I. Executive Summary

Transportation costs have risen sharply in recent years. Car ownership costs have increased more than 40 percent since 2020, while low-income households spend approximately 30 percent of their after-tax income on transportation. Affordable and reliable transportation is essential to economic participation. Limited access to employment, healthcare, and education can reduce labor force participation and economic stability.

The central policy challenge is balancing transportation investment with affordability, fiscal responsibility, and environmental goals. This paper examines two complimentary strategies for addressing the issue. First, expanding federal support for workforce-based transportation assistance programs such as employee pre-tax commuter benefits and enacting legislation like the Supporting Transit Commutes Act. Second, continuing to fund public investments into making public transportation reliable and accessible building on the 2021 Infrastructure Investment and Jobs Act.

II. Overview

A. Transportation Affordability and its Role in Economic Resilience

Transportation affordability is defined as a community’s access to transportation that costs no more than 20% of their household budget. Current estimations find that the poorest households in America are paying 30% of their after-tax income on transportation (BTS). The lack of affordable transportation hits poorest, car-driving communities the hardest, as they consistently face higher after-tax transportation costs than their non-car counterparts. This added economic pressure impedes citizen’s and community’s economic resilience, as strain on one’s budget limits their own economic activity in nearby businesses, community events, and public spaces. Corrigan Salerno, a policy manager at Transportation for America, makes this connection clearly, saying, “ “Steering just a portion of highway funding to public transit would be transformational for the economy. You’d have enormous opportunities for people to get to their jobs, to doctor’s appointments, to expand the availability of affordable housing in high-demand areas (Milman, 2025).”

B. Recent Trends in Transportation

According to AAA, the average cost of a tank of gas in the United States currently sits at about four dollars per gallon. The cost of owning a car, often the only viable option for communities most vulnerable to transportation affordability problems, has increased 40.59% since 2020. With increasing fuel, insurance, maintenance, and vehicle costs, owning a car costs the average American about 12,000 a year (AAA). These costs are only expected to increase as the Iran war and other market challenges continue. After rapidly increasing 20% in the early 2020s, public transportation costs (for all ticketed public transportation services) has fallen by 1.4% (BTS). 

C. Transportation Accessibility's Role as an Economic Policy Issue

Transportation accessibility has long been treated as an infrastructure issue, with nearly 80% of US transportation spending going to highways instead of public transportation. Economic analyses have found clear connections between neighborhoods' economic wellbeing and access to public transportation. According to the American Public Transportation Association, every one dollar invested in public transportation creates up to five dollars in economic activity back into that community. For businesses in these communities, investment in public transportation yields more than three times its cost in business sales (APTA). Access to public transportation, which is linked to higher investment in these communities, also helps to link people to needed services, like schools, healthcare, and sources of employment. A study done by New York University’s Rudin Center for Transportation found a correlation between an area’s access to transportation and the levels of unemployment and low-paying jobs in that area. (Bouchard, 2). The undeniable link between a community’s investment in transportation and its wealth requires action from the government to increase transport accessibility across the country. In understanding the importance of economic development the question for governments is clear: How can governments improve mobility while maintaining sustainable transportation systems?

III. History

A. Current Stances

The discussion around transportation affordability represents broader sentiment on how transportation should be viewed as a market function, government investment, and environmental sustainability to improve economic mobility.

Market-oriented approach: Market-oriented view focuses on the market solutions, consumer's choice and efficiency in pricing. Supporters contend that transportation markets can adjust to demand by competing with each other among vehicle makers, mobility services providers, rideshare services, and the private transportation sector. Governments need to do all they can to keep some infrastructure in place and to facilitate innovation, but not to provide a large subsidy to individual transport costs. But one constraint is that market based solutions may not meet the needs of households or communities with low mobility needs but a high need for mobility.

Public investment approach: A public investment perspective is one that considers transportation infrastructure as a public good that yields benefits in addition to the transportation user. The governments can overcome the mobility barriers by investing in public transport, roads, bridges, pedestrian facilities and linkages between residential and job locations. Public investment can also help to make the economy more resilient by making sure that transportation is still available if fuel costs rise, the economy experiences a downturn, or other events happen. The question is how to allocate public resources to a system that is reliable, cost-effective and responsive to real community needs.

Environmental perspective: Environmental policy is becoming an increasingly important factor in shaping transportation choices, especially by minimizing emissions of greenhouse gases, congestion and reliance on fossil fuels. Enabling greater mobility through public transit, promoting pedestrian/bike facilities, and promoting EVs can help lower transportation-related environmental costs. Policies which raise the cost of private vehicle use without offering viable alternatives, however, may disproportionate those households that rely on cars for work or services. Environmental objectives therefore need to be balanced with affordability and accessibility.

