As part of the latest round of fare increases, the MTA is introducing two new, and good, ideas: peak period pricing with off-peak discounts, and small regular fare increases instead of years of “save the fare” grandstanding with deferred maintenance followed by a whopper. Those who have read my prior posts here know that I am in favor of both, but would go further, as described below. I had considered writing in with my comments to the MTA website, even actually showing up at a public hearing. But I decided instead to put my comments here, so others can respond as well.
Nearly a century of “save the fare” grandstanding by pompous self-promoting pols has left us with a fare that has increased by more than the rate of inflation despite no significant new lines added since the mid-1950s. The reason is that if labor costs rise, as they always do by at least as much as inflation, the fare isn’t “saved;” the need to pay those costs is merely deferred through deferred maintenance, deterioration, and on- and off-the-books debts, the latter generally through deferred benefits and pension under-funding. Those who are complaining about the modest increases the MTA is proposing are either irrational, or are shrewd, greedy, selfish, and planning to move out of town and hoping to leave the city in ruins when they do so. Again.
The Straphangers, who have helped contribute to this mess by endorsing the “everybody wins, the future loses” deals of the Pataki Administration – a falling real fare level, pension enrichments, and lower state and local tax contributions to the MTA – now say that everyone, not just riders, should pay the price, and thus the fare increase should be deferred until everyone else antes up in a “everyone loses” deal. At first glance this is sensible. Everybody should indeed pay the price, but by pushing a fare increase now the MTA isn’t letting taxpayers off the hook, it is limiting (or trying to limit, I don’t think it will succeed) the riders’ share. The proposed MTA budget is based on some rather favorable assumptions, and if the fare increase has gone through and those assumptions don’t pan out, the agency presumably plans to argue that riders have already done their share and someone else has to make up the difference. We’ll see if it succeeds.
The MTA should have gone farther and end this farce once and for all. Once its fare structure is set, it should approve fares that automatically increase every year (two if they must) at the same rate as total labor cost per worker. No more grandstanding, no more nonsense, no more politicians getting a chance to say “it’s showtime!” every few years while playing game with a future they have shown they don’t care about. They have pension guarantees and parking permits. The rest of us need a viable mass transit system and a viable economy not just this year but also next year, the year after, and every year until the very advanced age when some of us might get to collect Social Security. If the MTA isn’t going to enact automatic, modest, regular fare increases in perpetuity this time, it should do it next time.
Readers may recall my discussion of the circumstances under which it is fair and reasonable for governments to use fees, as opposed to taxes, to fund a public service. One of the criteria I used is that since both fees and taxes discourage whatever is charged for or taxed, they should be targeted where possible at behaviors that are socially detrimental. One such behavior is the over-use of a scarce resource. Thus, despite the fact that drinkable water is one of the most basic necessities, I agree it should be charged for, because before it was it was casually wasted and there wasn’t enough. I also agree with congestion pricing.
And I agree with charging more to ride mass transit in peak periods than at other times, as the MTA has proposed. A substantial share of the transit system is, in fact, only used at the peak. Many transit cars, for example, only make two trips per day, one in the morning during the AM peak and one in the evening during the PM peak. Rising off peak fares could discourage riders from using the transit system at a time when additional service could be provided at a modest cost, leaving both the riders and the MTA finances worse off. More importantly, with subway ridership reaching highs not seen since the onset of the automobile era after WWII, the trains are jammed during peak periods, leading to crowding on lines where capacity is constrained.
The current MTA proposal includes a higher fare for weekdays from 6 am to 10 pm, and from 3 pm to 7 pm, and a lower fare at other times. The current pay per ride fare, with discount, is $1.67. It was $1.50 in 1995, more than 12 years ago, without free bus to subway transfers. Adjusted for inflation, that would be $2.05 in today’s dollars based on the Consumer Price Index. The MTA has proposed a peak hour fare of between $2.00 and $2.25, and an off-peak fare of between $1.50 and $1.75. The two would be 50 cents apart.
