by Alex Marshall, Editor, Spotlight on the Region
A higher bus and subway fare seems increasingly likely as Mayor Michael Bloomberg and other leaders signal nolo contendere to a fare increase sometime in the near future. This week, Metropolitan Transportation Authority budget director Gary Caplan told the City Council that a fare increase might occur next spring to help close a $663 million operating deficit.
Some months before these dire straits, Clyde Haberman of The New York Times flippantly summarized the accept-a-fare- increase argument with his citing of the "Pizza Connection" theory. Since the 1950s, after the nickel fare was banished, the price of a subway ride has been about that of a pizza slice. Since at $1.75 to $2 a pizza slice now costs more than a $1.50 subway ride, then a subway ride is now historically underpriced.
While this back-of-the-envelope logic has a certain elegance, there are reasons to use subtler theories to decide whether to raise subway and bus fares, or which ones to raise and how. The transit system is so vital to the city, that tinkering with its pricing structure will affect the city's life and economy. Authorities should consider these impacts before changing prices on 5 million trips a day. With a higher fare, New Yorkers would use the subway and buses less, and spend their money in different patterns. They would also, in aggregate, earn less money, because a flexible, cheap transportation system increases the economy's overall level. At a time of austerity, authorities need to avoid a penny- wise, pound-foolish policy that would close one agency's budget gap, but perhaps shrink overall economic activity in the city.
Analysis of U.S. 2000 Census results shows that for the first time, more New Yorkers use transit for trips other than to and from work. In 2000, the percentage of transit trips that were work-related was 44.5 percent, down from 54.5 percent in 1990, according to an analysis of census data by Bruce Schaller, a transportation consultant. Overall transit use grew by a whopping 62 percent, Schaller said, most of it not work-related.
In retrospect, it's clear that the new MetroCard system was the biggest factor in this unprecedented growth, although a strong economy, increased cleanliness, reliability, safety and efficiency all helped as well. On Independence Day 1998, the MTA introduced unlimited 7- and 30-day ride cards. The previous Independence Day, the MTA had introduced free transfers between bus and subway. Both revolutionized how people used the subway. Suddenly, a person could think about stopping off at a small bookstore or produce stand on the way home from work, without resenting or factoring in another $1.50 fare. MetroCard is why the average fare rider's pay has shrunk to not much more than a dollar.
Raising fares, particularly if done without care, could reduce off-hour use of the transit system, which would hurt the city's economy and quality of life. "You'd expect a bigger ridership fall-off [now] from a fare increase since non-work trips are more affected by pricing - they are more elastic," Schaller said.
Factors like this should be considered. In a perfect world, transit fares might be set just high enough to discourage frivolous use and to keep the trains less sardine-like at rush hour. It's a basic premise of Economics 101 that the price of public goods, whether a bridge or subway, should be set as low as possible, so that maximum use is obtained from a publicly funded good. Transportation of all types - transit, highways, air, etc. - has historically been subsidized because there is at least a dim recognition that it pays a greater good to society, much like education. There's also the fairness argument.
"This economy has been very inequitable in the way it distributes benefits," said James Parrott of the Fiscal Policy Institute in New York. Raising the subway fare "is reinforcing a bad trend, rather than countering it. There would be economic costs in low income neighborhoods, as low income workers, with less disposable income, have less to spend on other items."
A wise policy might be to raise the individual fare to $2, but to maintain or reduce the price of an unlimited ride pass. This would encourage residents to buy unlimited ride cards, which would ultimately benefit both their own lives and the city as a whole. Tourists could pay a $2 fare. But perhaps because it's difficult to summarize in a sentence, there has been little discussion in the press of how or whether to change the price of unlimited-ride passes.
Beyond present-day budget problems, larger questions are how to fund both maintenance and the longer-term capital projects, such as the 2nd Avenue subway line. In the past half decade, says the Fiscal Policy Institute, city, state and federal governments have reduced their contribution to both operating and capital budgets. See http://www.fiscalpolicy.org/masstransit.pdf. This endangers the long-term health of the system.
No one wishes to return to a 1970s-style decline. To keep the system healthy and expanding, city leaders should keep the unlimited-ride passes inexpensive, and find additional revenue sources for the system as a whole. For the health of the system, it would be best if the average fare paid was significantly less than the price of a slice.
