Friday, March 30, 2012
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Sunday, March 11, 2012
New Approach to Mass Transit Economics Needed
At first I was very disappointed that the Executive Council voted down the rail study last week, but as I think about the history of these studies it always comes down to a conclusion that user fees will not cover the investment and operation of these facilities. We need to change our thinking and stop accusing anyone who suggests that these services should be subsidized of being a socialist. Before we go out and fund another rail study, the real work needs to be done on education our society about who benefits from these services and how it is impractical to cover the costs with user fees when many of the greatest beneficiaries may never step foot on a bus or train.
Let's start by using a simple bus ridership calculation. Assuming that the bus has 30 seats with two passengers per seat, each person is charged $5 per trip, and each rider is earning an average salary of $40,000 per year. So for 50 weeks per year 60 passengers travel to and from work. This totals 30,000 total rider-trips and a revenue for the bus company of about $150,000. For their trouble, before taxes the riders earn a total of about $2,400,000 income.
Assuming a markup of about 3.0 for salaries, profit, benefits, and overhead, the riders on the bus generated revenues of about $7,200,000 including about $720,000 in profit for their companies assuming 10% profit. It is the benefits to the companies whose employees use these services that needs to be included in any benefit analysis of a public transportation system. This doesn't account for the need for an adequate workforce and the financial benefits to companies when they are not competing against each other when there is an inadequate pool of qualified candidates.
Other factors that need to be considered include the additional productivity of commuters when they can use the commuting time to check messages by phone or e-mail and even use laptops to increase productivity without adding the safety issues on roads from inattentive drivers.
Consider the lower housing and transportation costs realized by commuters that can be used for other expenses and reinvestment into the economy. Housing and transportation costs account for about 65% of employee expenses. When mass transportation can lower commuting costs and provide access to lower cost housing, while providing access to higher urban salaries, their quality of life improves with minimal direct impact to their employers.
Mass transportation allows more capacity on the existing road system. This improves congestion and could mean less road expansion needed for the same economic development. This allows the same amount of growth with less impact to the environment. Mass transit also addresses serious parking issues within our urban centers which continue to lose consumers due to poor parking facilities.
The arguments are that railroad had its age and that it is only resposive to a select few users. The response to that argument is that the world has changed. Nearly 80% of the population of the United States now lives and works in our urban centers. If we do not continually reassess our transportation systems with an open mind based upon our current and future economic growth and not that of yesterday, we will ultimately choke off the economic vitality of our urban centers.
So having elaborate studies account for potential corridors and environmental impacts without taking the critical steps of educating citizens, politicians, and businesses about the true value of this infrastructure is not a good investment. We need to better account for the true value of mass transportation as we continue to rely on our urban centers for our economic well being.
Saturday, March 10, 2012
Friday, March 9, 2012
Thursday, March 8, 2012
Tuesday, March 6, 2012
Monday, March 5, 2012
Sunday, March 4, 2012
Saturday, March 3, 2012
Friday, March 2, 2012
Thursday, March 1, 2012
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