When the MTA issues a fare hike proposal, they usually do so with little to no transparency. The numbers are presented to the public generally as an across-the-board hike put forth to raise revenue by a certain percentage. When the fares went up in 2009, that’s exactly how it played out, and the MTA reached its target of a 7.5-percent revenue increase through a straightforward set of higher fares and a lesser pay-per-ride discount.
This time around, the fare hike proposals are more complicated. The MTA has issued two separate proposals, and each, in addition to including higher rates, has its drawbacks. In one plan, riders would be paying over $100 per month for a 30-day Unlimited ride card. In the other, the 30-day card would no longer be unlimited. Instead, for $99 the card would be capped at 90 rides or three swipes per day.
With these two proposals on hand, many have wondered how the MTA arrived at these two proposals. This week, in a letter, Jay Walder explained his thinking. Generally, he says, the authority is looking for ways to keep the fare increases lower for those lower-income riders while raising the rates for those who can afford to pay. Walder notes that “the median household income for people who buy monthly passes is nearly 75% higher than the median household income for people who pay the base fare of $2.25 [with the pay-per-ride discount] or purchase weekly passes. At the same time, the current fare discounts for the monthly pass users with the highest median income far exceed the discounts offered for the fare products used by lower-income riders.”
To put this in context, the MTA CEO and Chairman offered up some numbers. The average 30-day card user has a household income of $63,000, and if he or she uses the current card 90 times a month — which only seven percent of all 30-day card owners do — the cost per ride is $0.99, a full 56 percent lower than the base fare. If a seven-day card user takes 22 rides — the proposed cap for that card — right now, the price per ride is $1.23. People who can afford to pay more and buy in bulk for a longer period of time benefit under the current scheme, and Walder would prefer to raise those fares to a greater extent.
Under the capped proposal, the fares would begin to reach parity, but those who pay for 30-day cards would still benefit. A seven-day card with a 22-ride cap for $28 would lead to costs per ride as low as $1.27 while a 30-day card with a 90-ride cap for $99 could bottom out at $1.10 per swipe with the uncapped $104 card would offer $1.16 per ride on 90 rides.
With this socioeconomic justification for raising the upper echelons of the time-limited MetroCards more so than the lower, Walder also explains why he is proposing capping rides when no other transit agency does so. Since, he says, only seven percent of 30-day card users exceed 90 rides, the rest of us are subsidizing those riders. A cap would allow the MTA to price the cards $5 lower, and thus, he says, the 93 percent of riders who never reach the cap would save $60 per year.
The final piece of this equation in the debate over a capped vs. a true unlimited card is the impact a capped card would have on ridership. The MTA estimates that the decline in ridership would be negligible as the city’s improving economy will bolster transit ridership anyway, and Walder offers his take on the psychology of a capped card. He believes that if the cap is instituted and “the turnstiles are modified to indicate the number of trips remaining (the exact design is being developed), customers will be more aware of the number of trips they are taking and therefore make informed choices that meet their needs.”
I don’t know if informed choices is the right conclusion to draw here or if we should assume that people would be less willing to use the subway earlier in the 30-day period. If I’m granted a limited number of swipes, will I save them for the latter part of the month to make sure I don’t need to buy a new card before the 30 days are up? Will I simply use all 90 and then purchase another card when I need do? Will a counter telling me how much I’ve used or how much I have left discourage frequent ridership or simply redistribute when we ride based upon how many days and rides are left on my MetroCard? Those are questions I — and seemingly the MTA — can’t answer right now.
So for now, these are the ideas behind the MTA’s proposals. The Board won’t make a decision on which hike to endorse until the public comment period is over, and so we the riding public can still influence the debate. The hike may be a foregone conclusion, but what shape it takes will depend on how we want to ride.
19 comments
Would the cap on the 30 day card be 90 rides or 3 times a day?
The former.
