Jul
30

How high could the subway fares go?

By

News that the MTA plans to raise fares every two years by an amount that exceeds the rate of inflation set off some alarm bells amongst the city’s transit advocates this week, and today, the Straphangers Campaign released some back-of-the-envelope calculations that show transit fares could rise to $3.75 a ride by 2023. It’s a sobering picture — perhaps one that relies a bit too much on sticker shock — but it should serve as a wake-up call to Albany.

“Constant fare hikes will overburden riders, discourage use of mass transit, and cannot be sustained over time,” Gene Russianoff, head of Straphangers Campaign, said in a statement. “Without more financial support from Albany, the MTA might as well start making announcements that “there is a fare hike right behind this one.’”

At the behest of the Straphangers, New York’s Independent Budget Office analyzed the fare history since the introduction of the Metrocard in 1996 and the MTA’s fare hike plans for the next ten. Noting that fares generally have to increase by around 8.4 percent to generate a 7.5 percent bump in revenue for the MTA, the IBO anticipates the possibility of a $168 30-day transit pass and a $3.75 per-swipe cost by 2023. Fares, they say, would increase a rate that exceeds inflation, and in constant 2013 dollars, the fares in 10 years would be approximately 15 percent higher than they are now.

In its defense, the MTA notes that the average fare is still lower today in inflation-adjusted dollars than it was in 1996 when Metrocards came onto the scene, but I am again left wondering if these constant increases that outpace inflation are sustainable. As I said yesterday, at some point, New Yorkers will stop begrudgingly accepted fare hikes and will start loudly protesting. What’s the breaking point though? A $3 fare? A $150 30-day card? Or are these figures and expectations simply the ever-increasing costs of life in New York City?



Categories : Asides, Fare Hikes

52 Responses to “How high could the subway fares go?”

  1. al says:

    If the Fed doesn’t wind down QE inflation might make $3.75 look trivial. If you believe history rhymes, then we are in a redux of the 1970’s. That was the decade of high inflation.

    • alen says:

      1970’s was last decade

      and interest rates aren’t going to 20% any time soon

    • Bolwerk says:

      Oh, sheesh, idiot pundits have been saying this for years. Instead, we have had the opposite problem: inflation has been too low, and that has been helping contribute to a long-term debt hangover.

      (Another potential bonus of inflation: real labor costs in the MTA could be driven downward.)

      • Alon Levy says:

        Do TWU, BLE, etc. workers have automatic cost of living increases in their contracts?

        • Bolwerk says:

          I seem to recall the TWU did in the last negotiated contract (pre-2005, IIRC, did not involve any arbitration), but each time I try opening it Adobe Acrocrap crashes. You want to try? Later increases may have been retroactive rewards by arbitrators.

          No idea about BLE.

  2. alen says:

    let these people spend 60-90 minutes each way in traffic and lets see if they take the subway. especially with $4 gas.

    $150 a month subway vs $50 every few days to fill up my CR-V

    • Do you truly believe that gas prices are going to remain static over the next decade as well? Or that parking rates will? Or tolls? Come on now.

      • alen says:

        parking not a big deal since you can do it like transit benefits at work. i think gas will stay the same.

        the most annoying is the traffic. you can go from central queens to midtown in 20 some minutes on the E or F. unless you pay the tunnel toll you will be sitting in traffic for a long time, and that’s annoying.

        on thursday and fridays the lincoln tunnel traffic is insane. backed up on 10th ave for blocks. don’t understand why people drive like this instead of the train.

        • i think gas will stay the same.

          In 2003, a gallon of gas in NYC cost $1.58. In 2013, a gallon of gas in NYC cost $3.98.

          • alen says:

            over the last 30 – 40 years gasoline rose at about the rate of inflation or slightly less. lots of recent breakthroughs in oil extraction tech means we have oil for decades and hundreds of years to come. in the USA.

            • SEAN says:

              There’s no way gas prices will remain at the same level a decade from now.

              A recent congressional hearing with AAA indicated that the days of gas prices going below $3 pg are long since past. The oil exploration companies know this, but in order for them to stay in business they need to drill ever deeper wells for lower quality oil deposits that requires more expensive refinering.

              • alen says:

                part of the rise of gas prices was the USA buying oil from other nations and the dollar dropping. going forward most of our oil will most likely come from inside the USA

                • SEAN says:

                  Wrong!

                  We will still be importing MOST of our oil. Why do you think we are spending trillions of dollars on wars in the middle east, for freedom & fighting terrorism? LOL

                  Most oil consumed in the US comes from Mexico & Canada, but the rest comes from countries that are hostel to the US. The wars were a smokescreen to get American companies access to those resources. http://www.theoildrum.com is a good news site on this & other oil related topics.

                • Bolwerk says:

                  Whether that’s true or not, oil inside the USA is more expensive to extract than oil from outside the USA. It’s not exactly going to be a great thing for prices, even ignoring the environment.

                  • SEAN says:

                    True.

                    That’s something the “DRILL BABY DRILL” crowd knows but won’t discuss since it will cause them to be banished by those political groups that front them.

