Fair Fares: transit equity starts at the farebox - Metropolitan Planning Council

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Fair Fares: transit equity starts at the farebox

As part of Our Equitable Future, MPC is advocating for fare reforms that increase mobility for low-income families. Fare capping and means-tested fares work in other cities, from New York to London. What can we do in Chicagoland?

Dan Simpson, Flickr

Lowering the financial burden of transportation drastically improves a person’s mobility, increasing access to employment, education, healthcare, and more.

Last month, New York City Mayor Bill de Blasio and the City Council reached a handshake agreement to fund a six-month pilot of the city’s so-called Fair Fares program. The program would provide a 50% subsidy to transit passes for adults living below the federal poverty line. That’s about $12k/year for individuals, and $25k for a family of four in the infamously expensive city that never sleeps. Up to 800,000 people could be eligible to receive the benefit, which would cost the city $106 million. Smaller cities have successfully implemented similar discount programs. For instance, Metro Transit in the Twin Cities has the Transit Assistance Program that provides $1 rides for people making 50% of the median area income. But at an annual cost of only $3 million, we’re not exactly comparing apples to apples. New York’s pilot is a big deal because a transit subsidy of this size has never been attempted in the U.S. With the second-highest ridership of any system in the county, Chicago has much in common with New York, including a maintenance backlog in the billions. So if the Big Apple can provide some cost relief for its neediest riders, what about us? 

New York’s pilot is a big deal because a transit subsidy of this size has never been attempted in the U.S. With the second-highest ridership of any system in the county, Chicago has much in common with New York, including a maintenance backlog in the billions. So if the Big Apple can provide some cost relief for its neediest riders, what about us?

Two Ideas to Increase Chicago’s Transit Equity

Earlier this summer, we explored what it would take to eliminate fares all together and provide CTA service for free. The answer? At least $580 million and some unprecedented political unity at the state and local level. But what if we tried something a little less drastic, focused on those who most need the help? The CTA already offers discounted rides for children, students, the elderly and people with disabilities. If you’re elderly or disabled and enrolled in the Illinois Department of Aging’s Benefits Access Program, you can even ride for free. People eligible for these programs accounted for 18% of all passengers, according to the RTA’s 2016 Customer Satisfaction Survey. However, there are no means-tested reduced fare programs for anybody outside of these groups. Most low-income individuals and families still pay the full fare, and a lot of them are already riding transit. Thirty-one percent of CTA riders are from households earning less than $40,000 per year, and 10-15% come from households below the federal poverty line. Among Pace riders, 51% are from households earning less than $40,000 per year and 21% earn less than $15,000.

Means-Test All Fares

It comes as no surprise that low-income households spend a higher percent of their earnings on transportation, meaning that families must make difficult choices about which trips to take and which to forgo.  Many of these people live in communities with few jobs or amenities nearby, requiring residents to travel significant distances for their daily needs. Lowering the financial burden of transportation drastically improves a person’s mobility, increasing access to employment, education, healthcare, and more. In Chicago, as in many other cities, socioeconomic conditions are intrinsically tied to race. The region’s physically and economically disconnected communities are, more often than not, communities of color.

Thirty-one percent of CTA riders are from households earning less than $40,000 per year, and 10-15% come from households below the federal poverty line. Among Pace riders, 51% are from households earning less than $40,000 per year and 21% earn less than $15,000.

To address our region’s racial inequity, MPC recently released Our Equitable Future, a policy roadmap with recommended actions and policies to promote inclusive economic growth, build community wealth, create equity in education and reform the criminal justice system. One such recommendation is a feasibility study for implementing means-tested reduced fares. A very back-of-the-envelope calculation suggests that a program similar to New York’s would cost the CTA $25-50 million annually. It’s a big chunk of change, but the payoff could be even bigger. Despite record-breaking unemployment numbers for people of color in the Chicago region, inequities still exist. At the same time, job vacancies are at an all-time high. So the opportunities are out there, they’re just out of reach. If we increase access and mobility by reducing price barriers for low-income families, we can connect more people to more opportunities and raise the tide for the entire region.

Implement Fare Capping

Another option to provide relief for low-income riders, and to simplify the system for everybody, is to implement fare capping. Also known as “pass earning,” it allows people who can’t afford the full cost of an unlimited pass upfront to earn it one single-ride ticket at a time. The way most fare structures operate currently, the people who can afford the least pay the most. An example: say you have two riders, John and Jane, that both take the same number of trips on the “El” each month – one round-trip ride each work day and one round-trip ride each weekend for a total of 50 trips. The only difference is that Jane can afford to pay the cost of a monthly pass up front, but John can’t. He loads his Ventra card with just enough cash for the trips he has planned for the day. At the end of the month, Jane will have paid just once: $105 for her unlimited pass. John will have paid $2.50 for each trip, totaling $125. John pays 20% more than Jane just because he doesn’t have enough cash on hand to buy the monthly pass. Under fare capping, John would have paid for each ride until he had “earned” a $105 pass, then the rest of his trips for the month would be free.

The Ventra card technology makes setting up a fare capping system relatively easy, and other transit agencies have similar systems. Portland’s Hop Fastpass and London’s Oyster card both include fare capping. Oyster is even administered by the same third-party company as Ventra. Fares could be capped dynamically so that you never pay more than the cost of a pass, whether it’s for a day, week, or month.

Type of CTA Pass

Cost

Number of “El” rides to earn a pass

Number of “El” rides per day to earn a pass

1-day

$10

4

4

7-day

$28

11.2

1.6

30-day

$105

42

1.4


Under fare capping, Ventra does the thinking for riders. You’ll never pay more than the lowest fare possible. MPC recommends that CTA, Metra, and Pace implement this intuitive and relatively simple fare policy. Fare capping would likely reduce revenue, but it may also increase ridership. net effect on revenue would need to be studied, and it’s likely that the State of Illinois would need to fill in some gaps (as it currently does for other discounted fares – though not always in a timely manner). According to TransitCenter, Portland’s TriMet estimated a 1-1.5% loss in revenue. If the same held true for the CTA, that’d be about $5-10 million annually.

At the end of the day, there’s no such thing as a free ride. But for the cause of advancing racial equity, it’s an investment our region should be willing to make. Reducing price barriers to mobility - either through means-tested fares or fare capping - is the right thing to do, but it also makes economic sense. Now that our region is flush with opportunity, there has never been a better moment to act boldly and invest in equitable and inclusive transit. Our future depends on it.

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