White House: Transit Inflation Outstripping Private Transportation

The White House’s annual economic report, in addition to its endorsement of inter-city rail and transit spending, also sheds more light on transit inflation,
which is often reported anecdotally in the many cities struggling with
fare hikes but rarely put in statistical terms by economists.

NYC-transit-fare-hikes-poised-for-passage_1.jpg(Photo: UPI)

the appendices of its report, the president’s Council on Economic
Advisers estimated the overall U.S. consumer price index (CPI) at
214.537 in 2009, with the period of 1982-1984 signifying the 100 level.
In general, then, prices for major goods have more than doubled over
the past two-and-a-half decades.

The changes in price for what Americans pay for food (218.249 in
2009) and housing, including utilities (217.057), have kept pace with
the overall CPI, according to the White House. But in the specific
category of transportation, the difference was notable — private
transportation, a category that includes new or used vehicles and motor
fuel, had a CPI of 174.762 in 2009, while transit’s CPI hit 236.348
last year.

To be sure, transit costs were not the most
out-off-control expense singled out by the White House. Inflation for
medical care reached 375.613 in 2009, and the cost of shelter, not
including utilities, was 249.354 last year.

Still, the
palpable disparity between the costs of private and public modes of
transportation is a trend that should be catching the attention of
policymakers on both ends of Pennsylvania Avenue.

  • There are a lot of different reasons for this phenomenon and they vary by city. “Libertarians” will point at union wage agreements, some of which include step increases that were agreed to prior to the economic turndown (when some transit systems were short of fully-qualified operators due to falling behind the economy’s wage structure).

    However, there are other reasons in other cities. One issue often ignored is that in systems with flat-rate fares, or only minor increments for zone fares, continuing urban sprawl means that passengers are riding further and further. Because the fares result from average trips, as the average length increases, more buses are sent to the outer limits and so up go the fares. That, in turn, kills off short distance ridership.

    Another issue that is ignored is the added cost of high-tech equipment encouraged by Federal capital grant programs, mandates, etc. Most systems do not effectively analyze the cost increases or cost savings of new technology. Some new equipment, such as Automatic Passenger Counters, can lead to operating cost savings only if the political will exists to use the data for reshaping routes.

    If you like, I can send this site a 1967 photo from the interior of a Rose City Transit Co. bus: no radio, no electronics or bill transporter machinery in the farebox, no electronic sign, no air-conditioning, etc. I’m happy to have these things, but they all cost money.

    In addition, there is a reliance on Diesel and related fuels technoology. The fare increases came on top of a massive scrape-out of transit budgets, reserve funds, etc. resulting from fuel price increases. On the technical side, my 1924 McGraw-Hill street railway engineering manual says that most systems need to include a 10% spare ratio (of additional cars above the peak requirement). We operated at that ratio during the oil boom in Alberta in the late 1970’s in a system where the main lines were covered by trolley coaches and Light Rail.

    In contrast, relying mostly on Diesels or other wireless power technology, yet with all the modern electrical gadgets on the buses, transit systems are now lobbying the FTA for higher than the current 20% spare requirement.

    All of these changes were asked for by someone, but there is a price tag for progress when it does not truly generate savings or when — as with sprawl — it has hidden costs. The Muni may have high labor costs and no sprawl, but the Colorado Springs system has low labor costs and unimaginable sprawl. Either way, fares go up.


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