Insights from state and local government: State and local governments are significant because there are significant community differences with respect to transportation needs. The large metros may need regular and reliable public transport and the suburban and rural areas may still rely on private transport to a greater extent. This poses a policy challenge: one transportation plan alone will not meet the needs of all populations. The government should then take account of local employment characteristics and density, income and existing infrastructure when distributing funds for transportation.

The central policy question isn't just whether or not to promote private cars versus public transit. It is about how governments can offer households access to reliable and affordable mobility choices, while remaining on a sustainable fiscal path and attaining wider economic and environmental goals.

B. Tried Policy

Multiple policy options have been employed to support transportation affordability and infrastructure and examined by governments, but their results have been inconsistent in communities.

Historically, the investment in federal infrastructure has been largely toward highway, bridge, public transportation, and transportation infrastructure. Large-scale infrastructure projects can enhance connectivity, shorten travel times, and facilitate economic activity by connecting workers to employers and businesses to markets. But as with infrastructure, it's not enough to make transportation affordable. While families have to pay high fuel prices, owning a car, car insurance, fares, or maintenance, a new road or transit system can increase accessibility.

Public transportation operating subsidies have also been employed to ensure the affordability of transportation and service level. Subsidies can lower the direct cost passengers pay for the service and can enable transit agencies to provide routes that cannot be financially supported through fares. This is important for low-income households, students, older people, and people who are unable to own a car. But continuing pressures on the public budget may occur with transit subsidies, especially if the transit agency has growing labor, maintenance, and energy costs.

Some groups have been the focus of targeted transportation assistance programs, such as low-income families, employees and commuters. While these can be more targeted to affordability issues than blanket investment in infrastructure, they can also be more challenging to manage and can fall short for those who are not eligible for particular programs.

Results from these policies indicate that transportation affordability can't be met with infrastructure investments. Infrastructure investment and development are important, but policies need to take into account the recurring costs to households. A more comprehensive approach would include both longer-term investment in infrastructure and targeted measures of affordability, and reliable transportation options.

Thus, the policy challenge is how to shift from providing transport capacity to facilitating access, reliability, and affordability at the same time. This is especially significant for lower-income families and youth, where transportation can make the difference between a job, education, and economic opportunity being a reality.

IV. Policy Problem

A. Stakeholders

Transportation affordability is not a problem that belongs to any one agency or government office. It cuts across income levels, industries, and generations, which is exactly why it has been so hard to address in any consistent way. Knowing who carries the costs and who controls the policy levers is the starting point for any reform that actually reaches people.

Federal, state, and local governments make the biggest calls in transportation. The Federal Transit Administration distributes billions in formula grants to transit agencies every year. Under the Infrastructure Investment and Jobs Act, that came out to roughly $21.4 billion per year, with the full law authorizing $108 billion for public transportation programs from FY2022 through FY2026 (FTA, 2021). On top of that, the USDOT sent about $61 billion directly to states in formula funds in fiscal year 2024, representing about 42 percent of its total spending (Brookings, 2025). State transportation departments decide how that money gets allocated and spent, while local governments and transit agencies run the systems that riders use daily. The friction between these levels of government over funding formulas and project priorities is a big reason why transportation outcomes vary so dramatically from one community to the next.

Transit agencies themselves are under a specific kind of pressure. More than 20 percent of transit revenue vehicles are already past their useful life, and over 11 percent of transit facilities need to be replaced or fully rehabilitated (FTA, 2024). At the same time, agencies are expected to expand service, cut emissions, modernize fleets, and handle growing ridership demand, all while dealing with operating budget gaps that have been a problem since COVID wiped out fare revenue. For these agencies, underfunding is not a policy debate. It shows up as fewer buses, longer wait times, and cuts to the routes that riders with no other options depend on most.

Low-income households take the hardest hit from rising transportation costs. In 2023, households earning $28,261 or less spent nearly 32 percent of their pre-tax income on transportation. That is more than three times the 9.6 percent that the highest-income households spent, even though lower-income families spent less in total dollars (Bureau of Transportation Statistics, 2024). Transportation is the second largest household expense after housing across every income level, averaging $13,174 per year nationally. For families already stretched thin, that number does not leave much room for anything else (BTS, 2024). About 30 percent of the lowest-income households do not own a vehicle at all, which makes them the most reliant on public transit systems that are often the least funded and least reliable in the areas where they live (Smart Cities Dive, 2024).

