By Eric Jaffe, April 4, 2014
Hardly a month goes by without a city transit agency announcing a fare
increase. That's the unequivocal conclusion from a quick Google search
of large U.S. cities. Boston's MBTA proposed an increase just last week. The D.C. Metro presented a plan for one the month before that, at the same time San Francisco's Muni riders prepared for one. The Los Angeles MTA chimed in with a recommended hike the month before that. And on and on.
The reason local agencies seem to need so many fare increases is that
they do a poor job keeping the price of taking a ride near the cost of
providing it. Just how poor a job comes through in a new data-filled report from the U.S. Department of Transportation on the state of American transport.
Let's first look at the average fares per mile from 2000 to 2010 for the ten largest U.S. transit agencies (see chapter six of
the report, or the asterisk below, for a list). We see that despite the
frequent news reports of fare hikes, the cost of a ride hasn't changed
much, when dollars are kept constant. In 2000 the average fare (per
mile) was $3.61; in 2010, it was $3.99. That's a 10 percent increase
over a decade, or 1 percent a year.
Compare that to the average cost of operating the service per mile over
the same period (again, with dollars constant). In 2000, that cost was
$9.05; in 2010, it had climbed to $10.82. That's an increase of 19
percent — or about 2 points a year — nearly doubling the growth rate of
And so we see an ever-widening gap between what the biggest transit
agencies spend running their service and what they recover from riders.
(Here we're talking about day-to-day or "operational" expenses; capital
expenses, used for infrastructure and equipment, are considered
separate.) In 2000, the top agencies recovered nearly 40 percent of
their costs through fares. That figure has since dipped below 37
Here's the picture altogether:
Taking the wider view of all U.S. transit systems, we see that this
recovery ratio has trended downward in the past decade even as funding
for transit operations has trended up. The share of system-generated
funds — that's primarily fares, though it can also include things like
platform and in-car advertisements — has increased almost 4 percent
since 2000. The share of federal and state funding, meanwhile, has
increased 8 and roughly 14 percent, respectively. From the DOT report:
Now it's important to point out that not all modes of transit recover
(or, more appropriately, fail to recover) their fares at similar rates.
In fact the differences can be quite dramatic. In 2010, heavy rail (e.g.
subway systems) recovered about 62 percent of their costs at the
farebox. Commuter rail, meanwhile, recovered about half. But buses and
light rail fares only covered about a quarter of their operational costs
— 26.7 and 27.5 percent, respectively.
So why is the gap widening so much? There's no single or simple answer,
of course, but the growth in operating costs since 2000 has been a
major factor. It's not so much the salaries of agency employees — those
increased a modest 4 percent (once again limited to the top 10
agencies). It's the fringe benefits (like health care) and labor that
have jumped: 45 percent and 19 percent, respectively.
Again, there are many reasons why fares don't keep pace with costs. As a
general rule, U.S. agencies keep fares low on purpose to provide
affordable transit as a public service, relying on subsidies for funding
help. In other words, agencies don't expect to eliminate the gap. But
until they do a better job minimizing it — coming somewhere closer to ajar than to gaping — you can expect another fare hike coming your way soon.
* New York's MTA, Chicago's CTA, LA's MTA, D.C.'s WMATA, Boston's
MBTA, Philadelphia's SEPTA, New Jersey Transit, San Francisco's Muni,
Atlanta's MARTA, and Baltimore's MTA.
All charts via Chartbuilder with US DOT data unless indicated.