Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: Just over five years ago, the onset of the COVID
Speaker 2: nineteen pandemic brought the world to a halt. Schools were closed,
Speaker 2: offices were empty, and without commuters, the number of people
Speaker 2: taking public transit plummeted it. New York's Metropolitan Transportation Authority
Speaker 2: has been knocked down before, but its current leader says
Speaker 2: nothing matches the current pandemic by orders of magnitude. We're
Speaker 2: back up to more than a million writers on the
Speaker 2: subway and a daily basis, but that's still down some
Speaker 2: eighty percent year on year.
Speaker 3: House the fair box is like, you know, a huge
Speaker 3: part of the revenue for these systems. So they needed
Speaker 3: to get a bailout from the federal government.
Speaker 2: Street Taylor covers transportation and public finance for Bloomberg, and
Speaker 2: she says over the last half decade, the federal government
Speaker 2: supplied roughly seventy billion dollars in aid to transit agency
Speaker 2: across the US. A that's helped keep them afloat, but
Speaker 2: ridership in the US across the board hasn't gotten back
Speaker 2: to pre pandemic norms. It's been a struggle, and that
Speaker 2: federal aid money is running out, so free Along with
Speaker 2: Bloomberg Data reporter Aaron Gordon, they have been tracking what
Speaker 2: could come next for those agencies, and they say the
Speaker 2: prospect of riders not returning has some transit advocates sounding
Speaker 2: the alarm about a potential death spiral.
Speaker 1: A death spiral is when a transit agency has to
Speaker 1: cut service to save money, which makes it less useful
Speaker 1: to people who then find other ways to get around
Speaker 1: or don't take trips entirely because they can't, which then
Speaker 1: leads to less fair revenue for the transit agency, and
Speaker 1: then they have to cut more service because revenue's down,
Speaker 1: and that's the death spiral.
Speaker 2: I'm David Gera and this is the big take from
Speaker 2: Bloomberg News today. On the show, as federal funding dries up,
Speaker 2: we dig into how mass transit actions across the US
Speaker 2: or trying to avoid a so called death spiral. What
Speaker 2: that vicious cycle of low ridership, lower revenue, and cuts
Speaker 2: to services could mean for America's major cities. The world
Speaker 2: shut down during the early days of the COVID nineteen pandemic,
Speaker 2: and mass transit in the US was no exception.
Speaker 3: So public transit agencies weren't exempt from the rule that
Speaker 3: everything was just going to start clearing out. People weren't
Speaker 3: traveling as much, so Ridership just kind of took a hit.
Speaker 2: Street Tailor teamed up with Aaron Gordon, who was also
Speaker 2: spent years covering transit. He says the funding the federal
Speaker 2: government supplied during the pandemic helped agencies bridge the gap.
Speaker 1: It was a very rare instance in US history where
Speaker 1: the federal government provided money to transit, not just to
Speaker 1: do big, expensive, long term projects, but to run so
Speaker 1: servius on a day to day basis. Typically, the federal
Speaker 1: government had never done this before, and it was absolutely essential.
Speaker 2: So here we are five years hence, is all of
Speaker 2: that money gone? Is the seventy billion gone completely? Or
Speaker 2: are we at a point where these transit agencies are
Speaker 2: beginning to reckon with the fact that it is going
Speaker 2: to disappear soon.
Speaker 1: It depends a little bit on which agency you're talking about,
Speaker 1: whether they spent all their money or not. A select
Speaker 1: few agencies kind of squirreled some away expecting that they
Speaker 1: would need it, and by the mid twenty twenties, but
Speaker 1: for the most part, it's all pretty much gone and
Speaker 1: agencies are trying to figure out what they're going to
Speaker 1: do now.
Speaker 2: A lot of companies have brought workers back to the office.
Speaker 2: I'll say, personally, riding the train day in and day out,
Speaker 2: I have my frustrations with delays and them being crowded.
Speaker 2: When it comes to ridership, are we back to that
Speaker 2: level that we saw pre COVID or are we close
Speaker 2: to it?
Speaker 3: People are taking the train again, and ridership has ticked
Speaker 3: up since the pandemic, but what hasn't recovered is people
Speaker 3: going in as frequently as they used to.
