Home MTA Economics A few thoughts on flattening ridership and the MTA’s economic abyss

A few thoughts on flattening ridership and the MTA’s economic abyss

by Benjamin Kabak

The mezzanine above the Lexington Ave. line at Grand Central sits empty on a recent Thursday morning. When will ridership start to grow again? (Photo by Benjamin Kabak)

The following post is an updated version of a post I published a few weeks ago on my Patreon. As a reminder, Second Ave. Sagas is entirely reader-funded, and I depend upon you to keep the site running. Now that my wrist is finally on the mend, I expect a more regular posting schedule, and I promise not every post will be about how the MTA is completely out of money.

Has transit ridership plateaued? I first asked this question when New York City entered Phase 4 of the governor’s reopening plan in late July, and the answer nearly three weeks later still appears to be guardedly yes.

It’s been a disjointed reopening in the city so far. While the open restaurants program has enlivened NYC streets and shown us that public space isn’t just for cars, city residents are the only New Yorkers not permitted to dine indoors (rightly so, in my view). Meanwhile, gyms and museums have only just been cleared for opening within the next few weeks while most white collar office workers are still telecommuting and the state of schooling is very hazy. With few places to go, transit ridership has plateaued.

In the week before and the week after Phase 4 began, subway ridership had leveled out at around 1.22 million per weekday, approximately 23% of an average 2019 weekday, and bus ridership settled at an average of 1.18 million. For Phase 4, daily subway ridership now sits at 1.25 million, still not even 24% of an average weekday, and bus ridership has creeped upward to 1.21 million. A system that used to serve nearly 7.5 million per day is now seeing just 2.46 million, many of whom are still riding local buses for free, and ridership that had been increasing by 100,000 per week is going up by just a few tens of thousands instead.

Despite a one-day dip for Tropical Storm Isaias last week, the plateau is visible if we look at subway ridership throughout the pandemic, beginning with the start of Gov. Andrew Cuomo’s NY PAUSE order on March 23.

You can see the big jumps in ridership each week once New York City entered Phase 1 on June 8 and smaller increases in recent weeks. Despite lower ridership on Wednesday and Thursday last week compared to the week before, a strong Friday pulled total weekday subway ridership to 6.5 million, a pandemic high. Had Tuesday, August 4th been storm-free, the total ridership figures for the past two weeks would have been nearly identical.

Bus ridership has shown a similar trend.

While the trajectory is an upward one of slight growth, barring some unexpected spikes over the next few weeks before school starts, transit ridership in New York City is no longer adding more than a few thousand new riders each week. After all, without indoor dining, entertainment or culture and with offices still largely vacant, New Yorkers simply have few places to go that requires transit trips.

There are, however, reasons to think this plateau may last only until early September before we see our next big bump in ridership. First, the upcoming museum openings — even at reduced capacity — will give people more places to go. Second, local bus fare collection is expected to resume soon, and that could lead some travelers to return to the subway (while driving up revenue generated from buses). Third, while tourism powers NYC over the summer, July and August are generally low ridership months as school is out of session and many families decamp from the city for the summer. This year, many New Yorkers with family or second homes out of the city have left and are planning to return to the city when schools start up again in September. Fourth, while many white collar employees will be working from home for the foreseeable future, some offices are expecting to reopen after Labor Day especially as kids return to school. Thus, September and October, traditionally the MTA’s busiest months, could see an uptick in transit ridership.

How much of an uptick the MTA can expect is an open question. In April, when consulting firm McKinsey modeled ridership and fare revenue based on the severity of the pandemic, they presented a “moderate” trend line and a “severe” trend line. Right now, the MTA is tracking at or below the “severe” trend line with fare revenue around the 30% range in August, jumping to 40% in September before a second wave in October sends ridership and revenue plunging back into the teens. With local bus trips still free, it’s tough to get a handle on the MTA’s current fare revenue figures (as opposed to ridership numbers), but the MTA is near the 30% fare revenue threshold.

