Does It Make Sense for Transit Agencies to Pay for “Last Mile” Uber Trips?

Should transit agencies subsidize short “last-mile” Uber trips to expand transit access for people who live outside comfortable walking distance of a train station?

Is it smart of transit agencies to use Uber subsidies to expand their service areas? Map of Atlanta's MARTA plus a three-and-half mile buffer via CAP
The green areas denote where people would be eligible for ride-hail commute subsidies. Map: CAP

Columbus, Ohio, has proposed something along these lines as part of its application for U.S. DOT’s Smart City Challenge. The city is one of seven finalists competing for a $50 million federal grant.

New technologies associated with ride-hailing services like Uber and Lyft make such a program more feasible, but is it a good idea? In a new report, the Center for American Progress explores how such a program might work for low-income residents of Atlanta.

CAP’s Kevin DeGood and Andrew Schwartz don’t reach a firm conclusion about the merits of such a program, but their report suggests it would have very limited impact.

They start by defining who would be eligible for the subsidized ride-hailing program, mapping out a radius of 3.5 miles from MARTA stations while excluding areas closer than half a mile away from a MARTA rail station or a quarter mile away from bus lines that connect to rail.

In one of their scenarios, any commuter living in that zone who doesn’t own a car would be eligible for a $3 ride-hailing subsidy for each trip to or from work. That would reach an estimated 8,300 people and cost $12 million per year.

In the other scenario, the same subsidy would be available for workers in households below the poverty line with three or more children, regardless of car ownership. CAP estimates this would encompass 3,300 people and cost $5 million per year.

Participating commuters would pay for the remainder of each ride-hailing trip, which is no small sum over the course of a year. On average, DeGood and Schwartz estimate it would cost each commuter $2,150 annually. That doesn’t include the cost of MARTA fares, and it assumes no surge pricing.

Low-income households spend about $2,000 per year to own a vehicle, according to CAP, so even with the subsidies, participants would on average pay more for the ride-hail portion of their commutes each year than they would to own a car. This strongly suggests that the number of people who participate would be much smaller than the number of people eligible for the subsidy. CAP does note, however, that vehicle costs for low-income households tend to be highly variable, because older cars break down and need expensive repairs, so the costs of a ride-hail-plus-transit commute would be more predictable.

But would this be a worthwhile way for MARTA to spend its money? Using federal transit funds for this purpose would require a change in current law, and even if MARTA could do it, right now the agency doesn’t have any federal funds to spare. DeGood and Schwartz note that “by almost any account,” current federal funds “are insufficient to meet the true ongoing capital needs of MARTA.”

What about MARTA’s operating funds? DeGood and Schwartz say such a program might be preferable to using the money to increase bus service:

Subsidizing ridesharing would expand access to people who are largely excluded and would provide a major improvement in their ability to access employment and other essential services — a change that could prove transformational to a qualified individual or family.

But it’s not clear that ride-hail subsidies would increase opportunity and access to jobs for more low-income households than spending the same amount on more frequent bus service.

While it’s interesting to see some analysis of how ride-hail-to-transit subsidies for commuters might work, it’s still hard to discern a concrete benefit compared to plain old bus and train service.

  • Kevin Love

    Does it make sense? No, it does not. For $12 million per year, it is possible to quickly roll out a 4th generation bike share system for this entire area to provide the “last mile” solution. For an example of a 4th generation system, take a look at SoBi bikes at:

    http://socialbicycles.com/

  • lepeage

    If the federal government and CAP cared about proper ride sharing options, they would have fixed MARTA by now.
    The future is not about personal mobility. Incompetent leadership and lack of transparency has encouraged states to apply for millions of dollars of funding for projects that should not be expanded.
    The federal government has been choking Atlanta and the state of Georgia with fraudulence. MARTA is a broken system that serves a major American city with the world’s largest airport. And yet the entire system is a disgrace. How is this even possible in the capital of the New South?
    The solution is to expand and repair MARTA immediately. No more years of waiting and division through unfair and corrupt voting processes. Atlantans deserve the best mass transit system and so does Georgia.

  • Vooch

    bikes are the Best solution for last mile

    proven in Every civilized City the World Over

  • Kevin M

    Someone correct me if I’m wrong, but it would only cost $12m or $5m if people actually took advantage of it, right? And that would mean that riders were paying a bunch more in transit fares. In that case, I don’t think it’s the full story to say that it would cost MARTA $12M and riders $2K+. You have to account also for the bump in MARTA revenue. I’m not sure if the full report better explores this side of it.

  • Andy Chow

    Why should a transit agency subsidizing an operation where the worker does not get any worker benefit or protection? These drivers don’t earn an hourly wage, get any overtime pay, workers compensation, and so forth. It is actually more fair to contract with companies in the likes of Walmart that actually treat their workers as employees not contractors.

    What they would subsidize is the financial return for the venture capitalists. If there’s a subsidy, they should go to support the bottom not the top.

  • AlanTobey

    Not a solution for winter-climate cities.

  • laughtiger

    What’s amazing is that people think this is some kind of new idea, made possible only because of Uber and Lyft.

    This is just a natural extension of paratransit ideas going back over several decades — in this case, subsidizing taxis to provide last mile services supplementing public transit. That’s a big part of what they do anyway.

    The idea has its merits. However, subsidizing these particular taxi services — the massive cab corporations, Uber and Lyft — is a terrible idea. No public entity should get in bed with these crooks. They are too powerful and too used to getting everything they want. The transit agencies will end up being their hapless puppets.

    So sure, subsidize last mile rides, but do it with locally regulated taxi companies, that you can control. Uber and Lyft will control you, and treat you just as poorly as they treat their drivers.

  • SD70MACMAN

    Additionally, subsidizing a now-major corporation which has shown to have little regard for laws not suiting their business model.

  • Kevin Love

    You mean like in Finland?

    Or The Netherlands?
    https://bicycledutch.wordpress.com/2010/12/03/cycling-in-the-snow-utrecht-netherlands/

    Or Canada? Where there is a “coldest day of the year” ride in Toronto every year in the exact middle of winter?
    http://bikingtoronto.com/blog/2016/01/video-toronto-cyclists-kick-off-cold-weather-bike-ride/

    I see that David Hembrow conveniently put all the myths and phoney excuses together:

    http://www.aviewfromthecyclepath.com/2011/02/all-those-myths-and-excuses-in-one-post.html

  • rmstallman

    Another disadvantage of the proposed subsidy is that it extends massive surveillance. You can take a bus or train anonymously and pay cash, but Uber and Lyft track their passengers’ identities and movements. Massive surveillance threatens our freedom, and even our democracy, so we should oppose any plan to extend surveillance. See http://gnu.org/philosophy/surveillance-vs-democracy.html.

    In addition, using Uber or Lyft requires a smartphone, which (aside from the fact that it tracks you everywhere and its microphone can be remotely activated) also tends to be rather expensive.The people this plan is intended to serve might be unable to use it.

    A non-smart portable phone also tracks you everywhere, and also allows its microphone to be remotely activated — but it can’t be used to call Uber or Lyft.

    See stallman.org/uber.html for more reasons to reject Uber. I have made it a personal rule never to use Uber.

  • laldm109

    Buffalo has been one of the test cities for SoBi…for a couple of years now…

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