No Such Thing As Free Parking

Cutting The Number Of People Driving Alone To Work May Be As Simple As Paying Them


June 5 2005

Paving Connecticut for a parking lot sounds like an outrageous idea, but the total space devoted to parking in America amounts to an area at least the size of Connecticut. We need all this parking because we have 230 million motor vehicles - 19 percent more than the number of people with driver's licenses. And for 99 percent of the trips we make in these vehicles, parking is free.

Free, but not cheap. The annual cost of all our free parking in the United States is about what we spend on Medicare or national defense. Everyone pays for free parking in countless, unseen ways. Cities require most commercial buildings to provide a parking lot greater than the floor area, and for restaurants the parking lots are often at least three times the size of the dining area. The cost of these parking spaces has to turn up somewhere, usually in the form of higher prices for everything we buy. Even those who walk, bike, or ride public transit pay for parking indirectly.

The additional driving encouraged by free parking also increases traffic congestion, air pollution and accidents. To fuel this extra driving we also have to import more oil, which we pay for with borrowed money.

Why do we have so much free parking? The short answer is that most cities require ample off-street parking for all new buildings. These off-street parking requirements often produce a surplus of available spaces, even during the peak shopping season. A 1999 study by the Urban Land Institute found that the parking lots at 43 percent of shopping malls were never more than 85 percent occupied, even at the busiest hour of the year. Everybody understands that you don't build your church for Easter Sunday, but we build our parking lots for the week before Christmas.

What can we do to reduce the cost of free parking? One solution is to reform employer-paid parking, which is an invitation to drive to work alone. Once you have bought your car, paid for insurance and have a parking permit, why not drive to work? That's a choice most of us make, because 95 percent of automobile commuters in America park free at work.

Employer-paid parking is the most common fringe benefit offered to American workers, and its cost amounts to about 1 percent of our national income. This money could be used to pay for other fringe benefits or higher salaries, but drivers rarely think about the cost of parking at work and might be surprised to learn that it has any cost at all.

Employer-paid parking seems both irresistible and immovable. Irresistible because almost everyone who can park for free drives to work, and immovable because taking away an established fringe benefit is politically difficult. But there is an ingenious way out of this dilemma: parking cash out. Employers can allow commuters to take the cash value of the free parking instead of the parking itself. Commuters can continue to park for free, but the cash option encourages everyone to consider the alternatives to driving to work alone. Would you walk, bike, car-pool, or ride the bus or train to work if someone paid you to do it?

If employers rent the parking spaces they offer free to commuters, parking cash out costs the employers almost nothing because they save as much on parking as they pay to commuters who stop driving. And because parking costs most in central business districts, parking cash out will work best where traffic and air pollution are worst, and where public transit is best.

In studies of firms that offer cash out in Southern California, the share of commuters who drove to work alone fell from 76 percent before cash out began to 63 percent afterward. Employers praised parking cash out for its simplicity and fairness, and said it also helped them recruit workers.

In these studies, cash out reduced the number of cars on the road to work by 11 percent. Three times more solo drivers switched to car pools than to transit, which shows that parking cash out can work even where public transit is not available. By encouraging car pools, cash out takes advantage of the many empty seats in cars already on the road to work.

Because cash in lieu of a parking subsidy is taxable, while the parking subsidy itself is tax-exempt, voluntary cash out increases federal and state income tax revenues without an increase in tax rates, and without ending the tax exemption for parking subsidies. In the California case studies, federal and state income tax revenues increased by $65 per employee per year after cashing out.

Parking cash out reduces traffic congestion, conserves gasoline, improves air quality and increases tax revenue without increasing tax rates or employers' costs. It also gives commuters a new reason to ride the public transit we already have. All these economic and environmental advantages result from subsidizing people, not parking.

Donald Shoup is a professor of urban planning at UCLA. His book "The High Cost of Free Parking" was published in March by the American Planning Association. More information about parking cash out is available at{tilde}shoup.

Copyright 2005, Hartford Courant