Richard Florida
by Richard Florida
Fri Jun 4th 2010 at 11:04am UTC

The Great Car Reset

Are we moving beyond the auto age? Writing in Esquire, Nate Silver provides hard statistical evidence that America’s once-overwhelming car-culture and driving habits have peaked. This article in Advertising Age (h/t: Patrick Adler) provides additional evidence that we may well be in the early stages of a reset in attitudes about driving and car ownership, especially among younger folks. Here are some key statistics from the article:

  • “In 1978, nearly half of 16-year-olds and three-quarters of 17-year-olds in the U.S. had their driver’s licenses, according to Department of Transportation data. By 2008, the most recent year data was available, only 31 percent of 16-year-olds and 49 percent of 17-year-olds had licenses, with the decline accelerating rapidly since 1998.”
  • “Twenty-somethings went from driving a disproportionate amount of the nation’s highway miles in 1995 to under-indexing for driving in 2009.”
  • “It’s not just new drivers driving less. The share of automobile miles driven by people ages 21 to 30 in the U.S. fell to 13.7 percent in 2009 from 18.3 percent in 2001 and 20.8 percent in 1995.”

Source: Advertising Age

While “the environment” is the reason many young people cite for driving less and not wanting to own a car, there are several other key forces at work, according to the article:

  • Alternatives to car ownership such as Zip Car or other auto-sharing services.
  • Greater use of alternative modes of mass transit to and from work. This can save money and boost productivity. You can focus on getting work done on the train, something you can’t do in a car.
  • New ways of working  from free agency to more flexible schedules and telecommuting which further reduce the need for cars.
  • The rise of the Internet and e-commerce as an alternative to shopping. You no longer need a car to get everything from groceries and personal products to books, CDs, and electronic goods.
  • Trading-off car ownership to free up cash for other uses from travel, entertainment, technology, and experiences to more savings.
  • The increased popularity of close-in locations and walkable mixed-used neighborhoods which further reduces the need for a car to get around.
  • A gradually changing economic landscape which advantages larger and denser regions with more transit alternatives – from walking and biking to mass transit (similar to what I described in an earlier Atlantic piece).  As the article notes:

“The real-estate markets most profoundly affected by the bursting housing bubble – such as Las Vegas and other Sunbelt metro areas – are boom towns built around highways with no substantial train transportation. Real-estate markets that have been less affected or quicker to recover include Boston and San Francisco, which have strong urban rail systems. In New Jersey, Connecticut, Boston, Denver and Chicago, housing prices near new or existing train stations have either been among the first to recover or have seen less depreciation during the bursting of the housing bubble.”

Source: Advertising Age

Younger people today – in fact, people of all ages – no longer see the car as a necessary expense or a source of personal freedom. In fact, it is increasingly just the opposite: Not owning a car and not owning a house are seen by more and more as a path to greater flexibility, choice, and personal autonomy.

Underlying all of this is not so much a shift in ”car culture” values but a shift in economic realities. Owning a car and a house is very costly, for individuals and the economy as a whole. What distinguished “savers” from “spenders,” according to a Canadian study (PDF), is outlays for housing and especially for cars. The amount of money the average American family spends on housing and cars went from 22 percent in 1950 to 44 percent by the 1980s to more than half today. It’s not so much that America is a society of wanton over-consumers – though some surely fit that bill – it’s that they’ve been trapped by the housing-car-energy complex that once stood at the very heart of the U.S. “Fordist” economy. And as any number of studies have shown (PDF), America’s over-investment in housing has badly distorted its economy.

We can’t recover by breathing life back into that old economy. Lasting prosperity requires investment in a new and more efficient economic system. We’ll never get there if we continue to spend every last penny on houses, cars, and energy. We need to reduce spending on the old Fordist consumption bundle in order to free up capital for new technologies, new industries, and greater skill and personal development broadly.

Some of that is already happening as people downsize their homes, downshift consumption, and trade train rides or walkability neighborhoods for long suburban commutes. Young people are at the cutting edge of these shifts, as they are just starting up in their jobs and careers; choosing places to live, work, and raise their families; and deciding how they want to live their lives. Great Resets like this are generational events. They do not spring forth overnight but emerge gradually over time as millions upon millions of individuals and families reset themselves in light of new economic realities. We remain in the very earliest stage of the current reset.

While some look at rebounding car sales or an uptick in the housing market as a sign of economic recovery, from where I sit, the shift away from driving and cars among young people is a much better indicator that the economy is starting to head in the right direction.

12 Responses to “The Great Car Reset”

  1. Fred Says:

    Young people spend so much on electronics – both the equipment and cell/etc. fees that it is harder to come up with the cash for a car and insurance. This has been compounded by the high unemployment rate among the young.

