Fare Hike Averted

Turns out the T doesn’t need a fare hike this year after all!  Last month the T announced that it would increase fares again — subway fares would break a 28-year inflation-adjusted record to set an all-time high of $2 per ride.  Around the same time, I noted that the last two occasions when fares broached the inflation-adjusted $1.75 mark, strange things happened.  Fare increases implemented in 1954 and 1981 that took prices over the inflation-adjusted $1.75 mark were rescinded the next year.  Those were the only two years in more than a century of transit in Boston that nominal subway fares actually receded.

Looks like history is repeating … or at least rhyming.  Gov. Patrick directed that the proposed 2009 hike is off the table, for now.  Hopefully major service cuts also were averted.  If the consensus economic view is correct that inflation will remain subdued for some time — and assuming the inflation-adjusted fare of $1.75 remains the third-rail of subway pricing — that proposed hike won’t be finding its way to riders anytime soon.

Proposed T Fare Hike Would Break 28-Year Record

Last week the T proposed to increase subway fares to $2.00 and local bus fares to $1.50.  From just 85¢ in 2000, the proposal would more than double subway fares in just nine years.

What is really interesting about this is it also would put subway and bus fares at their highest levels in Boston ever, even after the prices are adjusted for local inflation.  In other words, the Boston subway never has been as costly to ride in real world terms as it will be if the fare increase is approved.

The Boston subway debuted with a nickel fare in 1897, and slowly the fare rose, to 10¢ in 1919, 15¢ in 1949, 25¢ in 1968,  75¢ in 1981, and 85¢ in 1991.  The MBTA Advisory Board published then-current figures in 2006 during the last round of fare increases.

T to Riders: How High is Too High?

T to Riders: How High is Too High?

In 1897, a nickel bought more than it does today.  A lot more.  According to the Bureau of Labor statistics, a nickel then had 96% more value in Boston than a nickel today.  If you adjust the value of the nickel (or quarter) for the additional buying power in had in the past, you get a chart like the one on the right (which shows fares in constant dollars since 1945).

The actual value of the nickel fare in 1897 was $1.35 in today’s dollars, which is inexpensive but not so much of a steal.  The standard fare right now is $1.70.  In the Boston subway’s 112-year history, the standard fare been higher than it is right now in constant dollars just three times: in 1933 ($1.71), 1954 ($1.77), and in 1981 ($1.90).  And for 28-years, the 1981 peak has stood as a high-water mark for the regular subway fare (in constant dollars).  If the T gets its way and promptly implements the fare hike, it will set a new record for unaffordability, although because exit fares recently were eliminated the burden will fall disproportionately on innercity riders who do not exit at suburban stops where previously there were surcharges.

What is even more interesting is that the T is raising fares just as prices for private transportation are falling.  Or at least not rising to the same extent.  The chart shows dotted lines for private transportation costs in Boston and nationwide for public transit costs (also from the Bureau of Labor Statistics), both of which have continued to decline relative to background inflation as the T dramatically raised its fares.  (note: for purposes of the graph, private transportation costs were equalized to subway fares for the year 2000; the trend of costs upward or downward is what is significant)  For fifty years, changes in regular T fares corresponded roughly to changes in private transportation costs (both in direction and magnitude), but in the last ten years private costs have been flat whereas standard subway fares soared.  I’m no economist, but it seems like the T should be able to keep its customers’ costs flat.  Instead the T simply failed to hold the line.

Riders still can take heart from a historical perspective.  Each of the previous real dollar fare-price records were short-lived.  In 1981 and 1954, the fare increases were almost immediately rescinded.  The next year fares were cut– an unusual occurrence– by 20% and 25% respectively.  In 1982, for example, the Legislature restored funding that the T lost the previous year.  And in 1934, a bout of deflation that caused the rise in the real fare price was broken and the real fare price in constant dollars declined (even though the stated fare was unchanged).

The rate hike proposal probably isn’t the best option.  Probably a fairer solution (pun alert) would be to restore some rationality to the subway fare structure by reintroducing some form of distance pricing.  Functionally the T is closer to that goal because it has introduced an electronic fare system, but distance pricing would require a revival of exit fares.  And Charlie got stuck on the subway as a result of exit fares.  No one wants Charlie to get stuck again.  A 60-year-old ditty still drives policy in some quarters.  More on distance pricing another time.

Although the fare hike may possibly be a fait accompli, the T scheduled “workshops” for riders to speak out about it.  I expect they should get an earful.  Not for nothing, the first session is scheduled to be conducted in the State House,  Gardner Auditorium, on  Monday, August 10, from 4pm to 7pm.  Probably the T hopes someone there will be listening.

Whatever decision the state makes, it will be a painful one.  But on the other hand, history tells us that $2.00 to ride the Boston subway — even for just one stop — is just too high a price.