In our next series of posts, we’ll shift our attention to a major cost faced by low-income households: transportation. Transportation is most families’ second-greatest expense (after housing); on average, Americans spend nearly 14% of their income on it. However, the average poor family spends nearly 23% of their income on transportation, but despite paying more their transportation is often less reliable.
Affordable transportation is a pressing issue for North Carolina’s cities, which are some of the most sprawling in the country. A recent analysis ranked Winston-Salem as the 6th-most sprawling metro (out of 150), while Hickory was ranked #2. Sprawl leads families to spend more on transportation, as it leads to longer commutes for workers and less in public transportation.
Measuring Transportation Affordability
The Location Affordability Index – created by the Department of Housing and Urban Development – estimates how much households will spend on housing and transportation. It calculates these expenses for seven different types of households (listed below). In addition, the LAI reports data on several other indicators, like job density.
The household types reported by the LAI include:
- Average income household of four
- Single-person household earning the poverty rate
- Single-person household earning 50% of the area’s average income
- Single-professional household
- Retired couple
- Single-parent family of two earning 50% of the area’s average income
- Working-class family of three earning 80% of the area’s average income
- Two-worker family of four
The calculations used by the LAI are quite complex. To (very briefly) summarize: they use various indicators related to how much families spend on transportation and housing, like neighborhood density, proximity to jobs, the cost of housing, and transit service. It combines these measures with behavior data for the seven household types – for example, persons in poverty are more likely to rely on transit – and feeds these indicators into a complex statistical technique.* Costs are reported separately for renter and homeowner households.
Our upcoming posts will examine transportation costs from the LAI for three low-income household types in the LAI bolded above. For the two poorest household types (those in poverty and single parents with two children), we’ll look at transportation costs for renters, while we’ll report transportation costs for working-class homeowners.
Following this series, we’ll use data on both income inequality (see our previous posts on Charlotte, the Triangle, and the Triad) and transportation to identify neighborhoods where affordable housing should be built. We’ll argue that the best neighborhoods for affordable housing are those that currently lack housing for lower-income families and where transportation is most affordable.
*Called a simultaneous equation model