Reaching 40% – or 2.2 million per weekday – is a questionable bet right now, and the rosier projections of 50-60% seem like relics of another era. The restoration of bus fares is in limbo over labor disputes regarding adequate driver protection, and the wild card remains schools. If schools open for in-person learning and stay open while avoiding an uptick in infections, ridership will increase on the backs of school passes but how much will be on the revenue side is an open question. As more companies keep workers at home for longer than expected, the revenue might still fall short of expectations. (On the ridership side, as a side bet, Gotham Gazette’s Ben Max and I set the over/under for subway ridership on Thursday, September 10 at 1.6 million.)

So what does this all mean for the MTA’s revenue and tattered economic outlook? Nothing good.

It’s hard to overstate the dire impact the pandemic has had on the MTA’s finances. With paid subway ridership holding steady at under one quarter of 2019’s figures, the agency is on the precipice of a nearly unimaginable fiscal cliff. I wrote about the agency’s multi-billion-dollar budget gap in a lengthy post last month, and nothing good has happened since then. The Senate GOP and Trump Administration failed to endorse the House Democrats’ plan to fund cities, states and transit, and my point from July stands: While the MTA should look to streamline operations and cut expenses and while the state could explore a gas tax increase to help the MTA close its budget gap, fare hikes and service cuts would decimate transit in NYC without moving the needle more than a few percentage points. It’s federal bailout or bust.

But that comes with a caveat. A few weeks ago, my MTA sources felt confident that the feds wouldn’t hang the MTA out to dry, and they still might not. But it seems increasingly unlikely that a bailout will materialize before Election Day unless the country’s municipal funding crisis begins to torpedo the stock market. If Trump loses, it’s likely that federal transit funding will be available come January, but that’s a long five months. Even if New York, scarred from its tragic spring, avoids a second wave, the MTA won’t see transit ridership rushing back to pre-pandemic levels before a cure or vaccine arrive. So what is the MTA to do?

I’ve started to think the MTA should just keep borrowing. It’s a dangerous and risky strategy that could lead to an eruptive disruption in the municipal bond market, but so long as someone is willing to lend the MTA against the promise of eventual federal bailout, the agency should just keep tapping that line of credit to keep service running while avoiding calamitous fare hikes and service cuts that would dig the MTA out of this current hole by only a few percentage points. The MTA, transparent and consistent in its spending, has been maintaining its operations per usual at the cost of around $200 million a week and has consistently stated it will need $10-$12 billion to get through the end of 2021. The agency should look to streamline operations and reduce its costs, but it should also hold the line on service.

Borrow until the money runs out, the federal funding comes through, and ridership rebounds. The city’s future depends upon it, and the lenders realize this. It’s certainly not a sound fiscal strategy for the long term or a sustainable one should the federal government fail to come through. But none of this is normal. The subways and buses will power New York’s eventual recovery, and keeping the lights on and trains moving is going to require a bit more fiscal and operational creativity than usual.

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25 comments

Jack Fuller August 18, 2020 - 12:46 am

Would lengthened subway headways – that is, fewer trains – help bring revenues and expenses in line with ridership?

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Tim Kynerd August 18, 2020 - 9:15 am

In principle it would, but it would also make social distancing much more difficult if not impossible.

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Larry Penner August 18, 2020 - 7:58 am

Financial viability of the MTA is a four way dance between riders farebox revenue, City Hall, Albany and Washington. There are $12 billion worth of Federal Transit Administration funding projects and programs in active open grants. Why has the MTA has never initiated and completed a forensic audit to determine unspent available balances. The FTA issued guidance on March 13 that gave all transit agencies permission for reallocation of federal funding from capital projects in existing grants to reprogram these funds toward COVID-19 expenses.

The FTA made available $1.4 billion worth of funding in 2020. The MTA can program these funds toward COVID-19 expenses. MTA has already received and spent $3.9 billion in CARE COVID-19 funding. .