A higher bus and subway fare seems increasingly likely as Mayor Michael Bloomberg and other leaders signal nolo contendere to a fare increase sometime in the near future. This week, Metropolitan Transportation Authority budget director Gary Caplan told the City Council that a fare increase might occur next spring to help close a $663 million operating deficit.
Some months before these dire straits, Clyde Haberman of The New York Times flippantly summarized the accept-a-fare- increase argument with his citing of the "Pizza Connection" theory. Since the 1950s, after the nickel fare was banished, the price of a subway ride has been about that of a pizza slice. Since at $1.75 to $2 a pizza slice now costs more than a $1.50 subway ride, then a subway ride is now historically underpriced.
While this back-of-the-envelope logic has a certain elegance, there are reasons to use subtler theories to decide whether to raise subway and bus fares, or which ones to raise and how. The transit system is so vital to the city, that tinkering with its pricing structure will affect the city's life and economy. Authorities should consider these impacts before changing prices on 5 million trips a day. With a higher fare, New Yorkers would use the subway and buses less, and spend their money in different patterns. They would also, in aggregate, earn less money, because a flexible, cheap transportation system increases the economy's overall level. At a time of austerity, authorities need to avoid a penny- wise, pound-foolish policy that would close one agency's budget gap, but perhaps shrink overall economic activity in the city.
Analysis of U.S. 2000 Census results shows that for the first time, more New Yorkers use transit for trips other than to and from work. In 2000, the percentage of transit trips that were work-related was 44.5 percent, down from 54.5 percent in 1990, according to an analysis of census data by Bruce Schaller, a transportation consultant. Overall transit use grew by a whopping 62 percent, Schaller said, most of it not work-related.
In retrospect, it's clear that the new MetroCard system was the biggest factor in this unprecedented growth, although a strong economy, increased cleanliness, reliability, safety and efficiency all helped as well. On Independence Day 1998, the MTA introduced unlimited 7- and 30-day ride cards. The previous Independence Day, the MTA had introduced free transfers between bus and subway. Both revolutionized how people used the subway. Suddenly, a person could think about stopping off at a small bookstore or produce stand on the way home from work, without resenting or factoring in another $1.50 fare. MetroCard is why the average fare rider's pay has shrunk to not much more than a dollar.
Raising fares, particularly if done without care, could reduce off-hour use of the transit system, which would hurt the city's economy and quality of life. "You'd expect a bigger ridership fall-off [now] from a fare increase since non-work trips are more affected by pricing - they are more elastic," Schaller said.
Factors like this should be considered. In a perfect world, transit fares might be set just high enough to discourage frivolous use and to keep the trains less sardine-like at rush hour. It's a basic premise of Economics 101 that the price of public goods, whether a bridge or subway, should be set as low as possible, so that maximum use is obtained from a publicly funded good. Transportation of all types - transit, highways, air, etc. - has historically been subsidized because there is at least a dim recognition that it pays a greater good to society, much like education. There's also the fairness argument.
"This economy has been very inequitable in the way it distributes benefits," said James Parrott of the Fiscal Policy Institute in New York. Raising the subway fare "is reinforcing a bad trend, rather than countering it. There would be economic costs in low income neighborhoods, as low income workers, with less disposable income, have less to spend on other items."
A wise policy might be to raise the individual fare to $2, but to maintain or reduce the price of an unlimited ride pass. This would encourage residents to buy unlimited ride cards, which would ultimately benefit both their own lives and the city as a whole. Tourists could pay a $2 fare. But perhaps because it's difficult to summarize in a sentence, there has been little discussion in the press of how or whether to change the price of unlimited-ride passes.
Beyond present-day budget problems, larger questions are how to fund both maintenance and the longer-term capital projects, such as the 2nd Avenue subway line. In the past half decade, says the Fiscal Policy Institute, city, state and federal governments have reduced their contribution to both operating and capital budgets. See http://www.fiscalpolicy.org/masstransit.pdf. This endangers the long-term health of the system.
No one wishes to return to a 1970s-style decline. To keep the system healthy and expanding, city leaders should keep the unlimited-ride passes inexpensive, and find additional revenue sources for the system as a whole. For the health of the system, it would be best if the average fare paid was significantly less than the price of a slice.
@RegionalPlan