David Levinson’s post saying that transit should strive to restructure and be profitable stirred much discussion on neighboring blogs, including Human Transit (which broadly agrees with the idea if not the libertarian tone) and The Transport Politic (which does not), as well as multiple commenters who chimed in noting that it’s ridiculous to require transit to break even when cars get so many subsidies. While I agree with Levinson and Jarrett’s sentiments about core versus welfare services in principle, in practice the causes of transit losses are orthogonal to the subjects under discussion; the actual issues are somewhat related to what the commenters mention, but those commenters don’t go nearly far enough.
In the original post, Levinson proposes the following distinction:
Mass transit systems in the United States are collectively losing money hand over fist. Yet many individual routes (including bus routes) earn enough to pay their own operating (and even capital costs). But like bad mortgages contaminating the good, money-losing transit routes are bogging down the system.
We can divide individual systems into three sets of routes:
1. Those routes break-even or profit financially (at a given fare). This is the “core”.
2. Those lines which are necessary for the core routes to break-even, and collectively help the set of routes break-even. These are the “feeders”.
3. Those lines which lose money, and whose absence would not eliminate profitability on other routes. These money-losers are a welfare program. We might politely call them “equity” routes.
Jarrett, whose work has focused on priorities, not only agrees with the distinction but also downplay the importance of routes in category #2, and has often advocated that agencies let go of low-performing routes and concentrate on trunk frequency. While Jarrett is right and this distinction is critical when an agency needs to reduce its expenditure, it’s not going to make any agency profitable.
The number of routes in the US that break even financially is minimal. It’s easy enough to come up with routes that cover their avoidable costs, but transit has enough fixed costs that retreating to them is not going to be enough. For a New York example, see this spreadsheet, due to Cap’n Transit: although multiple bus routes are portrayed as profitable, once one checks the more detailed spreadsheet the Cap’n links to, it turns out that when including both direct and indirect operating costs, the best-performing route, the M86, drops from an operating ratio of 172% to one of 91%. Moreover, the best-performing routes do not form a trunk system, but are for the most part short-hop crosstown buses, with very high ridership per kilometer of route length. Most networks that actually are profitable consist of buses feeding into the Lincoln Tunnel, a choke point that has an exclusive bus lane in the morning rush hour.
Since in some other parts of the world urban transit is in fact profitable, we need to address causes other than the existence of lesser-used routes. I propose that instead of classifying American lines into profitable and unprofitable ones, a division in which one category is going to be very lonely, we classify whole networks according to what makes them lose so much money. I believe the following list of causes is relatively uncontroversial for good transit advocates:
1. High labor costs, predominantly overstaffing, but at some agencies (for example, Muni) also very high salaries.
2. Poor design, e.g. of intermodal transfers.
3. Low fares on some networks, which exist predominantly to provide minimal mobility of last resort rather than core transportation.
5. An auto-oriented policy.
Cause #5 is the elephant in the room. It’s not just ongoing auto subsidies and such mandates as Euclidean zoning and free parking. It’s also a decades-long history promoting auto-centric development, as a result of which uses are too widespread and low-intensity for transit to be of much use on most trips. Even edge cities are too dense sometimes; if you can find Robert Lang and Jennifer LeFurgy’s sadly now behind paywall article Edgeless Cities, read it for a quick explanation of the limitations of the relatively intense but auto-centric development form of Tysons Corner or White Plains.
The best analogy I can give here is a growing industry or industrial zone. Early on in a country’s development, it will want industrial policy: subsidies, tax breaks, protectionism. The US railroads got it, most Japanese exporters got it, Samsung and Hyundai got it. As a country becomes richer and its economy becomes more mature, those industries become profitable and suddenly start advocating free trade and free markets, even for themselves, and whine loudly at the suggestion that rich regions or industries should subsidize poor ones.
There are plenty of routes in the US that, while unprofitable now, could be made profitable with better management and operating practices. This is usually what I write about. Those are causes #1, 2, and 4. Cause #3 applies to some but not the most relevant agencies; fares in large US cities tend to be average or high by international standards, though perhaps lower than the revenue-maximizing fares. Altogether, fixing what are essentially issues of competence is going to raise transit use, possibly to acceptable levels. But it will not turn New York into Tokyo, Boston into Taipei, or Providence into Zurich.