      • Bolwerk says:

        It remains to be seen whether they see the ~67% rate of inflation unlimited MetroCards have seen since 1996 or so. Yes, I know, gas prices have gone up more, but subway users never got the degree of state subsidization drivers get.

        I think on practical grounds, meteoric growth of highway usage in our region is effectively in the past. It has less to do with price, and more to do with physics: without new highways, where are new cars going to go?

        • SEAN says:

          I think on practical grounds, meteoric growth of highway usage in our region is effectively in the past. It has less to do with price, and more to do with physics: without new highways, where are new cars going to go?

          Those future cars will remain in the garage.

          • Andrew Smith says:

            Driverless cars should be able to pack two to three times as many cars per hour onto existing roads. They also don’t need garages or parking, except for very rich people who will pay for the luxury of not sharing their cars.

            That’s reasonably long term, of course. I don’t believe we’ll see substantial numbers of driverless cars in anything less than a decade, but it’s going to happen.

            In the nearer term, price of gas is only part of driving costs. Gas costs, combined with federal regulation and some solid-though-not-spectacular technical breakthroughs will improve fuel economy substantially over the next few years.

            • Nathanael says:

              Driverless cars.
              (1) Simply don’t work (not programmed) in rural areas and probably never will.
              (2) In urban areas, are stuck in congestion.
              (3) Have to maintain a WIDER spacing than human-driven cars. Because most human drivers follow way too close. So they’ll actually mean fewer cars per 1000 feet.

              I guess I can imagine driverless urban taxis.

              The upcoming drop in battery prices is probably going to increase the market penetration of electric cars, however. (full disclosure: I have an electric car.)

    • llqbtt says:

      $50 every few days to fill up your CR-V is a lot of mileage. Unless all your business is in Manhattan, I don’t think the subway would ever work for you.

  3. Larry Littlefield says:

    The IBO article tells a more complete picture than your previous post. The real fare was cut severely relative to inflation, is still lower than it used to be, and will still be lower than it used to be for some time even at the current pace of fare increases.

    But it fails to ask this question. How did the MTA manage to go all these years with much lower inflation adjusted fares, even as its labor costs rose? Answer — it borrowed the money.

    And this question — how much more money would the MTA have collected if fares had kept up with inflation? What if the MTA debt was lower by that amount — how much less would fares have to rise now?

    What emerges is a picture of awesomely effective advocacy by the Straphangers on behalf of past transit riders. Against future transit riders. Past taxpayers scored a similar coup against future taxpayers. Etc. Etc. Etc.

  4. Sunny says:

    Make the fare a 2-hour unlimited fare. That way there won’t be a double (or triple) fare outcry. If they did so I wouldn’t mind a $3 fare…

  5. capt subway says:

    Was in London this past April and spent 3 weeks getting around on the underground and buses. The fares are shocking high, even if you’re using the oyster card. And of course you’ve got the fare zones to deal with too. NY is a bargain in comparison. And as is already noted above, the NY fare – unlike, say, college tuition – has definitely lagged behind the rate of inflation.

    • tacony palmyra says:

      Even Toronto has $3 fares (CAD, but basically 1:1 w USD right now). But the trains come very frequently and the system is clean and reliable and quiet. I’d gladly pay for it.

    • Larry Littlefield says:

      The arugument is that people on this board can afford a reasonable fare, while others are too poor and basically need to cash cow the system into collapse.

      My solution, again, is a higher minimum wage in Manhattan, and perhaps lower fares on the buses (and not allowing drivers to kill cyclists) for travel within the other boroughs.

      I want the subway to cover its costs, so Generation Greed can’t destroy it.

      • Bolwerk says:

        Higher fares on the subway than on buses is a backdoor way of saying buses get subsidized by the subway. The latter may not be as nice a ride, all things being equal, but they are more expensive to operate.

      • Alon Levy says:

        Higher fares on the subway than on the bus are a terrible policy. They make it impossible to plan trains and buses as complementary components of one transit network, and turn them into competitors, serving different population segments. It also makes it harder to form political coalitions to extend the subway, because low-income communities get used to taking the bus and treating the subway as for rich people. See for example Anacostia’s initial opposition to the Green Line, since cheap one-seat bus rides were replaced by a transfer at Anacostia and higher fares.

    • Chris C says:

      I don’t think it is fair to compare fares from one system with another – especially in different countries – as the funding mechanisms etc are often totally different let alone how the system operates.

      In the UK there is an active move (by Government) to shift the balance of funding for public transport from the tax payer to the fare payer hence we have had several years of fare increases much higher than inflation and this will no doubt continue.

  6. Eric F says:

    If I understand correctly:

    1. The ability of riders to absorb increasing fares is limited, at some point riders just get tapped out.

    2. The ability of riders to fund the MTA out of payroll taxes, income taxes and sales taxes is limitless.

    Do I have that right?

