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Quality Comes with a Fare

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Quality Comes with a Fare

Free transit won’t be better transit. February 25, 2022
Infrastructure and energy

Should public transportation be free? Effective March 1, three bus routes through poorer areas of Boston will be free to all riders for the next two years, in partial fulfillment of a pledge made by new mayor Michelle Wu during her campaign last year. Now, New York state senator Brad Hoylman, who represents Manhattan, has jumped aboard this train, tweeting that “subways and buses should be free.” But no successful large transit system is free—and transforming buses, subways, and commuter rail into purely a social service won’t by itself lure riders.

Wu, who took office last November, campaigned on systemwide free transit, and is thus the highest-profile advocate of this policy. In Boston, “Free the T” was one of her signature issues during the 2021 mayoral campaign. It built on arguments she laid out during her years as a city councilmember, promoting no-cost rides on the city’s subway and bus network as a way to reduce economic inequality. Free rides also would lure commuters from their cars, Wu and other proponents say, cutting down on pollution while easing traffic for those still on the road.

The initiative sounds sensible, but it isn’t likely to work. For starters, eliminating fares for all riders isn’t economically sustainable. It isn’t clear why Boston would encourage the state of Massachusetts—which runs the Massachusetts Bay Transportation Authority (MBTA) subway, bus, and commuter-rail system on behalf of Boston and its suburbs—to give up fare money with no reliable replacement in mind.

Running a reliable heavy-rail and bus transit system in the United States, as the MBTA does, is expensive. In 2019, the final year before Covid-19 slashed ridership, around one-third of the T’s $2.1 billion spent on operations and debt service came from passenger fares. The balance consisted of taxes and other fees, mostly a portion of the Massachusetts state sales tax, which provided more than $1 billion. On its own, Boston can’t come up with the money to make the state whole for any revenue losses from free transit. The city’s annual budget is just shy of $4 billion. It would thus have to raise city tax and fee revenues by nearly 20 percent to make up for lost fare revenue.

Even against the larger state budget, though, finding the money is not an easy feat. Massachusetts takes in $29.1 billion in tax revenues annually. If the state were to raise the money collected (before Covid-19) in fares via existing taxes, it would have to increase income-tax revenue by 4.2 percent, or sales-tax revenue by 9.8 percent, or some combination of the two. It would also have to make sure that none of those funds were siphoned off to other, more politically popular priorities, such as education.

Wu has already partly capitulated to these realities. Three free bus lines make up a tiny fraction of the MBTA’s 170 bus routes and four major subway lines, as Staci Rubin of the Conservation Law Foundation pointed out last week.

Indeed, American cities that have rolled out fully free transit have one thing in common: severely limited transit services, mostly bus-only, that serve small portions of the population, mostly poor residents with no other transportation options. Efforts underway in a handful of small bus-only transit networks—in places like Kansas City, Lawrence, Massachusetts, and Worcester, Massachusetts—illustrate the problem. Just before the Covid-19 outbreak, Kansas City introduced free fares for veterans and students. When the pandemic started, the city expanded this “zero fare” service for everyone, indefinitely. But barely 1 percent of the city’s nearly half-million residents take the bus; almost all take private cars. Similarly, in Lawrence and Worcester, fewer than 5 percent of the population relies on transit.

Free-transit programs in small cities where only poor people take the bus may be a good idea—here, transit really is a social service, rather than partly a market service of choice. Collecting the fare may not be worth it in these contexts.

But a free system is no model for cities that want more people across the income scale to depend on transit for day-to-day life. Free-but-unreliable service for riders with no other options—buses come just once every 15 to 30 minutes in Kansas City—is not what denser cities are aiming for in their efforts to cut carbon emissions and traffic.

In Boston, free fares won’t necessarily help poor people, either—at least not without forgoing lots of revenue from middle-class and wealthier residents. Ironically, before Covid cut ridership, Boston had already achieved what smaller cities want to achieve: universal transit ridership, regardless of income. Before Covid, and even after losing riders for the previous few years as a result of deteriorating service, the T carried 1.2 million riders, across all income brackets, every day. Fewer than 30 percent of T riders were low-income, earning less than $43,500 per household, according to a 2017 survey.

There are better ways to help disadvantaged residents than free fares. Boston could follow New York City’s lead and offer half-price fares to lower-income riders. The city could also offer more predictable and frequent service, so that poor people aren’t stuck waiting for the bus or train.

As for the goal of increasing ridership, New York’s experience shows that what attracts riders of all incomes to transit is frequent, safe, dependable service, not the lowest fares. Between 1980 and 2019, New York City’s subway and bus fare tripled, from 50 cents to $2.75, outpacing inflation by one half. But subway ridership rose as well, nearly doubling to 1.7 billion annually, as the state and city rehabilitated a system previously plagued by violent crime, trash, and breakdowns. Before Covid, more than three-quarters of people coming into Manhattan each day took some form of transit, not a private car— the highest rate of transit commuting in the nation.

By contrast, in Boston, T ridership tumbled more than 8 percent between 2016 and 2019, not because fares rose, but because service deteriorated, after years of disinvestment and cost mismanagement. More affluent customers flocked to Uber and Lyft (with New York losing some riders to these services, too), even though ride-hailing services are far more expensive than public transit. Public safety matters. In New York, homicides in the subway system fell from 26 in 1990 to one or two annually by the mid-2000s. American subway and bus systems won’t gain transit riders if violent crime continues to rise underground as well as above ground in public spaces, as it has over the past two years. People must feel safe in public to ride with strangers.

Americans often wonder why many cities in Europe have better-functioning transit systems than those in the U.S. They may be tempted by the example of Luxembourg, which declared fare-free transit in 2020. But Luxembourg, with a population of less than 1 million, is one of the smallest, richest countries in the world, getting an outsize share of its tax revenues from corporations. It has long subsidized transit to a far greater extent than most governments do. Before Luxembourg made transit free, fares covered just 10 percent of costs, according to the BBC.

Residents of cities like Paris and London, by contrast, pay fares. In Paris, riders pay the equivalent of $82 a month; in London, it’s closer to $200. Governments there, mostly at the national level, subsidize transit—but not to the extent that people can ride for free. Fares and subsidies together are lower, too, compared with U.S. systems, because transit is cheaper to build and run.

The reason people rely on transit in such cities is not because transit is free but because it is better. Riders rarely wait more than a few minutes between trains, and they enjoy clean, safe, reliable trips. Customers don’t mind paying because the service is predictable and reliable.

Sure, it would be great to have transit in the U.S. that was both reliable and free. But the countries with the world’s best social-safety nets haven’t found free service to be the best model. What has worked instead is quality service that people willingly pay for, even when they have other options. The West’s best transit systems are a combination of markets and social service—not purely social service, where the only riders are people with no choice.

Top photo: City Councilor Michelle Wu poses for a portrait at a MBTA bus stop on Washington Street in the Roslindale neighborhood of Boston, MA on January 23, 2021. Wu is running for mayor. (Photo by Craig F. Walker/The Boston Globe via Getty Images)

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