this report. The model measures the economic impact of constructing the Gateway Program Full Build Scenario and the corresponding expansion of rail service against a Baseline Scenario which only comprises projects that are currently funded and in construction. In the Baseline Scenario, ridership growth is limited by existing capacity.

Thus, the analysis includes the construction phase impacts of the Gateway Program Full Build Scenario as defined above, noting that travel time benefits are realized with completion of all Gateway Program projects and the Supporting Projects.

Model Inputs

Model inputs are capital costs which were provided by Amtrak for this study. Operating and maintenance costs were estimated using existing costs per passenger and level of service, assuming the same ratios in the future. Ridership forecasts were provided by NJ TRANSIT and Amtrak based on their ongoing capital and service planning efforts.

Assumptions on employment sector and population growth are based on national trends and built into the REMI TranSight model.

Multiplier Effects

The aggregate benefits are not the simple sum of benefits accruing to commuters, or the expansion of jobs for construction workers or rail operations staff. Those jobs have multiplier effects that create larger impacts; each job created or facilitated by the Gateway Program also has secondary and tertiary positive effects on the regional and national economy. With each paycheck, a portion of money is spent and spent again at grocery stores, restaurants, and gas stations, it is used to purchase services like haircuts, and to pay for teachers, electricians, plumbers, and accountants. All these activities multiply through the economy creating more jobs and generating more economic activity. This bolsters the local economy of communities and has an outsized impact on the national economy. The tri-state region currently contributes roughly 9.6% of the total U.S. GDP, among the highest per capita contributors to GDP across the nation.

Conservative Assumptions

At every opportunity, this analysis employs conservative assumptions:

• The cost of procuring and purchasing equipment to support the expansion of NJ TRANSIT service, which would rely on national supply chains and positively influence GDP, is not included in the model, nor are capital investments in rail lines beyond the NEC that may be required to support the level of service envisioned on connecting lines.

• There is no consideration of ridership growth from induced demand (where people would be taking trips that they otherwise would not have made at all).

• The productivity advantage of NJ TRANSIT versus driving is not taken into consideration, though the travel time savings are. Productivity for Amtrak travel is taken into account.

• While the economic benefits continue to accrue, no benefits are included in this analysis beyond 2060 – considered the end of the study period.

• The analysis does not account for the benefits of increased opportunity for non-commute travel.

• This analysis also not take into account NY State ridership from Pascack & Port Jervis in the NJ TRANSIT forecasts.

As a result, the authors are confident, on all these counts, that benefits will be higher than those accounted for here.

Model Outputs

As reported in this analysis, the model outputs (the economic impacts of the Gateway Program) are measured as the number of jobs created and dollars contributed to the local and national GDP (a measure of the value of goods and services produced).