  2. Mike L. Says:

    But overall highway miles driven continue to increase (at least to 2007):

  3. Rethink Every Assumption Says:

    [...] Florida posted about The Great Car Reset, talking about how America’s passion for cars might be waning a bit. In another story, with [...]

  4. Ari Herzog Says:

    How realistic is your (and Advertising Age’s) article to look at cars and their drivers in a vacuum? What of the types of cars they drive, or the rising price of fuel and maintenance and insurance, or the geographies where their cars are based? You mention ride sharing but not public transit. You mention housing but not McMansions.

  5. Ross Williams Says:

    The difference may be that older people are driving more than they did in 1970, not that young people are driving less. If you compare VMT figures from 1970 to today that is certainly the case, whether it accounts for the entire difference or not. What the numbers show is that 40 years ago there was a larger percentage of older Americans who had not adopted the car culture, while young people were adopting it enthusiastically.

    As for the declining drivers licenses, I think that is also problematic. My nephews and nieces aren’t getting drives licenses because their parents aren’t willing to pay the insurance. Again, the demographics show that the percentage of children growing up in poverty or families with limited means have increased. Its not that kids are abandoning the car culture, its that they can’t afford it until they are out on their own.

    Moreover, evaluating the decline in the percentage of miles driven by young people without considering the decline in their percentage of the adult population doesn’t tell you much about their personal choices. This article seems to be wishful (hopeful?) thinking.

  6. Manzell Says:

    There is a caveat here – the ability for a teenager to get a license has changed, and the costs of a car have risen significantly. Given that very few high-school students need a car to be economically productive, parents may be less willing/able to provide a car for their kids than they were in the 70’s and 80’s.

    Additionally, many states now require multi-stage licensing that can significantly delay the age at which a kid gets their license.

  7. BoyAboutOaktown Says:

    I suspect there are many factors at work. The rise of insurance rates and vehicle maintenance costs are tough for young people to take on. In urban areas, parking, street damage and theft turn many people off of the idea of owning a car.

    There’s also a shift of values. Sure you can get attention for driving a nice car, but in urban areas that may be seen as tacky or striving. One can also get just as much attention for having the latest phone or going out to hipper night spots.

    Finally, with young people leaving college deeply in debt and often carrying substantial credit card balances, adding another 20 or 30K to the debt load just isn’t feasible. As a result, you have people entering adulthood without a personal car ever being a part of the journey. They settle in urban spots with nearby mass transit and bus or bike to work and drinks. As adults who have learned how to thrive without a car, why would they take on that burden?

  8. John Prentice Says:

    Silver’s article is terrible, and the statistics you cite are more examples of stretching inference beyond a reasonable doubt.

    Silver’s “model” of car miles is based on a) a trend line, b) unemployment, and c) gas prices. As if NOTHING has changed in American society in that period that might be affecting the level of car usage?

    Silver’s additional “evidence” that we might be moving to a car free existence consists of comparative home price changes during the depths of the housing crisis. The first set of cities: Vegas, Phoenix, and Detroit. The second set: Seattle and Portland.

    Right. Those cities only differ on the variable “miles driven”. There is no other difference that might account for those housing price differences.

    Does Silver even know that Portland has, in fact, been losing families?

    Of course not. Silver runs a few statistics and makes some grand generalizations and then moves on to the next model.

  9. Jack Burns Says:

    North America, especially Canada has become an urban nation. When teenagers live in the city with full access to wireless communications and reasonable transit, it would be more of burden to drive. Think about all those mid-night texts making changes on the fly as to where to go. Kids can run from one club to the next or pile into a cab, cars are just not cool. Randy Backman talked about the live music days in the Prairies. Kids would jump into a beater drive 100 miles, getting hammered on the way and make it to the second show at the community centre. Now, with the crackdown on drunk driving, this is a thing of the past. Less driving and a lot less live music. I grew up in a car family; dad had car dealerships; Ford, American Motors, “Datsun”, Rolls Royce and Volvo. Getting cheap cars from trade ins was great. Today, no car, no need. My kids haven’t even brought up the subject and neither have their friends. It’s a different world, their generation has been freed of autoholic addiction.

  10. Mind Miss Says:

    When considering incredible high end autos, the Europeans maintain the leadership, as a result of such legendary brands as Rolls-Royce, Bentley, Aston Martin, and Maserati. Cherish luxury, enjoy life.

  11. Jack Stevens Says:

    I believe the real reason for the change in data, as mentioned above, is that there is now a much higher barrier to entry to getting your drivers license.

  12. Your Future Says:

    The automobile is now a liability – financially, environmentally, socially, morally.

    The road of the future – until they crumble – will be occupied by walkers, skaters, skateboarders, cyclists and resurgent wild animal populations.

    Oil is only going to get more expensive as its supply dries up. The automobile as mechanical dinosaur will become extinct just as surely as the biological dinosaur did.