Why Not Just Buy Them Cars?

Published July 6, 2004

A new report from the Federal Reserve Bank of St. Louis confirms what many light rail skeptics have been saying for some time: It would be less costly to buy new cars for transit riders than build and subsidize new rail systems.

The Fed report says it would be considerably cheaper to give a new Toyota Prius to each low-income rider of the St. Louis light rail line, and replace it with a new Prius every five years, than it is to operate that rail line.

Importance of Mobility

One of the principal justifications for public aid to transit is to provide mobility to low-income people who cannot afford cars. Federal data indicate approximately 70 percent of transit riders do not have access to a car for their trips.

But transit clearly is incapable of providing much mobility for the poor. For decades, virtually all new urban-area jobs (in the U.S. and throughout much of Europe and Canada) have been established in places that have little or no transit service. For example, a Federal Transit Administration report found there were virtually no jobs in the growing suburban Boston employment areas that could be reached conveniently by transit from low-income central city districts.

Mobility is crucial to both affluence and prosperity. A person with a car can get to a job anywhere in a sprawling modern urban area, whether Portland, Phoenix, Perth, or Paris. A person dependent on transit can at best get to downtown or to within a fairly constrained area of the urban core. As for suburb-to-suburb commuting by transit, that takes time–much time–and is often not even possible.

Research by Steven Raphael and Michael Stoll of the University of California – Berkeley indicates nearly one-half of the unemployment rate gap between African-Americans and non-Hispanic whites would be eliminated if virtually all African-American workers (like non-Hispanic white workers) had cars.

Simply stated,

  • Transit costs more than travel by car.
  • People with cars can get places faster and can go places transit riders cannot.
  • Automobile drivers can access more jobs, which means their potential for getting better jobs is enhanced.
  • Where people can travel to more jobs, a community’s prosperity is enhanced.

A Thought Experiment

In the U.S., we could provide cars for all travel by low-income transit riders for less than what we currently spend on transit subsidies. It would cost less than $10 billion to provide cars for all the transit riders who don’t have access to them, compared with annual spending of about $25 billion on transit subsidies.

A commercial model for such a program already exists. Around the world, anti-automobile activists have established “car-share” networks that allow people to have access to cars without having to own them. For example, “Flex-Car” in Portland provides cars for less than $0.30 per vehicle mile–a rate that includes the car, insurance, service, and fuel.

Today, car-sharing is seen as a substitute for car ownership. But its larger market may be to replace public transit systems. Flex-Car’s Web site offers packages that allow up to 3,000 miles per month for $700!

Transit riders generally don’t travel nearly that much (neither do average automobile drivers, for that matter). But if transit riders were allowed the freedom of a car, they would travel farther. If transit riders were to double their travel, the cost under Flex-Car’s volume discount pricing system would be less than $15 billion, still $10 billion less than the annual cost of transit subsidies.

Of course, a “cars for the poor” program would not accommodate all needs. The most obvious need would be for people physically incapable of driving. The U.S. currently spends less than $2 billion on dial-a-ride services for this market segment. Even if those services were doubled, at least $6 billion in transit subsidies would go unused if cars were provided to all low-income transit riders.

That leaves the transit riders who own cars yet choose transit, called the “choice” market in the transit industry. They represent at most 30 percent of the transit-riding population. Converting transit subsidies into cars for the poor could mean large fare increases for these remaining riders. Unprofitable services would have to be cut. But why are we subsidizing these people in the first place?

What public purpose is served by a system that forces working poor and moderate-income taxpayers to subsidize high-income executives riding a commuter rail train from Fairfield County to Grand Central Station in New York, or from downtown Chicago to O’Hare International Airport? Why should such executives not pay the full cost of their travel? They do in Tokyo, Osaka, Nagoya, and Hong Kong.

Eliminating transit subsidies could be a problem for downtown areas. In the long run, more jobs would be in the suburbs and fewer downtown. But that’s not necessarily bad. The principal jobs-housing imbalance in the modern American or European urban area is that so many jobs are concentrated in a small space in the core, while housing is widely dispersed. If more jobs were dispersed, traffic would be more manageable and less severe.

This is a thought experiment, not an actual proposal for converting transit subsidy programs into automobile options for low-income transit riders. But it demonstrates the extremely high cost, limited success, and unfair distribution of benefits of the current transit subsidy scheme. It is time to start considering alternatives that would provide greater value for taxpayers and more choices for transit riders.

Wendell Cox is a senior fellow of The Heartland Institute; a consultant to public and private public policy, planning, and transportation organizations; and a visiting professor at a French national university. His email address is [email protected].

For a description of how Cox converts transit subsidies to cost subsidies, go to Cost Estimate: Conversion of Transit Subsidies to Auto Subsidies for Low-Income Riders.

For answers to Frequently Asked Questions about the Greater Mobility Opportunity Program, visit The Greater Mobility Opportunity Program: Replacing Low-Income Transit Subsidies with Cars.