    • Bolwerk says:

      You sorta do. More to the point, the riders need a ride and whatever costs are attributable to providing that ride. They don’t need lots of things though, like retroactive pension enhancements for retired workers – or even some costs not meaningfully attributable to the cost of providing a ride, like a token booth clerk or a conductor in the back of the train.

      The stuff the riders don’t need is mandated by people who probably don’t use the system very much. And it’s one thing to mandate them, but it’s another thing to impose the cost of those mandates squarely on the people who don’t need those things.

    • John B says:

      i wouldn’t say limitless just less limited since the pool is larger. what concerns me is the current obsession on inflation rather than wage growth.

    • Nathanael says:

      Regarding *income taxes* specifically, the ability of the superrich 0.1% who live in the penthouse suites in Manhattan when they aren’t at their “country house” — the ability of these people to fund the MTA is pretty much unlimited at this point. They have obscene amounts of money.

  7. SEAN says:

    If the fare was 5 cents in 1904 & was raised along the rate of inflation, the fare would be what?

    • Bolwerk says:

      5¢ in 1913 = $1.18 in 2013

      This CPI calculator doesn’t go back to 1905, and I don’t know of one that does. Also, NYC’s CPI is most probably higher than average.

      • Alon Levy says:

        In the very long term, inflation before 1913 was zero. This is an average of wildly divergent inflation rates through the years – high inflation in years of growth, deflation in years of recession. The 5-cent fare was introduced in the 1870s with the els, but if you want a history of the GDP deflator (not the same as the CPI, which has tended to rise faster in the last 30 or so years), go here.

        • Bolwerk says:

          I doubt there is a way for there to be sustained 0 inflation, long-term or not. Something is always going up or down in value, especially over time.

          But I was just trying to answer his question, not comment on how useful the answer is (I think not very). What are you suggested GDP deflator be used for? Measuring transportation costs as a percentage of per-capita GDP?

          • Alon Levy says:

            Until well into the 20s, monetary policy aimed at stabilizing the price level rather than the inflation rate. So the response to a sustained bout of inflation (due to war, for example) would be to try engineering deflation to restore prices to the previous level, rather than engineering low inflation as is done today.

            • Bolwerk says:

              You probably couldn’t meaningfully measure inflation the way we do today until the consumer economy blossomed fully enough, probably sometime in the early 20th century and certainly not before the late 19th.

              As I recall, commodity prices tended to increase over the 19th century, perhaps being more stable in the 20th, though maybe relative long-term price stability was maintained with staple items. And there is no way land wasn’t going up as the population did.

              • Nathanael says:

                One of the problems is that the standard basket of goods has had some real structural shifts. Food is MUCH cheaper relative to housing than it was in 1910; and of course housing is MUCH more expensive relative to food.

      • Nathanael says:

        By all accounts the nickel fare was really lower than it should have been for a private enterprise in 1913, FWIW; WWI inflation put it into the “unprofitable” category, which meant it was quite marginal pricing to start with. A dime fare might have been more reasonable at the time.

        That still gives us only $2.36 in modern terms.

    • Eric Brasure says:

      The inflation calculator (westegg.com/inflation) says $1.26. Is that accurate? I don’t know.

    • Larry Littlefield says:

      Before 1973 wages were rising much faster than inflation. Since the subways had fewer productivity increases relative to the rest of the economy, but transit workers got the same wage increases, it was going to become more expensive relative to overall inflation, though perhaps not to wages.

  8. Kevin Walsh says:

    The LIRR peak fares have already priced me off of it, even for a monthly ticket. In the future employers will have to let people work at home, as commuting begins to be priced out of range for people on a budget and with families to feed.

  9. llqbtt says:

    Like all other taxes and tolls, we are paying now for the short-sightedness of our fearless leaders from the ’90s and ’00s who knowingly put us here. Poor leadership every last 1. They were warned, and they didn’t care. We were sold out, and now it is time to pay the price.

    • Larry Littlefield says:

      Right. Pataki. Bruno. Silver. Giuliani.

      Those who came after didn’t bite the bullet, they kicked the can.

  10. William says:

    The fares should be raise to $4 in 2016 for rush hour and $3 off peak. MTA needs it or will not exist past 2020 due political outside forces. Or better yet privatetize the subway and the city take over the buses

    • SEAN says:

      Privatization was the reason why the MTA was formed in the first place.

      MARTA although a publicly opperated system doesn’t recieve state support. So in a backhanded way, it opperates somewhat like a privatized system even though it really isn’t.

  11. Tsuyoshi says:

    We’ll know the fares have gone too high when ridership actually drops. I would argue that the MTA should, in fact, keep raising fares until that actually happens.

    Of course by this proposed standard, it would seem that bus service should have a lower fare than subway service, as the buses have been losing ridership for a while now…

  12. Mogoco says:

    $168 for a 30 day pass would be a bargain on DC’s Metro (where fares are also raised every 2 years). A one way fare on the train can cost as much as $6.75 if you use a paper farecard instead of a plastic smart card, and there are no free transfers to bus, only a 50 cent discount. Maybe the Straphanger estimate of a $3.75 fare in 2023 are actually rather optimistic?

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