Job Posting II
It seems like only yesterday that Jay Walder left his post as Chairman of the MTA, and I wrote a sarcastic “job posting” for his replacement. The job of the MTA Chairman, I asserted, was to preside over the re-destruction of the metro New York mass transit system, and eventually therefore its economy, while shielding those responsible for it from blame and providing rationalizations. At first by denying it was occurring, and then by taking the blame for it. It is no surprise that like Jay Walder, Joe Lhota has decided to leave that job to someone else.
So this time I’m going to say what the job of the MTA Chairman actually should be, given the situation that has been created by the decisions, non-decisions and deals of the past, if the transit system – or at least some weaker, worse version of it, is to be saved. The job of the MTA Chairman should be to tell people to go to hell. The transit unions, the riders’ advocates, the construction unions and contractors, taxpayers, the state legislature, the City Council, the Mayor and even the Governor. To always bring up the past when discussing the future. As in “you or those who preceded you decided to hand out these benefits to your interest group then, and shift the cost to a future that has now arrived. And any attempt to avoid your share of the resulting pain now is simply a social injustice against everyone else.” The job would consist of a desperate, angry battle with no friends and as many enemies as possible, a constant and much resented attempt to break down any sense of entitlement. That is what would be required to save not only the mass transit system, but also any other institution, in the public or private sectors, in the wake of Generation Greed.
I was out of town visiting relatives over the New Year, and thus had access to a Microsoft Windows computer that was not blocked from downloading programs. Such as the unzip program needed to download the National Transit Database data for 2011. With Room Eight on the fritz I’m not going to do a long multi-post, multi-spreadsheet analysis of this data. You can download the whole database here. But I will make a couple of points about what I found there.
According to Table T26, the Passenger Fare Recovery ratio, fares on the New York City Subway covered 76.6% of subway operating costs in 2011. The average fare per unlinked trip, net of discounts, was about $1.10 while the average subsidy was 33 cents.
There are two ways to look at this. One is to say that no other transit systems in the U.S. come close to that level of cost covering, and thus the subway transit subsidy is very low. The Chicago Transit Authority’s subway/elevated system, for example, only covered 52.0% of its operating costs with fares in 2011, for a net subsidy of $1.04 per unlinked trip, three times the per-ride subsidy in NYC.
Another way to look at it, however, is that despite the low subsidy per ride, the total subsidy for the subway was large at $827 million. Because mass transit is such a large part of the New York City transportation system. In contrast, metro St. Louis has a tiny light rail system that only covers 29.1% of its operating costs with fares, and has a net subsidy of $2.60 per rider, a far higher subsidy on a percentage basis than the New York City subway. But because it is so small the total subsidy is only $42 million, for an insignificant tax burden on the residents of metro St. Louis who do not use the system. Because it its large size, in contrast, one could argue that the total subsidy for the New York City subway by non subway riders is the highest in the country. Even the total subsidy for Chicago’s subway/elevated system was only $231 million, although it was paid for by the taxpayers of a smaller city than New York.
The subsidy for the New York City subway is nearly as much as the $841 million in subsidies for the Long Island Railroad and Metro North Railroad put together, even though they only covered 53.4% and 62.3% of their operating costs respectively. The operating subsidy per ride was $5.16 on the LIRR and $4.19 for MetroNorth. For comparison, the commuter railroads of the Northeast Illinois Regional Commuter Railroad Corporation, perhaps the best commuter rail lines in the country, covered 40.5% of their operating costs with fares. Their net subsidy per unlinked trip was $4.90, but the total subsidy was just $354 million or less than half the combined MetroNorth/LIRR subsidy for an area with a similar population.
In one sense, it is hard to make out what all this means. On the subway, for nearly 20 years the MTA has been charging what ought to be operating expenses to the capital program, so they can be borrowed for, by making them “reimbursable.” But perhaps part of the interest on the capital debt is now being tabulated as an operating expense. Like most agencies, MTA operations are paying now for pensions that were earned, or retroactively granted, in the past. But they are also still deferring some of those costs to the future. And there is no way to know how the fare revenue for joint bus/subway trips has been allocated between the two.
But I can say this. Both the Transit Workers Union and so-called riders’ advocates like the Straphangers would like that subway operating subsidy to be larger. The former so its members could suck more out, and latter so riders could put less in. But it is the past successes of these groups, in part, that has led to the disastrous situation we are in now. I also part ways with other advocacy groups, such as Transportation Alternatives and Streetsblog, who I agree with more often than not. Because a future in which everyone uses transit and no one drives, but the entire cost of transit is covered by drivers and not transit riders, is mathematically impossible.
I would like to see that net subsidy disappear, so the subway system – the most economically essential of the NY metro area transit systems – has a chance to avoid a downward spiral no matter what. Yes we have just about the highest state and local tax burden in the country in New York, but past debts and pensions are sucking up all that money. If future service beneficiaries and workers insist on being as selfish as those in the past, the system will collapse.