I have two problems with this. First, 50 cent gap may be too wide, and may lead riders to rush to beat the increase, jamming the last cheap train before the peak period, or wait to beat the increase, jamming the first cheap train before the peak period. Second, the peak period is too broad. Yes a rider leaving at 7:00 am contributes more to crowding than a rider leaving at 5:30 am, but he or she also contributes less to crowding than a rider leaving at 8:00 pm. The current proposal makes no attempt to spread people out within the peak period by giving them an incentive not to travel at the peak hour.
I would solve both problems by having the fare ramp up or down gradually, and having a higher cost at the peak hour – say $2.25 – than in the rest of the peak period, when it could be $2.00. The higher fare for those traveling at the most crowded time could be used to keep the fare lower during the off-peak time. For example, the fare could rise from $1.50 to $1.75 at 6:00 am, from $1.75 to $2.00 at 7:00 am, and from $2.00 to $2.25 at 7:30 am. At 8:30 am, the fare could begin to fall at the same gradual rate.
It should be noted that those riding the subway (rather than the bus) in outlying residential areas (north of 86th Street in Manhattan, east of Long Island City, south and east of Downtown Brooklyn) in the afternoon peak period are not contributing to crowding. Just the opposite – the MTA is running lots of empty trains into the Manhattan core during those periods in order to pick people up and take them back out in the other direction. So, in my view, those traveling in-bound should not be charged a peak period fare in the afternoon. That, after all, is the practice on the commuter railroads, who have long had monthly fares, peak period fares and off-peak discounts. Peak fares are only charged in the peak direction.
As in the case of congestion charges some have been making the case that a differential peak fare would be unfair to the least well off. Their argument is that the better off have control over their schedule, whereas clock punchers do not. This, more likely than not, is just not true.
A fairly definitive (limited by the accuracy of self-reported data) analysis of this issue could be undertaken using public use microdata sample (PUMS) data from the 2000 census or 2006 American Community Survey. Limiting the data to NYC residents who ride subways and buses, income levels could be cross-tabulated with the time leaving for work. Running PUMS data is something I’d like to learn to do, but unfortunately a SAS program costs $1,500, which is a little much for me to spend on a public policy hobby.
In the absence of a PUMS run, let’s rely on common sense. The lowest paid workers are in retail stores, eating and drinking places, personal services and building service work. If their employers are open in the morning, workers in these sectors must be at work before their office-based customers arrive, which means they travel before the peak period. Many such businesses open later, in the mid-morning in time for lunch. Their employees would be able to travel after the peak period. It is the professional and finance office workers who work from 9 am to 5 pm or thereabouts, not those who serve up their bagels in the morning, staff the stores where they shop at lunch, work the bar where they have a beer after work, and clean their office while they are away overnight. So why I don’t have a spreadsheet to show you, I believe that off peak fares would favor less well off workers.
And as for non-work trips, many affluent people like myself have private automobiles for those, whereas the working poor are more likely to use transit for all their travel. While an unlimited ride card makes the marginal cost of a Sunday ride zero for someone who works every day, the same cannot be said for children above the free age for a family traveling together. A lower off peak fare would benefit such family travel.
There is another group of people who do not have to work at all, since others work and pay taxes for them, and can travel whenever they like – the retired. Lots of businesses take advantage of that flexibility by trying to attract senior citizens with special discounts during off peak times, to use up capacity that would otherwise be wasted. And, in fact Federal Transit Administration rules require U.S. transit agencies to offer off peak discounts to senior citizens.
But during the 1990s it was noticed that in this generation, unlike in the past, senior citizens are in fact better off than the young – less likely to be poor. And in the spirit of the time, these better off and better organized seniors were granted additional privileges at the expense of the less well off. In New York, senior citizens are today allowed to ride at peak period for half price as well. That isn’t right. For one thing, why should an affluent senior pay less than a working poor wage earner? The half fare should be limited to off peak times, or at least be eliminated during the height of rush hour. Those who could ride at any time should give their wage slaves a break.