The Electric Commentary

Thursday, April 14, 2005

You can't spell "Hell" without "L"

Most of you, if you are reading this, have probably driven through Chicago at some point. If you live here, you know that getting around the city is a pain, especially by car. Traffic moves slowly, yet people still manage to drive like maniacs. There is no place to park, especially in the winter when it is official city policy (I'm not kidding about this) that you may save a parking spot that you personally shovel out by placing deck chairs in it while your car is gone. Moreover, it is enforced through neighborhood vigilante justice (for instance, keying an offending car, spraying it with the hose and freezing it shut, etc.).

One would think that in a dense urban area like this, a well run public transit system could not help but be profitable. And you would be correct. Hopefully, someday, we will have a well run public transit system in Chicago, but until then, we have the CTA, which is holding the city hostage over its alleged "lack of funding:"


The CTA board Wednesday set July 17 as date for a doomsday scenario that calls for cutting service nearly 40 percent by scaling back the entire system to the Sunday schedule, with only a few exceptions.

Aimed at filling a $55 million budget gap, the scenario calls for eliminating 54 bus routes and the Purple Line express, lengthening wait times 68 percent on all buses and trains and laying off more than 2,000 workers.

"There's not enough funding to maintain anything close to our current rush-hour schedule. So those commuters will face a significant challenge of getting to work," CTA board president Carole Brown said. "Buses and trains will be significantly more crowded, and all customers face more of a wait time."


The CTA is obviously lying, and they are not doing a very good job of it.

Let's say that you own an airline that flies two routes. Route 1 flies from Chicago to Vegas, and it's always full, every flight. Route 2 flies from Gary, Indiana to Fargo, ND, and usually has only one customer. He sits in the back muttering to himself stinking of cheap gin and cigarettes, and occasionally tries to sell the flight attendants M&M's to benefit his church. Your airline suddenly finds itself $55 million in the red. Do you cut "route 1," or "route 2?" If you answered "route 2," congratulations. You are smarter than a CTA board member. If you did not answer "route 2," I'll give you a minute to wipe the drool off of your keyboard before I move on. There you go. (Note: If you answered "route 1" you are probably the kind of person that makes my daily commute miserable. Read more about yourself in this post.)

During rush hour, CTA trains are completely packed. Obviously, you are going to make more money running full trains, and collecting say, 50 fares per car per 15 minutes, than you would make during off-peak times when you pull in only 10 fares per car per 15 minutes. So why, if cash is in short supply, would you make a statement like this:

"There's not enough funding to maintain anything close to our current rush-hour schedule. So those commuters will face a significant challenge of getting to work," CTA board president Carole Brown said.

This is obviously fear-mongering in an attempt to get free money from the city/state, but I believe there is another purpose as well. Currently many customers pay for their ride using cash at the turnstyle or with a rechargeable CTA card (dispensed and recharged at vending machines at most "L" stations). The result of this is that fares paid to the CTA are paid in small amounts, every time someone rides, and widely dispersed throughout the system.

A few months ago Illinois started charging cars on the tollways double the toll if they did not acquire an I-Pass transponder (you can read about it here). Imposing I-Pass systems on commuters allowed the state to cut toll-booth costs by automating more booths (reduced labor costs) and reducing the amount of cash involved in day-to-day transactions. The CTA has its own I-Pass like device, known as the Chicago Card Plus. The CCP is hooked up to a customers bank account and "charged" with about $50 at a time which can be used to pay fares. When that $50 starts to run out, the card automatically recharges itself by taking money out of your bank account. The CCP is also more convenient to use than cash or a CTA card.

The CCP is a huge boon to the CTA. Instead of customers making small payments, repeatedly, throughout the entire system, they pay a large fee up front to a central location. This fee requires no effort to collect, no vending machines at every station, and no employees handing out transfers.

Take a look at the proposed fare increases under the CTA's "Doomsday" scenario:

A 25-cent base fare increase on buses and trains, boosting fares to $2. Riders with transit cards continue to pay $1.75 for a bus ride.

Elimination of 25-cent transfers, requiring payment of a full fare for each trip for cash users. But transfer costs with Chicago Card, Chicago Card Plus and weekly or monthly passes don't change.

Boosting reduced fares for seniors, students and people with disabilities from 85 cents to $1.