Speaker 1: In the US, most trans agencies are hovering somewhere around
Speaker 1: seventy five percent of pre COVID ridership, which if you're
Speaker 1: a commuter on a train, you know, especially like Tuesday
Speaker 1: to Thursday, which are you know, typically the highest ridership days,
Speaker 1: the train probably feels more or less pre COVID, you know,
Speaker 1: like maybe it's not quite as crowded as it was.
Speaker 1: You know, hard to get this, it's still hard to
Speaker 1: get to see there's still tons of people on the train.
Speaker 1: It feels like things are more or less back to
Speaker 1: normal overall all washes out, So like most transidencies are
Speaker 1: about seventy five percent of ridership, which is basically where
Speaker 1: some of the most of the estimates were, you know,
Speaker 1: in like twenty twenty two of where this would all
Speaker 1: shake out. This is a problem for transit agencies because
Speaker 1: if they rely on fair revenue to help balance the
Speaker 1: budget every year, that's a really significant hit.
Speaker 3: If we took a.
Speaker 2: Tour through major cities in the United States, or most
Speaker 2: of them or all of them fair dependent, is that
Speaker 2: the kind of economic model that they use.
Speaker 1: It varies by transit agency. Some are more fair dependent
Speaker 1: than others. A lot of the transit agencies, for like
Speaker 1: mid size American cities that you wouldn't really think of
Speaker 1: as being very transit dependent, but have transit systems that
Speaker 1: are very important to the cities. I'm thinking like Boston, Philadelphia,
Speaker 1: San Francisco, Atlanta, cities where car dependency is still very
Speaker 1: much the norm, but there's also a large population that
Speaker 1: uses the transit system to commute every day. Those systems
Speaker 1: tend to be extremely fair reliant. New York City gets
Speaker 1: a ton of revenue, like billions and billions of dollars
Speaker 1: a year from the subway fares, but they also get
Speaker 1: a lot of tax revenue too. So it ends up
Speaker 1: being about fifty to fifty more or less. So it
Speaker 1: depends on the system just how much they rely on
Speaker 1: fair revenues. But I would say even for the systems
Speaker 1: where it's maybe a smaller chunk of their overall annual revenues,
Speaker 1: a twenty five percent reduction in that chunk is still
Speaker 1: significant for them.
Speaker 2: So if folks aren't riding the train the way they
Speaker 2: used to, what are they doing differently? I imagine some
Speaker 2: are just staying at home working from home. But are
Speaker 2: there's some folks like I know you're a bike rider.
Speaker 2: They're folks like you're riding bikes in now or taking
Speaker 2: their cars through. How is that shift manifested itself?
Speaker 1: I don't know. If we've seen a huge shift in
Speaker 1: transportation action. Call this mode shift the mode you're using
Speaker 1: to get where you're going. What we have found is
Speaker 1: much more significantly. If people moved away from the city
Speaker 1: during the pandemic thinking remote work would be the future,
Speaker 1: and they got called back to the office and they
Speaker 1: live further away from their office than they used to,
Speaker 1: that probably means they're driving now. But broadly, the mode
Speaker 1: choice pre and post pandemic is looking very similar.
Speaker 3: A lot of these transit agencies don't think that ridership
Speaker 3: will ever look the same as it used to before
Speaker 3: the pandemic came. So is ridership inching back to what
Speaker 3: we might consider normal, sure, But for these transit agencies
Speaker 3: who are so used to certain levels of ridership for
Speaker 3: decades before the pandemic came, they aren't seeing what they
Speaker 3: need to see at the fairbox.
Speaker 2: How would you characterize the financial situation of major transportation
Speaker 2: agencies across the countries? Is there nuance here or are
Speaker 2: some doing better than others? Where it's there kind of
Speaker 2: a blanket sense you can give us of how they're
Speaker 2: doing financially.
