Research into 1930s Commuting in London Shows How Public Transport Boosts the Labour Market

John here. The Tory evisceration of public services in the UK has effects across all aspects of life. In the light of the recent cancellation of bus lines and an announced tube fare increase, this piece looks at the historic benefits to workers and the economy of a functioning public transport system. Nonetheless, as much of the “public” transport in the UK is fully privatized, services that do not return a profit to their operators continue to be closed.

By Andrew J. Seltzer, Professor of Economics and Economic History, Royal Holloway, University of London, and Jonathan Wadsworth, Professor of Economics, Royal Holloway, University of London. Originally published at The Conversation

Following losses of £1.5bn in annual fare revenues incurred during the pandemic, Transport for London recently signed a deal with the UK government for emergency funding. The agreement ensures that new train orders, bridge repairs and tube upgrades will continue as planned. It also will lead to tube fares rising and bus services being cut.

While the Elizabeth Line, a £19 billion east-west addition to the London Underground, opened to great fanfare in May 2022, this year has also seen some of the oldest bus routes in the UK axed: including route 144 between Worcester and Birmingham, route 477 between Dartford and Orpington, and route 84 between north London and Hertfordshire. At least 135 bus routes countrywide currently face cutbacks or permanent cancellation.

The standard justification for public transport closures is economic feasibility – a lack of profitability for the service provider.

As our work shows, however, such discussions often miss much of the full value of public transport to society. In addition to making profits for operators, public transport opens up labour market opportunities for workers, increases residential choice, and reduces crowding in inner-city areas.

The advent of working-class commuting

Our research examines the consequences of working-class access to public transport in London in the 1920s and 1930s.

We know from a survey of working-class London conducted in the 1890s, entitled The Life and Labour of the People of London, that Victorian-era workers were typically employed in the immediate area of their home. Indeed, the homes themselves were often extensions of factories as “outwork” was a common phenomenon.

This absence of commuting in the 19th century led to widespread urban crowding, as industry typically clustered geographically due to economies of scale and agglomeration. Social reformers commented on how crowding caused poverty and what they perceived to be “vice”, as well as the spread of diseases.

Over the next 40 years, growth of the transport networks opened up opportunities for working-class commuting. By 1930, most residents and workers in the north and west of London had access to the Underground, most in the south and east had access to a tram, and almost everyone had access to at least one bus route. Only 1% of Londoners lived more than 560 metres from a public transport stop.

We have used the New Survey of London Life and Labour, a 1930 follow-up survey which contains a large sample of working-class Londoners, to examine how early public transport networks affected the labour market. This data contains, among other things, each worker’s place of residence and work.

By “GIS coding” this information, along with the entire extant public transport system in the London area, we were able to calculate their commuting distances, the centrality of their residences and workplaces, and their access to public transport.

Our research shows that commuting in 1930 followed many of the same patterns as today. The largest number of workers (about 38%) commuted inwards towards the city centre. The next-largest group (29%) worked within a kilometre of their residence. The remaining workers were evenly split between people travelling away from the centre for work and others travelling across the city.

To illustrate the typical commuting patterns, let’s look at where residents of Wandsworth Borough, located about nine kilometres southwest of the city centre, commuted for work.

We found that the average residence had 212 employers (in any industry) within a one-kilometre radius, 1,700 within three, and 4,333 within five. Moreover – holding age, gender, occupation and workplace area as constants – an additional kilometre commuted increased earnings by 1.5% to 3.0%, although the additional returns on longer commutes were likely less. These higher earnings considerably outweighed the monetary cost of public transport.

Access to transport leads to increased job opportunities

To understand the importance of public transport networks to labour markets, it is necessary to understand the reasons behind these large returns to commuting. We focus on two explanations why a commuting worker might have earned more than a local worker.

Search theory suggests that individual workers are better suited to some employers than others. Someone who can only work near to home, as was typical for workers in the Victorian period, only has a small number of employers to choose from.

But a worker who can travel using public transport, as had become the norm by 1930, can potentially work for more different employers. This in turn implies there will be a higher probability of a good match between workers and employers, and thus higher productivity and wages.

In the 1930s, British economist Joan Robinson in her book The Economics of Imperfect Competition formulated a theory of microeconomics she called monopsony. A slightly modified version of this theory suggests that, in the absence of public transport, local employers have a degree of monopoly power over their workers.

Employers can pay less than the market wage because it is costly for workers to switch to more distant jobs. The construction of London’s public transport networks in the early 20th century opened up remote employment opportunities for workers, and thus reduced local employers’ monopoly power.

Public transport improvements between 1890 and 1930 broke the link between residence and workplace. This allowed first the middle class and then the working class to move away from the city centre.

One result was a dramatic decrease in urban crowding and the associated concentration of poverty and spread of disease. As we have shown in our research, another implication was that workers were no longer constrained to working locally, and could seek out better employment opportunities further form home. This led to substantially higher wages for the working class of London.

These lessons about public transport from the 1930s still resonate today. If historical improvements in public transport increased the efficiency of London’s labour market, more recent cuts to infrastructure and increases in ticket prices will likely have the opposite effect. Workers who are no longer able to commute large distances or who face higher costs of doing so will likely also face a restricted set of employment opportunities.