On October 1st, an additional $1.5 billion in 2021 funds will become available. (Assuming Congress completes passage of a transportation funding bill on time for a change and sends it to the President that he can sign it). The MTA can program these funds toward COVID-19 expenses. Riders and Washington have already done their part. City Hall and Albany should do likewise.

Larry Penner — transportation advocate, historian and writer who previously worked for the Federal Transit Administration Region 2 New York Office. This included the development, review, approval and oversight for billions in capital projects and programs for the MTA, NYC Transit, Long Island Rail Road, Metro North Rail Road, MTA Bus along with 30 other transit agencies in NY & NJ) .

.

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Crimedoesntpay August 18, 2020 - 9:07 am

Perhaps part of the reason for the lack of resurgence in ridership is the crime wave that’s sweeping the city. Just this weekend for example, there were two separate incidents on the subway platforms at Grand Central, one shooting and one slashing.

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Benjamin Kabak August 18, 2020 - 9:23 am

I think this is backwards a bit. Crime is up slightly because ridership is down and not the other way. The overall incident rate isn’t up enough to suppress ridership, and I’d expect crime to drop as more people return to the system. On the other hand, I’m not sure how much one-off incidents like what happened at Grand Central filter through to the public these days so it could have a slight impact on ridership.

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GR August 18, 2020 - 4:55 pm

What crime wave are you talking about? Oh you I’d it bleeds it leads story being pushed by the media whose backers have a beef with the major?

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William August 19, 2020 - 4:13 pm

Last Saturday someone was shot on the platform at Grand Central (the subway portion, not Metro North). There are also many videos of people being stabbed in the subway. The fact is that the subway is not safe so people would be well advised to buy cars.

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VLM August 19, 2020 - 4:16 pm

That’s not a fact or how facts work. That’s your feeling.

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William August 19, 2020 - 4:30 pm

Last month on The Cats Roundtable radio show, Pat Foye said felony assaults in the subway are up 30 percent

Christopher Stephens August 19, 2020 - 4:34 pm

No, those are facts – crime really is up. Someone really was shot last week on the IRT platform at Grand Central, during the day, something that was unthinkable a year ago. A woman was stabbed at the 72nd Street station, also during the day. That’s not just feelings. Whether or not people will feel comfortable riding a more dangerous subway system? That’s feelings, but based on the facts, any such fear isn’t irrational.

VLM August 19, 2020 - 4:40 pm

Your personal response to three incidents is a feeling. The *fact* associated with that feeling is that transit crime is more or less on par with 2012 subway crime numbers. Is it a concern that subway crime is going up? Sure, and it’s weird that the crime numbers underground don’t mirror the general trends in non-gun crime on city streets. Is it dangerous in the subways? Nah.

Mister Sterling August 18, 2020 - 9:14 am

What are our thoughts on 24-hour subway service? Are those days over? I would think so.

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Christopher Stephens August 18, 2020 - 3:19 pm

The state paid McKinsey to predict that subway ridership would fall when the governor shut down the state? And they didn’t even get the numbers remotely close? Ugh. This kind of stupid, wasteful spending is exactly why the MTA doesn’t deserve a bailout. Why would anyone in the federal government (Trump loyalist or otherwise) give the MTA a dime when the MTA keeps throwing money away like that?

I wouldn’t hold your breath for a federal bailout. Our congressional delegation has spent the last four years throwing every insult in the book at the president, who had no incentive to help them out in the first place. Schumer et al. decided to play the #resist card from day one. Now they (and we) will suffer the consequences.

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HalMallon August 18, 2020 - 9:34 pm

Given the dismal ridership numbers on MNRR (15%) and LIRR (20%), I am surprised that the MTA has not shut down service on the branch lines yet, especially on the weekends. I take the train out of Southeast on the Harlem line. There are two parking lots, the largest holds about 1000 cars. Now, in total, on a weekday, there are about 50 (fifty!) cars total… Shut down the Wassaic and Danbury branches and tell commuters to drive to the Harlem line or the New Canaan branch… Shut down the Hempstead branch on LIRR and have commuters travel on the Main Line…Shut down the Mountauk beyond Babylon and take the Hampton Jitney… Divert the savings to the subway and buses for now… Do the maintenance needed to keep the branches in a state of good repair to bring back into on-line when service levels resume.