Speaker 1: I would say generally there are two categories. As with
Speaker 1: most things US transit related, there's New York and then
Speaker 1: there's everywhere else. You have to remember that basically one
Speaker 1: third of all public transit trips in the US occur
Speaker 1: in the New York metro area. So even though it
Speaker 1: feels disrespectful of the rest of the country to talk
Speaker 1: New York and everywhere else, it really is that way
Speaker 1: with transit. So the MTA is actually in pretty good
Speaker 1: financial shape all told. Because of some new taxes on
Speaker 1: the state level, and also congestion pricing, which has allowed
Speaker 1: them to fully fund their long term capital plans. D
Speaker 1: Transit is in pretty dire financial shape, and then the
Speaker 1: rest of the country is, I would say, in a
Speaker 1: similar boat to New Jersey Transit. Their ridership recovery has
Speaker 1: been quite poor. They tend to rely on commuters for
Speaker 1: most of their rides, whereas the MTA has a lot
Speaker 1: of discretionary trips. You know, people take the subway for
Speaker 1: all kinds of reasons in New York, whereas in most
Speaker 1: other cities, the transportation systems were designed to get workers
Speaker 1: to work, and they assumed if you're taking discretionary trips,
Speaker 1: you'd probably be driving your own personal car. So they've
Speaker 1: had a lot harder time getting people to take their
Speaker 1: systems as commuters aren't returning to the office, you know,
Speaker 1: maybe more than like three or four days a week.
Speaker 1: And also in those other states, it's harder for the
Speaker 1: transa agencies often to get financial support from the state
Speaker 1: for various different reasons. But buying large transit just isn't
Speaker 1: prioritized in the US.
Speaker 3: A lot of these systems have been flashing warning signs
Speaker 3: for years now, so the fact that some systems that
Speaker 3: are mentioned in the story still haven't gotten it together
Speaker 3: or gotten what they've needed or sorted it out. It's
Speaker 3: super down to the wire now, so.
Speaker 2: Ridership is down, and if it's not coming back, what
Speaker 2: options do these transit agencies have left? That's next? Could
Speaker 2: you just quickly take us kind of inside a boardroom
Speaker 2: at one of these agencies having to make this kind
Speaker 2: of decision. I imagine that the calculus is incredibly difficult
Speaker 2: and tricky whether or not to cut service, and that
Speaker 2: fear that it might kickstart that vicious cycle or that
Speaker 2: death spiral.
Speaker 1: There are only so many levers you can pull if
Speaker 1: you're running one of these transit agencies. You can raise fares,
Speaker 1: but that again is going to discourage some number of riders.
Speaker 1: You can cut service, you can try and defer hiring,
Speaker 1: or you know, put long term projects on hold. You
Speaker 1: can try and do as little maintenance as possible, but
Speaker 1: all of those have long term costs and ramifications as
Speaker 1: well that could be even more severe than anything you're
Speaker 1: doing in the short run. You know, we saw the
Speaker 1: cost of deferred maintenance in New York City back in
Speaker 1: twenty seventeen twenty eighteen when the subway seemed like was
Speaker 1: collapsing every day, and you know, not literally, but every
Speaker 1: day you would go down into the station, you weren't
Speaker 1: sure if you were going to see, you know, the
Speaker 1: platform five six people deep because the trains just couldn't
Speaker 1: run because maintenance had been deferred during the Great Recession.
Speaker 1: That was a huge reason for it. So I think
Speaker 1: the people who run these systems are extremely cognizant of this.
Speaker 1: They're not naive. They know that almost anything they do
Speaker 1: to try and cut costs and balance the books is
Speaker 1: going to have some type of long term costs or
Speaker 1: ramifications that they'll have to deal with. Eventually.
Speaker 3: When you cut service, like those drastic cuts service, people
Speaker 3: find other ways to get around and they'll get set
Speaker 3: in their routines and then they might never come back.
Speaker 3: If they hit the roads and you know, they can
Speaker 3: get in their cars and they figure that out, then
Speaker 3: that could also add to congestion and more traffic and
Speaker 3: it's just not good for anyone really.
Speaker 1: But by law, most of these transit agencies have to
Speaker 1: present balanced budgets every year. That's kind of the governing
Speaker 1: ethos of these public authorities. They're not government agencies that can,
Speaker 1: in theory run deficits. They have to present a balanced
Speaker 1: budget every year, so one way or another, something has
Speaker 1: to give.
Speaker 2: And I wonder sort of how you see this playing out.