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  1. digi_owl

    Never mind that an increasing number of service jobs demand ownership of a car, as one is more a temp with no fixed place of employment.

    1. Stephen

      Bus driving itself is one of those jobs given that depots are increasingly located out of town, combined with the unsocial hours. In that respect, there is seemingly a shortage of bus drivers in the UK too. Many operators are canceling services because they lack staff.

  2. PlutoniumKun

    I know this article focuses on labour issues, but probably a more important issue is innovation. There is a very long history of research on urban agglomeration effects (or put another way, the study of why mega cities keep on thriving even if their original industries have become outdated) is that having lots of people in a small area, especially if they encounter each other constantly, is very good for business. And public transport is central to this type of concentration and trend reinforcing effect. This is why ‘people’ focused business such as banking or advertising or design invariably sticks with dense cities like NY or SF or London or Paris or Shanghai, despite very high costs.

    The research with longer distance high speed trains is a bit more mixed. It certainly helps create urban agglomeration effects, but can also exacerbate a drain from lesser developed or smaller cities – this can be seen in some research in China. So while investing in HSR can have benefits, urban heavy rail investments are probably a safer bet when it comes to allocating infrastructure money.

  3. The Rev Kev

    It cannot be forgotten what a difference it made for workers that could afford to take advantage of public transport networks to move their families out of London itself. London back then was a very dirty city due to the amount of coal burned daily and which led to the infamous London fogs. The buildings themselves were covered in a black residue which made it not a good place to raise young children. So in a British version of ‘Mr. Blandings Builds His Dream House’, families left London to what was called ‘Metroland.’ So what was Metroland? I will drop the following link which I personally found fascinating-

  4. Polar Socialist

    Pretty much the only form of transport where the AI, or autopilots, can actually be useful is the urban track-based commuting. Especially if the tracks are separated from the pedestrian pathways (tunnels, overhang etc).

    Even the current level of sensors and AI can handle something like trams. And if the tracks were separated from other traffic, the vehicles could actually be lighter, smaller, cheaper and they could run more often. For security and solving issues there could still be driver/mechanic in every third or fourth vehicle. Or every station.

  5. Mikel

    It’s efficient if most people have one job.
    And as I’ve said, pandemic response has me not as excited about public transportation.

  6. lyman alpha blob

    I’m convinced that this worker shortage we keep hearing about isn’t really a worker shortage at all. My city does have labor shortages in restaurants and even at the post office. My co-worker went to mail a letter the other day only to find the office closed due to lack of anyone to work.

    It costs upwards of $1,500.00/mo now for just a one bedroom apartment in the city. Most of the job shortages in the city are for retail or restaurant work and even at $15-$20/hr that rent is unaffordable given that take home pay for a $20/hr job is roughly $30K per year. So you have to live outside the city if you’re working a job like that, so now you’re looking at a 45-60 minute commute each way to find any housing that is affordable at those wages. But with rising gas prices, the commute takes a big chunk out of one’s pay, making it unfeasible to work those types of lower paying jobs given the overall economic situation.

    Having reliable public transportation where you can commute for maybe $30/week as opposed to a tank or two of gas at upwards of $100/week (plus all the other costs associated with owning a vehicle) would go a long way towards finding people to fill the jobs that are currently open.

    Even better would be to stop treating housing as just another market, which is what has caused housing costs to rise astronomically in recent years. Really sick and tired of all the house flippers and short term rental owners making life more difficult for anyone who chooses to actually work for a living rather than being a real estate parasite.

    1. Altandmain

      Yep – unless the employer is willing to subsidize housing costs, it’s not happening. Either that or they have to pay more to make sure the pay is commensurate with the true cost of living.

      The people claiming that there are workers shortages are themselves employers or people who are on the side of employers. This also plays a role why immigration is so contentious, often immigrants are willing to work for lower wages, longer hours, and tolerate work conditions that native citizens would not – in other words, increasing the labour supply hurts the bargaining power of workers.

      The only other solution woulds be for the government to get directly involved in the housing. That would require public investments in housing, and perhaps expropriation of land.

      Let’s face it though, most employers don’t want to pay more. It’s a for profit company after all – that’s the real cause of the problem. Public transport may help, but rent is a bigger issue, and that’s a function of high land values and lack of affordable housing. Even with cheap transport, there’s still the matter that it would probably be better to get a job in a lower cost of living area to avoid the long commute – especially when the job isn’t paying that well and there isn’t a big salary increase to work in that high cost living area.

      I’ve been in that position before – for me it was easier to get a job in the suburbs rather than commute to downtown.

  7. Discouraged in WI

    Several years ago we saw an exhibit at the Chicago Art Institute on “Posters From the Underground” — posters commissioned by the transport company to show people where the newly extended underground could take them, probably in the 20s or so. They were often art-deco-ish, and very clever! I you ever have a chance to see them, it is a very enjoyable exhibit.

  8. Blackburn

    Local authorities should now be using the internet so we can all input our local post details (just the first few digits) and our required work, leisure, shopping, education, health destinations, then this can be sorted in the computer to work out where the best bus routes should be laid out.
    Stop saying ‘there is not demand’ or ‘not profitable’ when it is the cuts themselves that hurt the cascade effect of local transport

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