Path Dependence, Entrenched Interests, and the Future of Transit

Original post date: April 09, 2013
Article by: Anonymous

Path dependence: The tendency of a past or traditional practice or preference to continue even if better alternatives are available.          

Mortimer L. Downey has worked in New York’s Metropolitan Transit Authority (MTA) and the Washington Metropolitan Area Transit Authority (MATA), and was one of several presenters at a May 2012 symposium at Florida State University on market-oriented transit reform. At the forum, he suggested that managers think of transit services as having two customers: the users who pay a fare, and the government which expresses its preferences through the political system. Transit was once a private sector service but did not have a sustainable business model; ridership eroded through the rise of automobiles and suburbanization, and government intervened to ensure its continuation. Due to its near extinction, the transit industry does not embrace the risk inherent change and prefers the status quo.

The transit system is both labor intensive and capital intensive, Downey noted. It has to deal with several factors: its labor practices, its definition of services, its choice of markets, its choice of equipment, its investment decisions, and the way the system perceives its relationship to customers. In transit systems, employees are represented by unions, and change will only come about if labor leaders and transit managers can work out solutions to their mutual benefits. Old work rules tend to stay in place unless a strong incentive exists to remove them. Usually, changes in work rules come from a new bargaining framework that shows those changes to be the only way to provide a reasonable wage settlement. Expensive benefits are hard to take away from current and former employees, but redefining benefit packages for new employees is possible.

Given the public sector nature of transit services, the system typically operates within a no-strike framework. However, this is not always the case. Transit workers can strike in certain cities, even when they are public employees and certainly when they are employees of a private company.

The outcomes of third party arbitration are often disappointing, said Downey, and result in both sides of labor disputes having less incentive to seek “win-win” solutions when both sides know what is likely to be the outcome. However, one of the areas where management and labor interests do coincide is safety.

In publicly operated systems, elected officials are more often motivated to sustain the status quo rather than to take the opportunity to make systems more efficient or effective. For instance, elected officials in Washington allowed metro fares to rise without altering services, in a recent cycle of fare and service changes.  Services should be reformed from time to time, even if it is only to reallocate resources to areas where they will be more effectively applied.

Within the areas of fares and services, the perceived equity arguments for specific groups of users and beneficiaries are a sensitive one. For example, many advocates are trying to elevate mobility for seniors and the disabled to a civil right. However, the way this mobility is currently provided to these groups creates a burden on transit providers and payers. For example in Washington, the current cost of a ride is in the neighborhood of $40 while the maximum fare that can be collected is two time the regular fare. Even more troublesome, New York’s paratransit budget is more than five times the amount of Washington’s.

Transit system managers tend to stick with the equipment they are comfortable with. Being the first to transition to new technology is risky, Downey says, but so is staying with old technology past the time suppliers are able to support it. Risk aversion by conservative transit agencies has led to such anomalies as rail lines that take advantage of abandoned rail right-of-way rather than running routes more suited to serve ridership. Change may be coming, such as in the case of public-private partnerships (P3s) in transit projects, e.g. the RTD in Denver.

Today, technological advances allow for a computer app to tell users the best route to their destination, their real time of arrival and the necessary fare. The money transaction will also change for the better as customers will be able to use whatever is in their wallets, such as credit cards or personal IDs, to pay.

Two factors help to explain what transit systems can and do move in new directions, concluded Downey. First, the areas being changed are new opportunities not within the previous scope of the agency operation that bring about beneficial changes. Second, these changes are what customers are demanding.

References:

Link to presentation by Mortimer Downey:

http://www.coss.fsu.edu/dmc/sites/coss.fsu.edu.dmc/files/DowneyFSUTransitSymposium.pdf

Link to presentation at Market-Oriented Transit Critical Issues Symposium:

http://www.coss.fsu.edu/dmc/content/market-oriented-transit-reform

About DeVoe Moore Center

The DeVoe L. Moore Center is conducts economic research and policy analysis focused on state and local policy issues and is located in the College of Social Sciences and Public Policy at Florida State University in Tallahassee. As an educational institution the DMC provides professional research experience to undergraduate and master’s students through an extensive program of internships and independent study, preparing them for a future in public policy, economic development, public sector accountability and entrepreneurship.
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