Speaker 2: Can go back five years we had the government, federal
Speaker 2: government stepping in during the pandemic. Is there a world
Speaker 2: in which the federal government steps in again to help
Speaker 2: out these systems.
Speaker 1: No one we have spoken to for our stories has
Speaker 1: any expectation that this administration is going to step in
Speaker 1: and help public transit. If anything, the fear runs the
Speaker 1: opposite direction, which is previously committed money for projects is
Speaker 1: going to be clawed back or never delivered. Certainly, the
Speaker 1: administration's posture towards congestion pricing in New York is lending
Speaker 1: credence to those fears. Right, the administration is aggressively trying
Speaker 1: to cancel that program, revoke authorization for it, which would
Speaker 1: have tremendous ramifications on New York City's transportation lands.
Speaker 2: This is this is a program that was designed to
Speaker 2: raise revenues to improve the larger system here in the
Speaker 2: New York area by raising money from people who drove
Speaker 2: their cars into certain parts of the city.
Speaker 1: That's right, and in a lot of ways. That was
Speaker 1: a program designed so that New York City would not
Speaker 1: rely as much on the federal government for money to
Speaker 1: rebuild the system.
Speaker 3: Essentially, if Trump gets his way and congestion pricing is mixed,
Speaker 3: then MTA needs to come up with a plan B
Speaker 3: for you know, I guess, how to fund their capital
Speaker 3: project for the next however many years, and then they
Speaker 3: have to wonder, you know, how many people will actually
Speaker 3: want to ride the MTA if we're dealing with CenTra
Speaker 3: old equipment and it's always breaking down.
Speaker 1: Transagencies are used to dealing with administration changes, but what
Speaker 1: they're not as used to dealing with is an historic
Speaker 1: drop in ridership at the same time. And so how
Speaker 1: they're going to navigate those two things is, I think
Speaker 1: something that has very little historical precedence.
Speaker 2: If you look at the demographics, who is hurt the
Speaker 2: most when we see a system get into a death spiral?
Speaker 2: We see cuts across the system. Can you characterize who's
Speaker 2: most likely to be adversely affected by that?
Speaker 1: It's going to be the people who are transit dependent,
Speaker 1: the people who need those systems because they don't have
Speaker 1: another way to get around. And I think in this country.
Speaker 1: The first thing that comes to mind when most people
Speaker 1: here transit dependent is likely income based. You think of
Speaker 1: someone who can't afford to take a car, but that's
Speaker 1: not necessarily true. It could be people who can't drive
Speaker 1: a car for medical reasons. It could be people who
Speaker 1: can't drive a car because they're elderly and aren't comfortable
Speaker 1: driving anymore, they don't feel safe doing it. It could
Speaker 1: be people who choose not to drive a car for
Speaker 1: various lifestyle reasons. They want to live a car free lifestyle.
Speaker 1: But the reality is, in most places in the country,
Speaker 1: if you want to be an active economic participant, you
Speaker 1: have to be able to drive. So there are all
Speaker 1: types of people who get affected when transit doesn't provide
Speaker 1: the kind of service they need.
Speaker 3: And that's going to be even more devastating for these
Speaker 3: communities where people rely heavily on public transportation. There's a
Speaker 3: lot at sake for not just these agencies who might
Speaker 3: lose a lot of money, but for writers who are
Speaker 3: depending on public transit and a robust system to get around.
Speaker 2: This is the big take from Bloomberg News. I'm David Gera.
Speaker 2: This episode is produced by David Fox and Rachel Lewis Krisky.
Speaker 2: It was edited by Air and Edwards, Patty Hirsch, and
Speaker 2: Tim Annette. He was fact checked by andrean A. Tapia
Speaker 2: and Rachel Lewis Chrisky, and mixed and sound designed by
Speaker 2: Alex Sagura. Our senior producer is Naomi Shaven. Our senior
Speaker 2: editor is Elizabeth Ponso. Our deputy executive producer is Julia Weaver.
Speaker 2: Our executive producer is Nicole beemster Boor. Sage Bauman is
Speaker 2: Bloomberg's head of podcasts. If you liked this episode, make
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Speaker 2: for listening. We'll be back on Monday.