Notice that anyone using CCP, or weekly or monthly passes (in other words anyone paying a large sum up front) does not suffer any increase:

However, for customers using Chicago Card, Chicago Card Plus and weekly or monthly passes, fares, including transfer fares, would remain at current levels.

So, instead of convincing people that the CCP is a good idea, the CTA is instead going to be "forced" to raise the rates of customers who do not switch to CCP, just as the state "convinced" people to switch to the I-Pass by doubling the non-I-Pass rate.

The CTA's scare tactics are nothing more than advertisements for the Chicago Card Plus. If they were serious about cutting routes they would propose cutting service to poor areas of Chicago, or cutting off-peak service in wealthier areas. It is these routes that lose money, and perhaps, with regard to transit in poor areas, a subsidy might be justified. But the CTA did not do this. Instead of threatening a relatively small number of poor people they threatened a large number of relatively wealthy people. The "doomsday" threat could only be a political move, because it is certainly not much of a business move. They want a subsidy, and the want an increase in the number of Chicago Card Plus users.

With regard to service cuts, do not believe a word they say.

Update: I have to add one more thing. The Chicago Card Plus requires the user to have access to a computer and a checking account. Many poor people in the city, those who really rely on public transportation, do not have access to either of these things. Therefore, this fare increase will weigh disproportionately on the poor.

Also, I should point out that on CTA buses the seats are sometimes made of a black acrylic substance. This substance will occasionally stain your pants.

8 Comments:

  • I completely sympathize with you. Lived in Chicago for a year, live in Boston now...let's just say that both transit systems are horrible, but at least L trains run after bars close, unlike here in Boston. I'll be in Chicago in June btw, looking forward to riding the L again.

    By Anonymous Anonymous, at 2:06 PM  

  • I've heard bad things about Boston's system, but I've never had the privilege.

    Your comment reminds me of another point. They threatened to cut bartime service as well, as if creating an increase in drunk driving will win them support.

    By Blogger PaulNoonan, at 4:36 PM  

  • You obviously know little about the economics of public transit. Every single transit system in North America loses money, even when the buses or trains are completely full. According to the American Public Transportation Association, the CTA only covers about 50% of its costs from fares, which is actually much higher than most systems, but even so, fares alone can't pay for the cost of building a railroad, maintaining it, the power, and the labor involved in operating it even if the thing is jam-packed.

    The logic of transit is as follows -- fare paying customers benefit from transit, so they pay a fare that approximates that benefit. But lots of OTHER people also benefit -- drivers who have less congestion, property owners whose values increase because of convenient transportation, and -- oh yeah -- everyone who breathes. So most public transit agencies provide a subsidy to make up the rest of the costs. In Chicago it looks like 1/2 of the total operating costs come from public subsidy and half from fares. Perversely, if they cut $2 in service costs they will also lose $1 in revenue. That's what transit planners call the "death spiral" -- if the public can't find a way to keep up with the increased costs of transit, it will wither away and disappear.

    One more point -- federal civil rights law prohibits what you proposed, providing a subsidy only in poor areas and charging more in wealthier areas. (Not to mention that the subsidy is needed everywhere, as noted above). This may or may not be a good thing, but since every transit service change must be submitted to the feds, CTA's hands are tied -- if you want to change it, call Congress and the courts.

    By Anonymous Anonymous, at 9:44 PM  

  • I love arguments that start with the words, "You obviously." It's the single best way to indicate that your argument lacks evidence. I think that we need to handle this one as a fisk. Shall we?

    Every single transit system in North America loses money, even when the buses or trains are completely full.

    Uhm, thanks for admitting that the whole thing is an inefficient boondoggle. I mean, how can you even begin to defend a system consdiering this fact? And, As I've written in a previous post, which I linked to in this post, customer service (or, as I call it, catering to bums) is the single biggest factor in public transit's lack of profitablility.

    According to the American Public Transportation Association, the CTA only covers about 50% of its costs from fares, which is actually much higher than most systems, but even so, fares alone can't pay for the cost of building a railroad, maintaining it, the power, and the labor involved in operating it even if the thing is jam-packed.

    This may be the case, and if it is the case, it simply should not exist. However, anyone with even a basic understanding of economics can see that it is not as big a drain on the system to run full trains as it is to run empty trains. Running a train is a fixed cost. More customers+no increase in cost per customer=at the very least losing less cash. Marginal costs, and all.

    The logic of transit is as follows -- fare paying customers benefit from transit, so they pay a fare that approximates that benefit.