I said this in an earlier post on the topic… I think that such a scheme would actually encourage the selling of swipes. If someone is in day 28 or 29 of their Metrocard, and they swipe and see “15 trips remaining”, they’d be inclined to use those trips, they’d feel they aren’t getting their money’s worth unless they use (or sell) the remaining trips. Psychologically, this doesn’t happen with today’s unlimited cards, because there is no real count if trips taken versus price paid (except for Ben’s 30-day Metrocard Challenge, of course!)
I’m sure there is a fascinating research project out there on the perceived value of those swipes depending on how close one is to the card’s expiration point. I’m not sure finding this out through a large-scale trial-and-error next year will be such a great idea.
If the MTA could try out this on a trial basis (such as a random sample of month pass users being offered the option to buy a capped card) to see how this all goes. That way they could make a stronger case in 2013 for the next hikes.
Creating a cap might actually increase ridership.
Once the 93% who don’t use their card 90 times a month realize that they aren’t using it to the fullest, they might actually increase how much they use the transit system in order to utilize all 90 swipes.
So at first they might be hesitant use up their rides, but as they learn that their use goes no where near the cap, they might start trying to get their money’s worth by riding more.
When I realized that I wasn’t coming close to using all my cellphone minutes, I didn’t start calling everyone in sight at the end of the month, I simply switched to a cheaper plan with fewer minutes.
Perhaps not. But there have been occasions where I had a long walk to make in heavy rain. I’d swipe in a station (with an unlimited card), walk the length of the station underground, and exit through a turnstile at the other end without ever setting foot on a train. (14th Street is a good place for this). These are the kind of swipes that may be encouraged/discouraged by the cap.
Yeah, but we wouldn’t have the option of switching to a cheaper plan. You would either have to get the monthly card, and be stuck with the 90 rides, or pay-per-ride, which would be more expensive for regular users.
That said, I remember back when I had a limited minutes cellphone plan. I used to have the cheapest plan, since most of my calls were naturally done on weekends and nights, which were free anyways.
Because of this, even though I only had 450 minutes to use, I’d have a lot of minutes left over each month. I would always be conscious of this since it was seemingly going to waste.
Whenever the situation came up of deciding whether or not to make a weekday morning or afternoon call, all those wasted minutes would come to mind, which would push toward making the call.
The same thing MAY happen with a capped monthly metrocard. The vast majority of monthly card users will see that a significant portion of their rides go to waste, and it will compel them to take rides they wouldn’t normally take.
bring back tokens
What would that do? Tokens are much more expensive to handle than MetroCards as far as the MTA is concerned. Also, you would lose your free transfer priviliges.
It seems that the MTA is considering fare-hikes more frequently in recent years. I guess this is understandable given the massive deficits. I’ve seen figures citing a 9billion dollar operating costs versus just some 6billion in fare revenue (forgive me if I’m a little off).
For the moment, I’m still more or less okay (not happy, but okay) with having to pay a little more. But it seems that this system is outrageously unsustainable. Even with the budget and service cuts, the costs of maintaining the system will always been driven up by inflation, upcoming debt schedules, necessary infrastructural improvements, etc. These increases are unlikely to be offset by increasing ridership.
So my question is, is the MTA considering other sources of revenue? (I can’t imagine any source of government funding would ever bridge the gap). Or should we expect more fare hikes until it reaches the average total cost? How do other transit authorities (London, Paris, etc) go about addressing this?
great blog, by the way.
Well, not having the MTA looted by Nassau County Bus and the school system might help. 😛
Other transit authorities (London, Paris) are integral parts of government and are fully funded by general taxation in their localities. The equivalent would be to throw the subway back to New York City, do the same for SIRT, and hand the LIRR and Metro-North to the State.
Scott E is onto something here.
