CATO Institute Analysis: Charting Public Transit’s Decline

By Randal O’Toole

Nationwide transit ridership has declined steadily since 2014, with some of the largest urban areas, including Atlanta, Miami, and Los Angeles, losing more than 20 percent of their transit riders in the last few years. While this recent decline is stunning, it results from a continuation of a century-long trend of urban areas becoming more dispersed and alternatives to transit becoming more convenient and less expensive.

Those trends include a dispersion of jobs away from downtowns and increasing automobile ownership, both of which began with Henry Ford’s development of the moving assembly line in 1913. As a result, per capita transit ridership peaked in 1920 at 287 trips per urban resident per year, and have since fallen to just 38 trips per urbanite in 2017.

Congress began federal subsidies to transit with the passage of the Urban Mass Transportation Act of 1964, and since then federal, state and local governments have spent well over $1 trillion on subsidies aimed at reversing transit’s decline. Yet, those subsidies have failed to do more than slow the decline, as the trends that have made transit obsolete and nearly irrelevant to the vast majority of urban Americans have overwhelmed the subsidies. Where transit once carried around a quarter of all American employees to work and still carried 13 percent in 1960, today it carries just 5 percent, and the share continues to drop. In most American urban areas, transit’s share of passenger travel is so small that a minor increase in auto ownership or the introduction of app-based ride-hailing can result in large reductions in transit ridership.

Transit plays a significant role in transportation in the New York urban area and a small but noticeable role in the Boston, Chicago, Philadelphia, San Francisco–Oakland, Seattle, and Washington urban areas.

But transit carries fewer than 3 percent of commuters to work in half the nation’s 50 largest urban areas, as well as in the vast majority of smaller ones, making transit nearly irrelevant to those regions except for the high taxes needed to support it. Due to moderate gas prices, increasing auto ownership, and the growth of the ride-hailing industry, the nation likely reached “peak transit” in 2014.

The supposed social, environmental and economic development benefits of transit are negligible to nonexistent. Federal, state and local governments should withdraw subsidies to transit and allow private operators to take over where the demand still justifies mass transit operations.

Introduction

The federal, state and local governments spend more than $50 billion a year subsidizing public transit, yet transit ridership has declined in each of the last four years. The reasons for the subsidies are also declining, as the social, environmental, and economic benefits that transit supposedly provides are either fading away or were exaggerated in the first place. In a series of twelve charts, this paper explains the decline in ridership and its implications for the future.

Transit Ridership Is Declining

Nationwide transit ridership in the fiscal year ending in June 2018 was 2.7 percent less than in the year ending in June 2017 (the fiscal year for most transit agencies is from July 1 to June 30). This follows three years of steady losses in FY14 through FY17, resulting in a 7.5 percent total decline between FY14 and FY18 (Figure 1).¹ Ridership is falling in big cities and small cities, in cities with decrepit transit infrastructure and cities with brand-new infrastructure, and it is falling for both rail and bus. The following charts should help clarify the past, present, and future of transit in the United States.

The 2008 financial crisis led nationwide transit ridership to fall through 2010, but it then recovered along with the economy for a few years. Since 2014, however, ridership has been steadily falling in almost every urban area despite a strengthening economy. Figure 1 shows that ridership is declining whether it is bus or rail and whether it is in large, medium, or small urban areas.²

No type of urban area is immune: the legacy rail regions with big downtowns — New York, Chicago, Philadelphia, Washington, Boston, and San Francisco-Oakland — saw ridership fall by 5.4 percent. The 24 urban areas that have introduced commuter, light, or heavy rail since 1975, ranging from Los Angeles to Buffalo, have seen ridership fall by 11.2 percent. The 18 largest urban areas that lack rail transit (or have no more than a tiny streetcar line) have seen bus ridership decline by 9.3 percent.³

Transit’s Recent Decline Is Nearly Catastrophic in Some Urban Areas

A 7.5 percent drop in ridership between 2014 and 2018 may not sound catastrophic, but some urban areas have seen much larger declines. Transit agencies spent $46.9 billion on operations in 2016 and paid for about a third of those operating costs, or $15.8 billion, out of fare revenues.⁴ For budgeting purposes, agencies normally expect fares revenues to stay constant or increase, so large drops in ridership from their most recent peak can produce serious financial problems. If fares cover a third of operating costs, then a 30 percent decline means a 10 percent reduction in operating funds, which in turn forces agencies to either curtail existing transit service or raise fares, both of which will further reduce ridership.

Figure 2 shows that transit ridership in 31 of the nation’s 50 largest urban areas has dropped 15 percent or more since the year of highest ridership in each region in the last decade. Eleven of those regions have lost 30 to 47 percent of their riders.⁵ The worst was Memphis, and a recent report prepared by noted transit expert Jarrett Walker for the city of Memphis observed, “Memphis is experiencing a slow-moving self-reinforcing decline in transit, which could be called a vicious cycle of declining ridership and service.”⁶

“I call it the transit death spiral,” says Darrell Johnson, the CEO at California’s Orange County Transportation Authority. “It’s a never-ending pattern, and pretty soon you’re at a bare-bones service.”⁷ Ridership declines of 27 percent in Los Angeles and 26 percent in Atlanta may not be quite as catastrophic as declines of 40 percent in Sacramento and St. Louis and more than 45 percent in Cleveland and Memphis, but they are still significant.

Moreover, while transit ridership has declined in the past, as it did between 1990 and 1995, it recovered due to high gas prices. Today, moderate gas prices are fueled by America’s resurging oil industry, and when that resurgence is combined with deteriorating transit infrastructure and the growth of the ride-hailing industry, it appears that the most recent decline may be irreversible.

According to the Federal Transit Administration data, transit carried 255 million fewer riders in calendar-year 2017 than in 2016.⁸ Where did these riders go? A recent report estimates the number of trips carried by ride-hailing companies such as Uber and Lyft grew by 710 million in 2017. A survey of ride-hailing customers found that a third of them would have otherwise taken transit. If true, ride-hailing alone was responsible for more than 90 percent of the reduction in transit ridership between 2016 and 2017.⁹

Ride-hailing will soon be even more competitive with transit. Waymo, General Motors, Ford, Uber, and other companies are in a race to put driverless ride-hailing services on the streets of American cities by 2021.¹⁰ Driverless vehicles will cut the cost of ride hailing by at least half, taking even more customers away from transit. Driverless ride hailing’s cost per passenger mile might be more than transit fares but is likely to be far less than the full cost of transit. Because most congestion is caused by slow human reflexes, autonomous vehicles are also expected to significantly reduce congestion.

This is not something transit agencies can adapt to by using driverless buses or partnering with driverless ride-hailing in order to provide the “first and last mile” of a transit trip. Driverless ride-hailing is likely to be an extinction-level event for most public transit outside New York City and a few other big cities that have large numbers of downtown jobs, which, as the next section will show, is the crucial element for transit’s having even a modest effect on a region’s transportation.

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