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SEAN August 20, 2020 - 9:48 am

You should be in comedy. Based on that logic, the railroads might as well suspend all service & save a boatload of money as their primary customers have more or less ran away. Of course that won’t happen, but I’m pointing out the insanity of it all.

Interestingly I read two articles in the past week on how NYC is dying & everyone is fleeing to greener pastures elsewhere like Austin, Nashville & the suburbs of Miami. One was in the NYT & the other was in the NY Post I think, but couldn’t recall.

The NYT piece talked about how chain restaurants such as Shake Shack, Subway & Chipotle are struggling because they don’t have drive throughs & chain stores like Gap as well as Victoria Secret are leaving Manhattan without paying back rent. The L-brands comments were quite galling in that the only reason they bothered to pay high rents in Manhattan was because it was Manhattan. They also took a potshot at the pandemic response saying more or less, one of the reasons they were leaving was because NYC took the responsible action & shut down instead of doing what other big cities down south were doing by staying open.

The second piece was ahit job on how New York is never going to recover from the pandemic & it was written by a former NYer who use to own a comedy club & is now in Miami .

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Christopher Stephens August 20, 2020 - 9:59 am

OK, you don’t like that people are abandoning the city. But are they wrong? Lots of us (including that comedy club owner) lived through New York in the 70s, and all signs are pointing to the next few years being even worse, but with no path to recovery on the other side.

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SEAN August 20, 2020 - 11:01 am

In all seriousness, yes they are. Life isn’t transactional. You either believe in the place you are in or you don’t. And once all the so called second tier cities fill up, the same wining will occur on how it’s traffic sucks, too expensive , blah, blah, blah.

Also if you think this is only a NYC problem, I would venture the same will happen to London, Paris, Sydney & every other important city on the planet witch impacts tourism & global aviation as fewer people will travel long distances. Besides who would want to visit a city if most of it is devoid of activity?

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Christopher Stephens August 20, 2020 - 11:26 am

I think you’re arguing against yourself here: “Besides who would want to visit a city if most of it is devoid of activity?” That’s one of the main reasons people are fleeing New York: why pay the premium of living here, put up with soaring crime rates, dysfunctional government and a cratered public transit system when all the reasons to stay here are gone? That was pretty much the main argument of the comedy club owner.

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SEAN August 20, 2020 - 12:26 pm

My last remark was referring to global tourism & not to locals living here. Also if you read more carefully, I also made reference to this not being a NYC centric problem. Another way to look at this is if NYC is in this state, then the rest of the global economy will need to deal with the same problem sooner or later.

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Kevin Duval August 22, 2020 - 12:57 pm

Everyone in this comment section is only scratching the surface. There are reasons to leave NY but there are much bigger reasons to come back, New Yorkers are stubborn, prideful, and educated. Once they realize how boring their lifestyle is without their usual hustle or bustle or spontaneous encounters with friends, associates, and other local crackheads; they will be extremely homesick. We may never know if they will return but what we do know is that people from out of New York have constantly been moving in, meaning the people who have moved out can afford to live elsewhere; which is not cheap at all when put into perspective. However, for most New Yorkers, people who make less than 100,000 a year, living in the city just got a lot easier, people can save more money which is extremely hard in New York, people are making important investments for themselves and their families, teenagers are still out and about and making the most of their situations by any means necessary, people aren’t being forced to buy stuff they no longer need, i.e. fast fashion, fast food and such. People are also happier because they no longer feel intense amounts of FOMO especially for a city like NYC where every day you can feel as if you’re missing out on something. Moreover, I have friends whose families have taken advantage of the decreased rents and rates and moved out from their Middle-class apartments to Upper Middle-class apartments on Riverside Drive in the UWS or Madison Avenue on the UES. As much as people wish they could live in the Hamptons, those Airbnbs are most definitely raising prices if things keep going the way they are going meaning the New Yorks who cant afford those prices have to go back home 1. 2. The wealthiest people will be the only ones “escaping from New York” because they can afford it while the rest of the city just moves on with their lives. Poor to Working Class to Middle Class people have more of a reason to stay in New York, saving money, energy, and time than spending what they could have saved to be out and about in the Sun Belt or wherever else.