Those riders that use more than 90 swipes in 30 days (messengers etc.) will figure out how to manage and reduce their transportation costs. There will be a price point, maybe 10 days left with more than 45 swipes remaining, where the balance between remaining days and swipes creates a mutually beneficial bargain between riders who ride the system just for commuting and those who are willing to buy those excess rides for a price below what MTA is selling but enough to make it beneficial for savvy riders to sell their swipes away and get a new 90-swipe card. I’m actually sort of intrigued by this.
I’m picturing the TICKETS category on Craigslist will get a little busier. Intriguing idea.
[…] the last few weeks, I’ve written extensively about the MTA’s competing fare hike proposals and the need for a rigorous discussion on the alternatives during the fare hike hearings. […]
Walder is flat out lying with the talk of less frequent riders subsidizing more frequent riders and the cap “allowing” the MTA to price the 90-ride cards $5 lower.
The marginal cost of an extra subway rider is essentially zero, which means ultra-frequent riders only cost the MTA pennies more a month than people who buy an unlimited card and never use it.
No, this is not about costs. It’s about revenues — and first-strike politics.
The MTA believes it can boost revenues by squeezing a small group of ultra-frequent riders, while minimizing political backlash, by taking it (somewhat) easy on a far more numerous batch of semi-regular riders.
Moreover, the MTA believes it can preempt any efforts that frequent riders will make to win public sympathy by defining frequent riders in the public mind as leeches, leeches who inflict costs the we less hoggish riders must pay.
Without this lie, the fare hike proposals invite endless debate about what is fair. After all, when each rider inflicts zero cost on the system, then who’s to say how much each should pay? The MTA has a strong argument with price-per-ride, but it’s not a slam dunk — until you try to trick the public into believing that in addition to paying less per ride, the frequent riders generate costs.
It’s a lie designed to prevent debate, one that might save us an acrimonious fight — but it’s still a lie.
It is the first thing the Walder administration has done that seriously angers me and leads me to believe he’s not someone who can seriously improve this organization. Politically expedient lies are a big part of what has gotten the MTA into the current mess. We don’t need more of them.
And no, I don’t take more than 90 rides per month. My distaste for these tactics does not hinge on my wallet.
Okay. On rereading that when not enraged by a Giants loss, I see I oversimplified the MTA’s strategy.
The MTA’s cost arguments in favor of the 90-ride metrocard are as false as I claimed — heavy riders do not impose any significan marginal costs on the system — but the agency certainly hasn’t been aggressive enough in spreading those lies to say it has been working all out to rig the debate.
To the contrary, this process is more open than any previous fare hike, as the original post points out, but I suspect the reason for this isn’t so much the desire for public input as political cowardice.
My unprovable belief is that the MTA thinks it can make much more revenue down the road by eliminating unlimited rides and thus wants to do that. But unlimited rides are so popular that it feared to unilaterally eliminate them or even to aggressively commit itself to opposing them.
Thus, in an effort to trick the public into choosing to abandon unlimited rides, the MTA offered up this choice, giving people a financial incentive (for now) to ditch unlimited rides and a fake argument to morally justify the choice.
Once unlimited rides are gone, we won’t ever get the choice to get them back (unless their removal doesn’t succeed in helping the MTA increase revenues) and we won’t see any financial savings.
Why do I say this? Well, while the MTA certainly hasn’t been lobbying as hard as I assert in my first comment, I have heard MTA officials make a lot of arguments about why people should choose the 90-ride option and zero arguments about why they should stick with unlimited cards. And the MTA keeps on repeating the cost lie as a moral justification for abandoning unlimited cards.
No, the MTA hasn’t been as clumsy in its demagoguery as I suggested in the first post, but there’s little doubt which side it is on or that it is, in fact, lying to achieve that end.
[…] As part of its fare hike offerings, the MTA had put forward two proposals — a capped and an uncapped one. Under the capped proposal, the more expensive offering would cost $99 and would be valid for either 30 days or 90 rides, whichever came first. According to the MTA, only a very small percentage of subway riders swipe their cards 90 or more times a month, but the MTA’s justification for the capped proposal, as I explored last week, has seemed sparse. […]