I’ve downloaded 2005 financial data on mass transit from the National Transit Database, and crunched it down to the most relevant information, with the intention of providing and discussing it on Room Eight. I’m still going to do that, but something I saw there makes me uneasy. The only heavy rail (subway) system in the U.S. with lower operating costs per revenue vehicle hour is the Chicago Transit Authority. This could be because the CTA has already installed a more advanced signal system (cab signaling) and gone to one-person train operation, efforts underway in New York, but there may be another factor. New York City Transit spent nearly 70 cents on fringe benefits for every dollar spent on wages, and while some of those benefits go to those working today, much of the money is for pensions and retiree health benefits. In Chicago, according to the NTD data, fringe benefit spending actually exceeded wages and salaries. But I read that the CTA is drawing to down its pension fund to pay oppressive retiree costs rather than building it up. In that case, the CTA’s costs may appear lower because retiree costs are being deferred to a future financial catastrophe. Given varying levels of pension and retiree health care under-funding, what does this comparative cost data really mean?
For what it’s worth, the data shows that the New York City subway system is an economic marvel. Despite only $1.03 in fare revenue per unlinked passenger trip, a result of all the Metrocard discounts over the years, it covered 68.3% of its operating costs in 2005. Of course, the MTA has been shifting some operating costs to the capital budget by charging the capital plan for flaggers and other T.A. personnel during diversions, but it has also shifted capital costs to the operating budget by making some capital interest an operating expense. The only other transit services that covered more than 60% of their costs were the Washington DC Metro (65.2%) and MetroNorth commuter railroad (CR in the data — 61.2%). Then again, in the 1950s, the last time subway ridership was as high as it is now (but at a time when pension and retiree health care were much less costly), the New York City subway covered all of its operating costs. The Long Island Railroad covered 46.8% of its operating costs by this measure, while New Jersey Transit commuter trains covered 46.2% and the PATH 45.0%. It should be noted that the State of New Jersey has pension cost deferral issues much like the CTA, so NJT’s actual costs may be significantly higher. Costs are also being shifted to future generations in New York State, via both debts and pensions, but to a lesser extent in the case of the latter.
It is worth noting that although the New York City Subway is the least subsidized transit service as a share of its total costs, it may be the most subsidized based on the total tax dollars it requires. The MTA collects dedicated taxes throughout its service region, and though those living, say, on Long Island are covering a lower share of their per-ride costs in fares, they cover a higher share in taxes, since the taxes paid by Long Islanders are used for fewer riders. Moreover, a large share of dedicated MTA taxes are collected from Manhattan-based businesses, who are paying to have access to a labor force from the entire region, rather than just those living within the city’s borders.
One reason the subway can cover a large share of its operating costs is that those costs are low – although rising retiree and debt costs are pushing them higher. The NTD provides several measures of costs – the cost per unlinked trip, per passenger mile, per revenue vehicle hour, and per employee work hour. The Manhattan Institute prefers cost per passenger mile, because in the past it made the cost of suburban commuter rail services – which carry passengers many miles while the employees on board are paid by the hour – look cheap and city services look expensive. The subway takes longer to travel a distance, since it stops every few blocks, pushing up its cost per mile traveled. The cost per passenger mile for the NYC subway in 2005 was 32 cents, compared with 46 cents for MetroNorth, 49 cents for the LIRR, 34 cents for NJT Commuter Rail, and 63 cents for the PATH. Don’t expect an MI report on this subject using the 2005 data. Generally, cost per passenger mile is a good comparison between very similar services, but a bad between different services such as commuter rail and heavy rail.
The same may be said for cost per ride, which for the subway was $1.51, just about the lowest out there. The cost for the PATH was $2.72 per ride, compared with $9.58 for MetroNorth, $9.89 for the Long Island Railroad, and $9.10 for New Jersey Transit commuter rail. Obviously this measure favors services that carry more people shorter distances.
My preferred measure of operating costs is the cost per vehicle revenue hour. After all, employees get paid by the hour, and this is a measure of cost that is not skewed depending on how often the vehicle stops, how fast it travels, or how many people are on it – factors beyond the control of any given transit provider. The New York City subway’s operating cost of $140 per vehicle revenue hour is lower than any heavy rail (subway) service save the $110 at the CTA, and most light rail (trolley) services as well (which often don’t have the cost of stations). PATH has a per hour cost of $214. The New York area’s suburban transit providers – MetroNorth ($429.10), the LIRR ($433.50), and NJT rail ($315.57) have higher costs; the latter may be lower than the others due to the pension issues discussed previously.
MTA officials have long criticized LIRR costs compared with MetroNorth, yet by the measures above their costs are roughly comparable, with the LIRR covering a lower share of its costs due to its lower fare revenue per ride ($4.63 compared with $5.89). There is, however, one measure by which the LIRR is far more costly than MetroNorth – operating costs per employee work hour at $81.45 for the former, $66.81 for the latter, $73.22 for New Jersey Transit, $93.66 for the PATH — $60.14 for the NYC subway. Politically, issues of compensation (pay and benefits per hour worked) are often called “productivity,” and thus mixed up with issues of actual productivity (work accomplished per hour worked). It appears that the actual concern with the LIRR is that its employees cost more than everyone else’s, not that they accomplish less.
In New York City, as elsewhere in the country, local and express buses (MB in the data) are as much a social service as a transportation system. With fare revenue per unlinked trip at just 90 cents in 2005, thanks not only to Metrocard discounts but also to a large constituency of half-fare elderly and disabled riders and students, New York City Transit’s buses’ fare revenues covered only 42.4% of their operating costs. That was higher than virtually all other local bus providers, although express buses cover a higher share of their costs with higher fares. Buses account for most transit service nationwide. Nationally, fares covered 33.5% of all transit costs in 2005, with agencies in larger metropolitan areas and with a higher number of Vehicles Operated in Maximum Service (VOMS) covering somewhat more of their costs via the farebox than agencies in smaller metros.
Since buses, unlike subways and commuter rail, don’t have rights of way and stations to maintain (New York City maintains the streets and franchisees the bus shelters), New York City Transit’s bus cost per vehicle hour was only $119.25 in 2005, lower than for the subway. That was true even though there are two employees for every ten subway cars, but one per bus. The costs per vehicle hour for the Westchester Been Line and Long Island Bus were about the same: New Jersey Transit was lower, but the data is questionable due to the pension issue. New York City transit’s cost per employee work hour ($56) was lower than for the subway, but higher than most bus operators, many of which (unlike rail operators) are in low-cost metro areas. Many bus services rely on purchased transportation (PT) rather than being directly operated (DO).
New York City Transit’s cost was $1.89 per ride, more than for the subway because fewer people ride each bus than each subway car on average. With even fewer riders per bus, per rider costs for the Westchester Bee Line ($3.56) and Long Island Bus ($3.31) were much higher. In much of the country, in fact, there are so few people on each bus, even with limited schedules and long waits, that the energy use per passenger mile for transit is nearly as great as for private automobiles, according to the federal Departmetn of Energy. Caught in traffic with frequent stops, New York City’s transit’s cost per passenger mile as 92 cents, triple the cost for the subway. Agencies with more express bus service such as Los Angeles (55 cents) have lower costs per passenger mile. In general, it takes New York City more money to move people over distances by bus due to frequent stops and heavy traffic.
The data is attached, so download it, print it, and look at it for what insights you can find. But remember the pension and retiree health care issue, which is increasingly overwhelming all others at the state and local level. Absent national standards for these costs, which may be coming and may force an even higher share of state and local taxes to be used for the services of the past and not the present, the cost you are seeing in this data may not be the cost you someday have to pay.