Now in terms of the transit crisis, NYC shoulder shut down service from the end of March to June entirely, saving millions in operating costs which would be enough to put employees on paid leave if necessary or better yet, expanding and upgrading the entire system within the timeframe would have most likely done wonders for the city in the long run, I. E. the L train shut down if down properly. Now even though that didn’t happen, that would’ve been the options with the most caveats yet yielded the best results in terms of COVID cases as well as remaining relatively financially stable for the time being. Moving forward, what I believe would be the best answer to the current crisis our city and our state as a whole is facing would be to ban travel from other states and other countries until a vaccine has been established or until the COVID cases reflect that of New York. I do not know much about the legality fo this but banning travel to the city would allow for a much more relaxed state of mind knowing that 1. NYC and NY state are really low in cases so ridership would increase at a much better rate, 2. Protecting the citizens from COVID would prevent a second wave in the Fall which would again increase ridership and 3. As remote working and learning become a thing, people will still have more time to do other things such as being out and about meaning entertainment would become the hottest trend in the retail market such as experience rooms or just flat out new innovations to replace the storefronts that have closed.

We don’t know what the future holds but making the most of it will allow the best results, no more luxury housing construction 1. 2. more affordable housing can easily be made by reconfiguring apartments in already empty buildings and areas such as Hudson Yards and Midtown overall.

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SEAN August 22, 2020 - 9:59 pm

GREAT comment Kevin. I’ll give one more reason to come back & that is climate change especially Miami & other nearby cities in south Florida, an area where NYers have flocked to for decades. With rapid sea level rise, the city of Miami & close in areas have been flooding even when it doesn’t rain. The city has embarked on a massive undertaking by digging trenches, laying pipes to divert the excess water, but it’s only a short term fix. There is no real long-term plan as the entire area is only 6-feet above sea level & moving inland as some have done will only buy a few years as Atlantic storms have only intensified over the past decade.

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Larry Littlefield August 24, 2020 - 7:45 am

Should those who took and took and took for 30 years give anything back?

How as the average income, in wages and benefits, of the average MTA worker or contractor employed last February changed, compared with the average New Yorker?

They can borrow, but the money should not be paid back. Not by the MTA, using money taken from New Yorkers who never benefitted from the decades of pillage. Not by the federal government, using money taken from Americans who never benefitted.

Generation Greed needs to be held accountable.

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David Brown August 25, 2020 - 9:08 am

The real problem with the MTA and NYC is they are unwilling to change. Look at East Side Access and how long it his is taking. Look at how much the Transportation Center at Ground Zero cost? Speaking of Ground Zero, we are approaching 19 years since 9/11 and it is still not rebuilt. Why should the Federal Government nail NYC and the MTA out, when they will not make the necessary changes to the way they do business?

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SEAN August 25, 2020 - 12:02 pm

I’de be careful there my friend as the same applies to everything in government contracting especially on the federal level.

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David Brown August 25, 2020 - 5:49 pm

It is a very non controversial opinion saying the MTA wastes money ( Ben has made an issue of it on more then one occasion). One thing is for sure there will be an infrastructure bill coming out next year ( it is just a question of how much, and how will it be allocated). But reform really needs to happen. New York needs trains that run on time, stations that are clean and safe, and projects that are affordable. They do not need Taj Majal vanity projects, and they do not need Greenpoint Ave dungeons.

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