Category: Social Justice

» Less wealthy regions may be more likely to spend less on transit, leaving the poor there with higher transportation expenses.

One of the unique features of the American transit funding system is that the federal government chips in significant sums each year for capital expenses, such as for the purchase of new buses or the construction of new rail lines, but the law forbids significant involvement in subsidizing operating expenses. This means that local and state governments must find the means to pay for service day-in and day-out.

This could offer the benefit of a considerable range of local political decision-making: Some cities may choose to prioritize transit, while others don’t — people can choose to move between cities based on whether or not they want to take advantage of such transportation offerings. Yet the provision of transit for impoverished people is a redistributive service, and there is considerable theoretical support for the argument that redistributive public functions should not be funded by local governments. Cities that choose to aid their poor, scholars like Paul Peterson have argued, will simply attract more of the needy into their city limits; other municipalities without such aid will be able to escape with lower taxes and no aid to the poor.

A review of evidence from American cities on transit operations funding suggests that neither of these arguments is substantiated. Rather, the current funding system results in highly inequitable results that result in worse transit service in places with higher poverty rates and lower median household incomes. Differences in metropolitan wealth are highly positively correlated with levels of funding for transit service. In other words, the places where residents need transit service most are those that are providing the least of it. Median household incomes, at least based on the regions reviewed here, are prime determinants for the level of public services offered.

To conduct this quick study, I considered data from 15 American cities. I selected all central cities with populations of between 600,000 and 1,000,000 in the 2010 U.S. Census, producing a broad sample of cities throughout the country with varying demographic profiles.* I assembled data at the metropolitan (MSA) level (from 800,000 to 5.6 million in population) from local transit systems (for operating funding data), the Brookings Institution (for 0-vehicle households, metropolitan area poverty rates and median household income), the American Public Transportation Association (for ridership in July 2011), and the U.S. Census (for central city population, poverty rates, and median incomes).

Comparing statistics across this group of cities indicates that by requiring operating funding to be assembled at the local level, people living in poorer metropolitan areas are likely to be denied the quantity of transit services that their peers in wealthier regions are offered. This will only increase the transportation costs faced by people living there. This indicates that there is a strong equity argument to shift operating funding of transit services away from the local level and towards the federal government, which would be more likely to spread resources equally across metropolitan areas, regardless of local incomes.

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The most devastating data, as shown in the charts above, demonstrate that metropolitan areas with higher poverty rates and lower median incomes are likely to spend less on operating their public transportation networks than peer cities with lower poverty rates and higher median incomes (R-squared correlations of positive 0.72 and negative 0.49, respectively). A 50% increase in the poverty rate is associated with a 49% decline in per-person transit operations funding. The differences in transit funding are even more significant when compared with differences in income. The regression shows that a 50% increase in regional median income is associated with a 220% increase in per-person transit funding.

This suggests not only that less-wealthy metropolitan areas do not have the funding capacity to ensure good transit for their populations, but that they are providing disproportionally less public transit than their wealthier peers.** Local funding results in considerably varied service provision, based almost directly on the wealth of each respective region.

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This is not to suggest that people in poor areas are not able to get around at all. The evidence in the chart above shows that there is no correlation between the poverty of metropolitan areas and the rate of zero-household vehicles (R-squared correlation of 0.07). People who live in areas with poor transit offerings will simply find the means to drive. This comes with a grave consequence: Driving costs the average person more than using transit, so impoverished people in transit-poor areas are in effect forced to spend more for transportation than their peers in transit-rich areas.

On the other hand, there is a strong relationship between the number of zero-vehicle households in a region and the ridership on transit there (R-squared correlation of 0.66). The regression implies that a 50% increase in the rate of zero-vehicle households in a metropolitan area is associated with a more than five-fold increase in transit ridership. This suggests, perhaps unsurprisingly, that people are more likely to abandon their private vehicles when good transit is offered. Giving up on using personal cars lessens personal transportation costs, but ironically the evidence shows that this is more feasible in regions with lower poverty and higher median incomes. Regions that are already well-off are making themselves better off, while those that are poorer are reinforcing their economic problems.

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Nonetheless, the relatively strong correlation between transit operating dollars spent per person in the metropolitan area and voting share in the relevant county for Barack Obama in the 2008 presidential race (see above; R-squared correlation of 0.66) suggests that through political action, people have the ability to alter the level of service offered by transit services in their area. More strongly Democratic-voting populations appear to benefit from better transit offerings.

