Labor Moves on Transportation

When I was 15, growing up in rural South Jersey, I learned an early lesson about work: transportation is the key to making money.

The problem was that outside of my parents—who left for work very early—there were no reliable transportation options available to me. My hometown of Woodbine, New Jersey hadn't been an economic center for about 30 years (unless you liked to drink alcohol), so jobs weren't close. I made it work through some luck and persistence, eventually buying a car of my own.

That car was a used piece of junk—but it was all I could afford. I still remember spending nearly all of my graduation money repairing it after the front wheel bearings failed while I was working a restaurant job at a campground. Add in New Jersey's notoriously high insurance rates, and driving became a very intentional choice for a young adult earning close to minimum wage in low-skilled work.

Gas was cheap back then, thankfully. I could literally dig change out of the seats to get another gallon.

Fast forward to today, and many of the same issues persist—especially for people living in rural areas or on the outer edges of major metro regions where jobs are scarce.

The Fed's View

Last week, Federal Reserve Chair Jerome Powell held his monthly press conference. He reiterated the Fed's decision to hold interest rates steady, citing relatively low unemployment alongside persistently elevated inflation—roughly 3% compared to the Fed's 2% target for core Personal Consumption Expenditure (PCE) prices.

As an aside: the Fed relies on PCE rather than CPI because it captures a broader population—rural and urban—not just urban consumers.

These aren't terrible figures compared to where the U.S. economy stood just a few years ago. But they're enough to keep the Fed firmly in "wait and see" territory.

Looking at these numbers, I started thinking about transportation—specifically how it has behaved over the last 12 months. Transportation costs are often cited as a headwind to discretionary spending (most visibly at the gas pump), but the story is more nuanced.

What I found reinforced a belief I've held for a long time: access to affordable transportation can be a binding constraint for people who want to work—but simply can't justify the economics.

Put plainly: what rational person would invest more in the means to work than the work itself returns?

The Insurance Problem

You've likely heard that used car prices have been elevated for some time. But today's used car isn't the used car of 30 years ago. Vehicles are more technologically complex, repairs are more expensive, and failures increasingly require specialized parts and labor.

That's where insurance enters the picture—and it has become a major headwind.

Auto insurance rose roughly 12% year-over-year in January 2025 and about 3% year-over-year in December 2025. While prices flattened somewhat last year, premiums have increased by roughly 55% since February 2020, according to the Bureau of Labor Statistics. Nearly all of that increase occurred between 2022 and 2024.

Tariffs play a role here as well. Many automotive parts are manufactured outside the United States, increasing replacement costs and, in turn, insurance premiums. Chair Powell has noted that tariff impacts should begin to subside mid-year, which is encouraging.

Insurance prices are flattening too—but the damage is done. A new, higher baseline for transportation costs has been established.

As for gas prices: the good news is they're no longer a major headwind. In fact, they were a tailwind in the middle of 2025.

The result is that the barrier to entry for rural populations—and for those living on the fringes of suburban areas around major cities—remains stubbornly high.

The Unlock

Lowering this barrier is a meaningful unlock for economic growth, in my view. This is especially true for labor-intensive, frontline roles—but it also applies to people seeking access to education and training that could materially improve their circumstances, such as community colleges, driver training programs, and technical institutes.

One last data point brings this home.

In North Carolina, the Division of Motor Vehicles has become a quiet bottleneck. The Charlotte metro area alone adds roughly 15 new residents per day. Yet securing a DMV appointment for a driver's license can take three months—and often requires traveling more than 50 miles from home.

This is not a failure of DMV employees, who are understaffed and routinely work long hours to manage overwhelming demand. It's a systems and funding issue—and one worth evaluating through an ROI lens.

What is the economic return of unlocking legal mobility for people who want to work?

Visible Solutions

From where I sit, the solutions are visible. They require government involvement—but not necessarily government funding. Using North Carolina as a reference point (though this applies broadly across the U.S.), a few levers stand out:

1. Remove the first barrier by adequately resourcing licensing agencies so people can legally get on the road.

2. Evaluate the ROI of long-haul public transportation connecting rural areas to urban job centers as an economic engine.

3. Scrutinize insurance and registration structures for lower-tech vehicles that offer a more affordable on-ramp to workforce mobility.

4. Encourage automakers to increase production of lower-tech vehicles aligned with workforce mobility needs.

There are undoubtedly additional solutions that don't require government intervention at all. But a government prompt—especially one grounded in measurable economic return—wouldn't hurt.

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Transportation moves labor. When labor can't move, neither can opportunity.