An article in last week’s New York Times joins others in asking us to sympathize with the beleaguered transit industry, whose ridership has dropped every year since Uber and Lyft arrived on the scene. The article notes that Uber and Lyft subsidized the 5.6 billion rides they carried last year to the tune of $2.7 billion, or almost 50 cents a ride.
“The risks of [transit] privatization are grave,” the Times article warns. Uber and Lyft are taking “a privileged subset of passengers away from public transit systems” which “undermines support for public transportation.”
What the article doesn’t say is that, in order to carry 9.6 billion riders last year, public transit demanded more than $50 billion in subsidies from taxpayers, or more than $5 per ride. In other words, transit subsidies per rider are more than ten times greater than Uber and Lyft subsidies.
I shouldn’t have to say this, but there is also a crucial difference between ride-hailing subsidies and transit subsidies: the money Uber and Lyft are spending is voluntarily given to them by investors who hope to eventually make a profit. Tax subsidies are taken involuntarily from taxpayers to support systems that, as long as they are publicly owned, will never come close to making a profit.
Instead of bemoaning the loss of transit riders to ride-hailing services, we should be celebrating the fact that a fast, convenient, and affordable service is taking away the need to subsidize slow, inconvenient, and expensive transit systems. It’s worth adding that Uber and Lyft might not be losing $2.7 billion a year if they didn’t have to compete with a transit industry that gets $50 billion in annual subsidies.
Further, the argument that ride hailing is stealing well-off passengers away from transit doesn’t stand up to the facts. As I’ve shown elsewhere, census data reveal that low-income people are buying cars and reducing their use of transit for commuting. The biggest growth market for transit is among people who earn more than $75,000 per year. They don’t need other taxpayers to subsidize their rides to work.
Congress will revisit these issues next year when it has to reauthorize federal highway and transit spending. Today, the Cato Institute published my new report urging Congress to put transportation programs on a pay-as-you-go basis, with funding mainly out of user fees rather than tax dollars.
For those who are interested in finding out what is happening to transit in your urban area, I’ve created a spreadsheet that has charts showing key variables for transit systems in more than 100 urban areas. As described in the instructions for this spreadsheet, all users have to do is find the number of the urban area they are interested in on the spreadsheet, enter that number in cell F1, and it will automatically make eleven charts for that area.