There is a direct correlation between investing in improved transit and the rate of ridership in the regions evaluated (R-squared correlation of 0.85), suggesting that higher funding for public transportation services is associated with more users. This is hardly a surprising result (one would hope that transit funding is roughly proportional to the number of riders!), but it reinforces the contention that transit ridership levels are not simply a result of socio-economic conditions and land uses, but also a consequence of direct political decision-making about how much to spend on transit.

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I also considered another possibility: That transit funding in regions is to some degree dependent on differences between central city and suburban populations within each metropolitan region. This question seems particularly relevant considering the recent situation in Detroit, in which suburban reluctance may have led at least in part to the canceling of a light rail line down Woodward Avenue. But a comparison between the central city share of zero-vehicle households (when weighed in terms of the city’s share of the metropolitan area population) and transit funding — where a larger share of zero-vehicle households in the city should theoretically indicate less funding — shows a weak positive correlation (R-squared of 0.34), which is unexpected. An increasing divergence between central city and suburban poverty rates and transit funding shows the expected negative correlation (R-squared of 0.33), indicating that a significant difference in poverty rates within the metropolitan area is associated with somewhat of a decline in transit funding, though it cannot account for most of the differences between regions.

This evidence is purely correlative, not causative. This means that I cannot conclusively show from these data that the lower level of transit funding in poorer metropolitan regions results from those regions’ economic difficulties.

Even so, these data suggest strongly that people living in cities with high poverty rates and low median household incomes are likely to suffer from inadequately funded public transportation systems compared to their peers in low poverty rate and high median household income metropolitan areas. This produces an inequitable funding distribution that further disadvantages lower-income households in lower-income regions by forcing them to resort to the use of expensive private automobiles rather than cheaper transit. This certainly should put in question the assumption that it is in the best interests of residents for funding decisions about public services to be made at the local level.

We should reevaluate whether it is reasonable for metropolitan areas to take responsibility for funding transit, or whether such funding concerns would be better placed in the hands of national government decision-makers, who might be more likely to prioritize equal spending on transit across regions.

* This list includes Austin, Boston, Charlotte, Columbus, Denver, Detroit, El Paso, Indianapolis, Jacksonville, Memphis, Nashville, San Francisco, San Jose, Seattle, and Washington. I did not include Baltimore because I could not find funding data for Baltimore’s transit services apart from those of Maryland in general, since the state has a unified transit system. I did not include Fort Worth because it shares its MSA with larger Dallas.

** One could also argue that the lack of transit provision is strongly correlated with a reduced median income in the regions studied.

» Why do we subsidize transit? Is skewing the market acceptable?

People are armed with powerful tools that often determine quite directly the future of our society: Their wallets. With the flick of a credit card or the passing over of a wad of cash, an individual aids the society as a whole in determining which products are most desired and which services are most needed. This is an incredible tool of the market economy which — though seriously skewed by the influence of powerful economic interests whose primary goal is increasing personal wealth accumulation — allows for the modern world to be pretty efficient in offering people the things they need to survive.

The market’s power to determine what sorts of things to produce and what sorts of things to discard is an important element of a transportation practitioner’s toolkit, as the value individuals confer on mobility as compared to other aspects of their lives should play a role in deciding how much services to provide and where to do so. It would be nonsensical to promote the construction of busways no one wanted to use or buy trains no one needed to ride in, thus we estimate demand and then alter provision of transport based on use.

If the market can and should be used to determine what transportation offerings to provide, why not charge the full cost to provide those offerings to the person demanding mobility and adjust services to adapt to need, instead of subsidizing trains and buses as we have come to do in almost every city around the world? This, in essence, is the argument transportation economists frequently make and it is one that David Levinson of the University of Minnesota repeated this week. “Maybe you want transit,” Levinson writes. “But maybe you would rather have the cash I am spending to provide you subsidized transit service so you can do something else with it. The only way to know what the best allocation of resources is, is to charge for things what they cost.”

In theory, this seems like a valid line of thought. Here’s an example. You have two choices: Take a ride to your city’s most beautiful park for a fare of $2 on your local bus (with the aid of a $2 subsidy chipped in by your local government), or walk to the nearest, less exciting park and buy an ice cream on the way for $3.00. Thinking about the relative merits of the two possibilities, you might determine that the trip to the better park is actually the best deal (since it is cheaper for you), but for the society at large, it’s more expensive. If you were charged the full $4 cost of providing the bus ride to the park, you might think twice and pick the ice cream option instead — which is cheaper for the society as a whole. But the mobility subsidy is providing an inappropriate incentive to do just the opposite and is causing people, as Levinson writes, “To behave inefficiently.”