Students and young adults face their own version of this. Transportation costs show up at the exact moment when young people are trying to get stable, access school, and break into the workforce. In 2024, people under 25 spent an average of $9,243 on transportation, about 19.5 percent of their total spending, and that is before accounting for tuition, rent, and entry-level pay (BLS, 2024). As Luke's section of this brief lays out, for many young people the cost of getting to a job or internship is enough to make the opportunity not worth it. That is not a personal failing. It is a structural problem that policy has the power to address.

The reason this is a policy problem and not just a collection of individual struggles is that every group in this picture is constrained by what the others can or cannot do. Transit agencies need funding to run better service. Governments need political will and revenue to provide it. Low-income households and young adults need better options to take advantage of economic opportunity, but they have the least power to push for the infrastructure they depend on. Getting out of that cycle requires policy that takes all of these pressures seriously at the same time.

B. Risks of Indifference

The consequences of failing to address transportation affordability extend beyond individual households. When policymakers treat the rise in transportation costs as a trivial matter rather than a structural issue, the effects begin to compound across areas such as the labor market and public health system. Moreover, the impacts on long-term economic mobility, especially of already low-income populations, becomes increasingly difficult and costly to reverse.

C. Labor Force Participation

The most immediate impact is a reduction in labor force participation. Research from the Federal Reserve Bank of St. Louis identifies transportation access as one of the most consistent barriers to employment, with labor force participation running 6.5 to 7.6 percentage points lower in low-and-moderate-income communities than in higher-income ones, a gap that has persisted across multiple economic cycles (Chalise & Rodgers, 2023). When workers cannot afford to reliably get a job, they either forgo job opportunities or accept positions within a narrower area, often at lower wages. A growing share of young people already face structural barriers that include transport constraints, which contributes to weakening labor force participation with workers between 16 to 24. Their participation rate is project to fall from 55.9 percent in 2024 to 53.6 percent by 2034 with current trends. Allowing transportation costs to remain high accelerates this trend and leaves the productive potential of young people unrealized (Nguyen, 2026).

D. Healthcare

Moreover, the American healthcare system absorbs costs of the policy issue. According to the Centers for Medicare and Medicaid Services, 5.8 million people in the U.S. do not receive medical care each year due to transport issues, with research surveying data between 1997 and 2017 finding that 21 percent of adults without a vehicle or adequate public transportation went without necessary medical care (Wolfe et al. 2020). These missed appointments, rather than decreasing costs, compound them onto more expensive systems. In other words, transportation barriers lead millions of people to miss medical appointments annually, directly exacerbating health disparities; patients who skip routine and preventative care are more likely to require emergency healthcare services that are significantly more expensive for both the individual and the healthcare system as a whole. When those costs fall on emergency departments and public insurance, the financial burden is ultimately distributed back to the taxpayers and insurers. 

E. Household Finances

The risk to household financial stability is equally significant. As established in the overview, the poorest American households already spend 30 percent of their after-tax income on transportation, well above the 20 percent threshold that constitutes affordability (BTS). For households already stretched thin by housing, food, debt, healthcare, and other costs, transportation expenses function as a regressive tax. The less a household earns, the larger the share of income that simply goes from getting from place to place, such as from their home to their workplace. According to the American Society of Civil Engineers, failure to adequately invest in transportation infrastructure could cost the average American family an estimated $700 per year through increased congestion, vehicle repairs, lost economic productivity, and other factors (ASCE, 2024). Moreover, the figure leaves out the opportunity cost experienced by workers who turn down jobs or patients who skip appointments because reaching them is unfeasible.

Thus, left unaddressed, these compounding pressures narrow the economic opportunity available to lower-income households, concentrating poverty in areas with limited transit while concentrating opportunities in areas accessible by personal vehicles. In other words, the gap between those who can afford to get where they need to go and those who cannot is a gap in who actually gets to participate in the national economy.

F. Nonpartisan Reasoning

Transportation affordability is arguably one of the few national policy areas in which the underlying economic reasoning is consistent across partisan lines. The specific solutions may differ depending on what exactly is prioritized, such as public investment or fiscal responsibility, but the core proposition that reliable and affordable transportation is necessary for economic growth has consistently attracted bipartisan attention.

