Transit Ridership is Declining–So Why Pay Transit CEOs So Much Money?

The Anti-Planner, September 7, 2017

Transit ridership is declining, and that decline appears to be accelerating. Nationally, ridership declined by 4.4 percent between 2014 and 2016 and by 4.5 percent in the first six months in 2017 compared with the same period in 2016.

Despite these losses, transit agency CEOs get paid staggering amounts of money. Here’s a few examples.

• Los Angeles Metro lost 10.5 percent of its riders from 2014 to 2016, and another 5.8 percent in the first six months of 2017. Yet the agency’s CEO pulls down a salary of more than $430,000, plus nearly $48,000 in benefits.
• San Francisco BART ridership has been flat for the last several years, and it lost 4.9 percent of its riders in the first half of 2017. Its CEO collected $498,000 in pay and benefits in 2016.
• Even better paid was the CEO of San Mateo County Transit, who also runs the commuter trains between San Jose and San Francisco. From 2014 to 2016, SamTrans lost 4 percent of its riders and another 7.6 percent in 2017, while CalTrains ridership has been flat through 2016 and lost 7.9 percent in 2017. Its CEO received $492,500 plus $24,000 in benefits in 2016, for a total of more than $516,000.
• Atlanta’s MARTA lost 4.8 percent from 2014 to 2016 and 2.1 percent in 2017; its CEO (who recently resigned) earned $369,000 in 2016.
• Honolulu Area Rapid Transit (HART) has yet to carry a single rider, but its CEO will earn $379,000 this year.
• Boston’s transit system, the MBTA, is falling apart and it lost 4.0 percent of its riders from 2014 to 2016 and another 3.2 percent in 2017. Its CEO collects about $384,000 plus benefits.

In general, the going rate for rail transit agencies is about $300,000 to $400,000 a year plus benefits, while bus-only agencies in larger cities is around $200,000 to $300,000 per year. In smaller cities it is about $100,000 to $200,000 a year, and some very small agencies pay their general managers under $100,000 a year.

Most CEOs get a “base pay” plus a variety of “allowances.” HART’s CEO, for example, gets $317,000 plus a “housing allowance” of about $4,600 a month and a “transportation allowance” of $600 a month. This isn’t because Hawaii is an expensive place to live; transit CEOs in Denver, Phoenix, and other ore affordable cities get similar housing and transportation allowances. Pension and health-care benefits are on top of these salaries and allowances.

Among other things, this means that if you see a media report of a transit CEO salary, that salary may not include the housing and transportation allowances unless the article says so, and it also probably does not include benefits. A site called Transparent California breaks out base salary, additional salary, and benefits, but a site called See Through New York doesn’t list benefits and a site called Texas Government Salaries Explorer only lists pay, which may or may not include allowances. No matter what they include, these sites are also missing many transit agencies or have not been kept up to date; the latest data I can find for New York’s MTA is from 2013.

In any case, considering declining ridership, the high salaries paid by major transit agencies seem to be for something other than providing effective transportation. A 2005 survey of transit CEOs asked them what they thought were the biggest challenges in their jobs. Some of their answers included:

• “Educating the organization, elected officials and the public on the benefits of public transportation and demonstrating that there is value in investing in transit even if you do not use the service.”
• “Completing an aggressive, very political capital plan to build 21 miles of light rail, 80 miles of commuter rail and 41 capital projects related to our express bus service.”
• “Anticipating, measuring and dealing with change — changing rider demographics; changing employment markets; changing technology; and changing political and funding environments.”

In other words, moving people wasn’t their primary goal. Instead, their main goal was to sell politicians and voters on the need for subsidies. That goal becomes even more important in a time of declining ridership, and people who can best achieve that goal will be more likely to be hired to run bigger agencies at higher salaries.

The Antiplanner’s own approach to running a transit agency would be very different:

1. As rail lines wear out–and in some cases, before–replace them with buses.
2. As ridership declines, concentrate buses in heavy-use corridors and core neighborhoods where demand is high.
3. Pay off debts and reduce unfunded pension and health-care liabilities as rapidly as possible.
4. Be prepared to phase out the agency completely as private solutions such as ridesharing and driverless cars take over.

That’s probably not going to persuade any transit agencies to hire me as CEO. The sad thing is that the industry seems to be selecting people who are moving in the opposite direction: towards more debt, more costly infrastructure, and more cushy pension and health-care programs.