Cutting The Number Of People Driving Alone To Work May Be As Simple As Paying Them
By DONALD SHOUP
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.
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.
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.
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.
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?
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.
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