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.