But we provide subsidies nonetheless, generally because we believe it is important to provide affordable mobility. This is a political and welfare goal shared by most modern societies. Is this a mistaken policy? Would it make more sense to encourage transit providers to be fiscally independent, so that they do not have to rely on limited allocations of public funds?

The answer comes down to two questions — whether or not the subsidy provided to transit is appropriate considering other transportation offerings; and whether a situation in which there were no subsidies would produce the appropriate social environment from the perspective of social equity.

Jarrett Walker tackled the first issue yesterday, noting that there are significant subsidies provided to highways and local roadways and their users, so eliminating aid to public transportation alone would be poor policy. In addition, he noted that there are significant positive externalities generated by transit — like more efficient land-use patterns, lessened pollution, freer-flowing roads, and decreased traffic fatality rates — that deserve to be compensated by subsidies.

While a surface-level analysis might suggest that the fares for transit should simply equal the cost to provide a ride, a more serious discussion would recognize that moving people away from transit and into automobiles would have negative side effects. This suggests that we either tax the alternatives to transit — the automobile, primarily — at their full cost to society, or we do not have an economic rationale to eliminate subsidies to public transportation. There are few if, ands, or buts around that.

The second question — whether a situation without subsidies would be acceptable — is an ideological one. Levinson describes transit providers as “Transportation organizations first, not welfare organizations. They should be considered public utilities rather than departments of government, which provide a useful service for a price to their users.” Instead of forcing bus and rail operators to run services that are less-than-efficient from a profit-maximizing perspective, politicians should be forced to directly vote and choose to subsidize those services that they consider most important. “This would entirely change public and political perception of transit services,” Levinson writes. “It might also result in fewer bad routes being funded, since it would be crystal clear where the subsidies lay.”

In my mind, this is an appealing solution in some ways, since it would take advantage of the democratic processes we already have to make what are important societal decisions about mobility. If people want better, subsidized transit services, they can vote in politicians who support such offerings in addition to the routes that are profitable.

On the other hand, isn’t that what we have done already? There is a constant battle over funding for transit, and it is because of political differences over whether and how much bus and rail routes should be subsidized. Our current situation — as topsy-turvy as it may be — is reflective of democratic conflict over transportation funding. What is the alternative? Removing transportation from the democratic sphere and simply providing those services that are directly profitable?

This would be disastrous, both for the reasons cited above by Jarrett Walker but also, and even more importantly, because the fundamental logic that underpins Levinson’s argument is flawed. While it might be nice to imagine a world in which every individual has the ability to act as a rational actor in a fair marketplace full of decisions that reflect efficiency and true costs, we do not inhabit it. Whether we like it or not, social inequality in American society has increased significantly over the past forty years, and poverty is a real problem.

Why bring up these issues? Because Levinson describes a situation in which everyone has the option to pay the true cost of transportation services, but in fact many do not. A more efficient approach to ensure that people make the most cost-effective decisions might be one in which everyone got a reasonable amount of money to begin with, but we do not live in a particularly redistribution-inclined society.

So we are left with alternatives along the sidelines. We can crusade for the elimination of transportation services that cannot pay for themselves and in the process eliminate essential mobility for people who need to get around now, all the while hoping that the poor will at some point be handed adequate funds to make economically sound decisions. Or we can recognize reality and admit that transit services are at their core not just transportation organizations but also welfare providers.

This may be a disappointing conclusion, since it provides no insight as to how the state of funding for transit could be improved, but it does suggest that there is no way of getting around the fact that subsidies will continue to be needed in the running of public transportation unless some future technological advance reduces operations costs dramatically. There are plenty of ways to improve the performance and cost effectiveness of transit systems, but we cannot ignore the fact that transit plays an important redistributionist role.

Update, 21 September: David Levinson responds, writing that “I expect that the places that would see service dropped once you went to an appropriate funding model are not the poor inner-city areas, which are (or ought to be with appropriate management/regulation/etc.) profitable given the relatively high densities, but instead the suburban routes.” The problem, in my mind, is that those suburban places are increasingly impoverished themselves. We can no longer associate density with poverty as we have in the past.