The subsidy level for New York City’s bus system is much larger than that of the subway or commuter railroads, though not large per rider compared with other bus systems elsewhere. New York City Transit buses covered 36.1% of their operating costs with fares, for a net subsidy of $1.92 per unlinked passenger trip and a total subsidy of $1.54 billion. MTA Bus, the former private bus lines in New York City, covered 33.8% of its cost through fares, for a subsidy of $2.96 per ride and a total subsidy of $350 million.
For comparison, the portion of the Los Angeles County MTA bus system operated by public employees covered 29.0% of its costs, for a net subsidy of $1.90 per unlinked trip but a total subsidy of just $652 million. Or around one-third the total subsidy burden of New York City’s buses, for an area with a somewhat higher population. Once again the taxpayer/non-user burden of a lower per ride subsidy level is in fact higher, if more people use mass transit.
The private bus companies had kept costs lower by underfunding their pensions even more than New York City has. Had those companies been allowed to go bankrupt, their employees and former employees would have lost part of their pensions. Those employees received a massive benefit from the rest of us when New York City agreed to cover their pension obligations; fares rose sharply and services were cut not long after. But you never hear about this today. Particularly from the current head of the TWU, who came (I believe) out of the private bus company part of the union.
Rounding out the MTA services, New York City’s para-transit services, paid for by the MTA but provided by private companies, covered just 2.6% of their operating expenses with fares in 2011, for a net subsidy of $71.66 per ride. The total subsidy for paratransit was $422 million, or nearly half the subsidy for the subway, despite serving far fewer people. The subsidy for the Staten Island Ferry, which is free, was $6.17 per trip.
The second table of most interest to me is T27, “Service Ratios,” which shows the operating cost of mass transit measured a variety of ways. Per unlinked passenger trip, the New York City subway cost a remarkably low $1.40, compared with $3.00 for New York City Transit buses, $4.50 for the MTA Bus Company, $11.10 for the Long Island Railroad, and $11.10 for MetroNorth. Measuring costs this way unfairly favors the city services, which have many riders getting on and off over short distances.
Measuring per passenger mile favors commuter railroads, which have employees operating vehicles that cover many miles for each hour they are paid. Even so the New York City subway, at 30 cents per passenger mile is now cheaper than the Long Island Railroad, at 50 cents per passenger mile, and matches Metro North. With New York City buses stuck in traffic, their cost per passenger mile is $1.30 for New York City Transit and $1.50 for the MTA Bus Company.
My favorite measure of cost is the cost per Vehicle Revenue Hour. It costs $177.50 in operating costs for each hour a subway car is in revenue service. While New York City Transit Buses and MTA Bus Company buses are cheaper at $163.90 and $126.80 per vehicle hour respectively, that does not include the cost of maintaining the roads and bus stops, which is funded by New York City. New York City also pays to maintain the local streets for private motor vehicles with taxes everyone pays even if they do not own private motor vehicles, but requires property owners to maintain the sidewalks. The subway includes the cost of maintaining the subway right of way, and the stations. The same is true for the commuter railroads, with their cost per revenue vehicle hour of $471.70 for the Long Island Railroad and $512.10 for MetroNorth.
One reason New York City buses are so heavily subsidized even though the cost per vehicle hour is lower than the subway is that they carry fewer passengers than the subway. Another reason, however, is that they often run empty or nearly so, to maintain a decent time interval between buses and provide service overnight. The MTA has asked the TWU to allow new bus drivers to be paid less to do a different, less difficult job – drive mini-buses which could be substituted for full buses in times and places of lower demand. The TWU has said no.
A final measure is total operating costs per employee work hour. This includes costs other than labor costs, such as fuel, work materials, and even (Social Security) taxes, so it cannot be compared directly to one’s own compensation. Nonetheless most of the cost is in fact worker wages and benefits. On the New York City subway, for example, employee wages and fringe benefits (the latter probably including the employers’ share of FICA taxes) accounted for 82.0% of total operating expenses, according to the Operating Expenses summary spreadsheet. That means that with an average operating cost of $70.60 per employee work hour for the subway from the Service Ratios spreadsheet, it cost about $57.90 per hour to employ a NYC subway worker in 2011.
As it happens, with a liberal estimate of what my health insurance costs, I’d say it costs my employer about $58.70 per hour to employ me. Or course far more of my pay is in cash, and I work more hours than the average transit worker, leading to a larger annual cash total. Less is in retirement benefits for me, relative to the average subway employee.
The total average operating cost per employee work hour was $77.10 for New York City Transit bus workers, $78.00 for MTA Bus, $88.70 for MetroNorth – and $94.70 for the LIRR. All well more than the $70.60 per employee work hour on the NYC subway.