    SO, if I am understanding you correctly, the benefit that transit provides is much, much, much less than the cost required to provide that benefit. I'm glad that we have that straight.

    But lots of OTHER people also benefit

    I love free riders and unitended beneficiaries. fun stuff.

    -- drivers who have less congestion,

    IL took care of that with the toll booths. They have completely replaced and congestion relief with new congestion. Also, the congestion relief offered by Public Transit is negligible, as most riders would not drive anyway.

    property owners whose values increase because of convenient transportation,

    Wow, is this a canard. Tell you what, next time you're in the Loop in Chicago, take a walk down Michigan Ave., and State St. They are both very nice, upscale boutique-laden touristy places, etc. Then walk on over to Wabash. The Brown, Purple, Green, and Orange lines run along wabash. You can get a nice wig, or even a subway sandwhich on Wabash. Property values go DOWN around the L, because the L brings noise, bums, and ugliness.

    and -- oh yeah -- everyone who breathes.

    Once again, the Tolls take care of the extra cars. Air pollution causes breathing problems, like asthma. Thing is, all air pollution in the US has been Declining for about 50 years now (except greenhouses gases, but greenhouse gases don't make it hard to breathe, they just make it hot). This is because even though cars use more gas then they used to (post 1978 or so) they give off less pollution. In fact, over 90% of automobile air pollution comes from 10% of automobiles. This will only get better as Hybrids and better tech becomes ubiquitous. Moreover, when everyone can ride in a clean car, public transit will become obsolete, as road construction will become more cost effective. As for now, the cars taken off of the road due to public transit, and their enviro impact are negligible. Most transit takers would not drive anyway.

    So most public transit agencies provide a subsidy to make up the rest of the costs. In Chicago it looks like 1/2 of the total operating costs come from public subsidy and half from fares. Perversely, if they cut $2 in service costs they will also lose $1 in revenue.

    Then why run them at all. Why support a business like this? What is the point. Why not save that cash and buy poor people cars instead? I'm only half kidding about that.

    That's what transit planners call the "death spiral" -- if the public can't find a way to keep up with the increased costs of transit, it will wither away and disappear.

    Uhm, if anyone ever coins a term in my industry called "the death spiral" I'm leavinng the industry.

    One more point

    Thank God

    -- federal civil rights law prohibits what you proposed, providing a subsidy only in poor areas and charging more in wealthier areas. (Not to mention that the subsidy is needed everywhere, as noted above).

    First of all, you are making the assumption that these poorer areas are largely populated by minorities. This may be the case, but my concern is that they are POOR. If your concern is that they are black, well, you may want to reprioritize. Moreover, I did not endorse a subsidy. I am, in general, against all subsidies. I merely said that if you believe in providing this kind of service to the poor, a subsidy might be justified. As for wealthy areas, perhaps it would be illegal (if the government is doing it. A private company might have more flexibility in this regard). However, if a business is losing money and not charging what it's customers are willing to pay, they deserve to go bankrupt, not to put too fine a point on it.

    This may or may not be a good thing, but since every transit service change must be submitted to the feds, CTA's hands are tied -- if you want to change it, call Congress and the courts.

    This, of course, is the root of the problem. What the hell does congress, or the courts, know about running a business? And the CTA is a business. They provide a service for a fee. Asking these entities to make CTA more efficient is like asking The Unabomber to add an extra stamp. IT misses the point entirely.

    By Blogger PaulNoonan, at 10:18 PM  

  • Not sure about Chicago, but in Detroit, eliminating bus routes to affluent areas would only hurt the poor, as they use the bus to commute to their jobs in these areas.

    By Anonymous Jeff Moore, at 9:55 PM  

  • I can see that. I was referring more to routes that run from affluent to affluent. Off-peak routes from the western suburbs into downtown for instance. Or from the loop to the near north side.

    I suppose poorer folks use these routes too via tranfers, but by and large these routes are a luxury.

    By Blogger PaulNoonan, at 8:16 AM  

  • I used to live in Boston and moved to Chicago last year. The L is definitely better than the T, although it is also smellier and has bums.

    By Blogger Danny Taggart, at 4:38 AM  

  • "Every single transit system in North America loses money"

    That should be "every single *public* transit system," if that much is true. The statement is not true of all privately owned transit systems.

    By Blogger McGroarty, at 9:40 PM  

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