The clearest legislative evidence of this agreement is the 2021 Infrastructure Investment and Job Act. The bill passed the Senate in a 69 to 30 vote, with 19 Republican Senators joining all 50 Democrats, and its sponsors described the legislation as a step to “create jobs, increase productivity, and pave the way for decades of economic growth and prosperity – all without raising taxes on everyday Americans or increasing inflation” (Warner et al., 2021). The law provided $91.2 billion in mandatory transit funding over five years, with investments designed to help people get to work, school, and essential services more quickly and affordability. It represented the largest federal investment in public transit in American history and reflected a shared recognition across parties that transportation infrastructure powers the national economy (DOT Office of Public Affairs, 2022)

That consensus, more importantly, didn’t emerge from the exact same set of values. Conservatives tend to support transportation investments on the grounds that it reduces friction in labor markets and lowers the cost of doing business, both of which stem from a support of free markets and financial development. Meanwhile, progressives emphasize that transportation is also a matter of equity, arguing that communities historically underserved by transit infrastructure face compounding disadvantages in education and employment (BPC, 2021). Both arguments, however, point to the same conclusion. Affordable and reliable transportation options are a structural input to economic opportunity, rather than simply an optional amenity. The Bipartistan Policy Center has framed this case explicitly, supporting the 2021 Infrastructure Bill with a proposed $1 trillion investment package designed to address priorities shared across party lines, recognizing that transit infrastructure is often supported across the political spectrum (BPC, 2021).

The nonpartisan case also rests on the relationship between transportation affordability and workforce development. A labor market in which workers cannot reliably reach employers is less efficient than one where they can. As outlined, high-quality, affordable transportation is crucial to upward mobility from poverty, with limited transportation options shown to restrict job access and increase unemployment. Every dollar invested in public transportation results in several dollars of economic activity in the surrounding community, a return on investment that holds regardless of which party is in power. The challenge, then, for policymakers is not building consensus around the goal but sustaining the political will through the slower and harder work of appropriating funding and designing solutions. Ultimately, the case for treating transportation affordability is one of the more reliable points of agreement in politics today, and it deserves to be treated as such.

V. Policy Options

A. Problem to Action

The prior sections make it clear that transportation affordability is already costing people jobs, educational opportunities, and economic stability. The policy options below are realistic responses to that problem that target the two most direct pressure points: the cost of commuting for workers who are already in the system, and the quality and reach of the transit systems everyone else depends on.

B. Expand Workforce Transportation Assistance

One of the most practical tools already available is the employer commuter benefit. Under IRS Code Section 132(f), employers can provide up to $340 per month per employee in 2026 for transit and vanpool costs on a pre-tax basis, meaning neither side pays federal income or payroll taxes on that amount (ACT, 2025). For an employee spending $200 a month on transit, that adds up to roughly $600 to $840 in yearly savings depending on their tax bracket (Fleet, 2026). Employers save too, since pre-tax contributions reduce their payroll tax liability. The problem is access. Smaller employers rarely offer these benefits, and lower-wage workers are the least likely to work somewhere with a structured benefits program. These are also the workers who are most burdened by transportation costs in the first place.

In January 2025, Representatives Auchincloss and Lawler introduced the bipartisan Supporting Transit Commutes Act, which would restore full employer deductibility for transit benefits that was stripped by the 2018 tax law, giving more businesses a direct financial reason to offer these programs to their employees (Auchincloss, 2025). Expanding this framework, especially for small and mid-sized employers, and pairing it with direct transit vouchers for workers who cannot access employer benefits at all, would get relief to the people being affected the most.

C. Investing in Reliable Public Transportation Systems

Subsidizing the cost of getting somewhere only matters if there is somewhere reliable to go. The 2021 Infrastructure Investment and Jobs Act made the largest federal investment in public transit in U.S. history, authorizing $108 billion for transit over five fiscal years, including $91 billion in guaranteed funding and $5.6 billion specifically for low and zero emission buses (FTA, 2021). That represented a roughly 67 percent increase in annual transit funding compared to the previous authorization period. The results, though, have been uneven. A 2025 Urban Institute analysis found that while overall transportation investment went up under the IIJA, public transit capital spending essentially flatlined while highway projects took the bulk of new construction dollars. High construction cost inflation also reduced the value of what was built (Urban Institute, 2025).

Ridership has not fully bounced back either. Public transit trips reached 8.1 billion in 2025, still about 20 percent below pre-COVID levels, which points to real gaps in service reliability and coverage that are keeping potential riders away (Congress.gov, 2026). Genuine transit investment means outcomes: more frequent service, longer hours, updated vehicles, and routes that connect residential neighborhoods to job centers and schools. Through IIJA, the 2026 reauthorization process, is the next opportunity to push that further and hold investment to a standard of access and ridership. 

D. The Bottom Line

These two approaches work at different timescales and reach different people, which is what makes them work together. Commuter benefits and tax credits reduce costs now for workers already in the system. While transit investment builds the infrastructure that expands access for everyone else, including people not yet employed or unable to get employer-sponsored benefits. Together they address how  transportation affordability can act as a barrier to economic participation that hits hardest on the people who can least afford it and at the moments when access to opportunity is most critical.

VI. Impact on Young People

Affordable transportation would affect young people in several connected ways. Reliable transportation determines which opportunities they can reach, while the cost of commuting determines whether those opportunities are financially practical. For students and workers beginning their careers, transportation reform could expand access to employment, make internships and training programs easier to participate in, and leave more income available for other expenses.

A. Expanding Access to Jobs and Early Career Opportunities

Investments in reliable public transportation could expand the geographic range of jobs available to young people. A study using longitudinal data from the 95 largest cities in the United States found that improvements in public transit were associated with reductions in youth unemployment, particularly in cities that already had established transit networks (Brandtner et al., 2019). This suggests that public transportation can help address the distance between where young people live and where employers are located.

The benefit extends beyond providing a ride to work. More frequent service, longer operating hours, and routes connecting residential communities with employment centers would allow young people to search for jobs across a significantly larger area. They would be better positioned to attend interviews, accept positions with evening or weekend shifts, and report to work consistently. This could allow a young applicant to choose a position because it offers stronger experience, higher wages, or greater opportunities for advancement rather than because it is the only job within walking distance. Employers would also gain access to a wider group of potential workers, improving the connection between open positions and the young people seeking employment.

B. Improving Access to Internships and Workforce Training

Transportation reform could also help young people gain experience before entering the workforce full time. The Department of Education identifies paid and unpaid internships as forms of work based learning that often take place at an employer’s work site. In a 2022 review of career and technical education programs, six of the seven stakeholders interviewed by the Government Accountability Office identified transportation to these sites as a barrier to student participation (GAO, 2022). An internship or apprenticeship may be available, but its value is limited when students cannot reach the workplace reliably in the first place. 

Improved transit connections between schools, residential areas, campuses, and work sites could make existing programs accessible to more students. A 2021 analysis of 1,373 community and technical colleges found that only 57 percent of their primary campuses had a transit stop within walking distance. However, another 25 percent could potentially be connected through relatively small extensions of existing bus routes (Civic Mapping Initiative, 2021). This indicates that some access gaps could be addressed by extending existing infrastructure rather than constructing entirely new systems.

Reduced fare programs can strengthen these investments by helping students use the transportation that is available. Minneapolis students who received unlimited transit passes had absenteeism rates that were 23 percent lower and grade point averages that were 0.28 points higher than students without passes. Pass users were also able to reach learning opportunities located away from their schools (Urban Institute, 2017). Although one local program cannot reliably predict results everywhere, it demonstrates how affordable transportation can support attendance and participation in educational opportunities that prepare young people for future careers.

C. Reducing the Financial Burden of Commuting

Lower commuting costs would allow students and workers beginning their careers to retain more of the income they earn. In 2024, consumer units whose reference person was under 25 spent an average of $9,243 on transportation, equivalent to approximately 19.5 percent of their total expenditures. Those with a reference person between 25 and 34 spent $12,802, or approximately 17.2 percent of total expenditures (BLS, 2024). These expenses include vehicle purchases, gasoline, insurance, repairs, and public transportation. The burden is especially significant for households with limited incomes. In 2023, households in the lowest income quintile spent 32 percent of their before tax income on transportation, compared with 12 percent among households in the highest income quintile (BTS, 2024). For a young person considering an internship or entry level position, commuting costs can reduce the actual financial benefit of accepting the opportunity. A position may provide valuable experience, but fares, fuel, insurance, and repairs can consume a meaningful portion of the resulting income.

Employer commuter benefits offer one way to reduce this burden. In 2026, employers can generally exclude up to $340 per month in combined transit pass and commuter highway vehicle benefits from an employee’s taxable wages (IRS, 2026). Expanding access to these benefits could allow younger workers to preserve more of their earnings for tuition, housing, debt payments, emergency expenses, and savings. Because these benefits begin after employment, discounted student passes and direct transportation assistance would remain important for job seekers, unpaid interns, and students participating in workforce training.

VII. Conclusions

Transportation costs have risen over the past years, with transportation affordability becoming a rising concern. Transportation has long been tied to factors such as economic stability, job opportunities, and access to greater possibilities. Therefore, with the rising transportation costs, more stress is put on those who need to access job opportunities, education, healthcare, and other resources. This, in turn, can create many barriers for low-income families, limiting employment options, increasing economic inequality, and reducing access to education, all of which are high-return opportunities. Consequently, improving transportation affordability opens more access to opportunities, strengthening economic resilience and long-term economic mobility. 

VIII. Acknowledgement

The Institute for Youth in Policy wishes to acknowledge Michelle Young for editing this policy brief.

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