The Scourge of Free Parking

By Donald C. Shoup
Donald C. Shoup, a professor of urban planning at UCLA, is the author of "The High Cost of Free Parking." More information about cash for parking is available at www.bol.ucla.edu/~shoup.

April 17, 2005

Even if Southern California spends billions of dollars to build a larger rail system, a big problem will remain: Few commuters will ride the train if their employers continue to offer them free parking.

Once you buy a car, insure it and have a parking permit, why not drive to work? That's what most of us do, and it's a choice made much easier because 95% of automobile commuters in Southern California park free at work.

Employer-paid parking is the most common fringe benefit offered to workers, and the cost of all this free parking amounts to about 1% of national income. Almost everyone who can park free drives to work, but taking away any fringe benefit is difficult.

There is an ingenious way out of this dilemma: Employers can offer commuters the option to "cash out" the value of their free parking. Commuters can continue to park free, but the cash-out option encourages them to consider alternatives to driving to work alone. Would you walk, bike, carpool or ride the bus to work if someone paid you to do it?

If employers with more than 50 employees rent parking spaces for drivers, California law requires them to offer their workers cash equal to the parking subsidy. The money the employer saves on parking goes to the commuters who stop driving, so the program costs the employers almost nothing.

Few people have heard of the law, and the state has not enforced it. Even so, some companies voluntarily offer their workers cash to not park, and the results are promising. In one study, the share of Southern California commuters who drove to work alone fell from 76% before a cash offer to 63% afterward. The number of cars driven to work fell 11%. Three times more solo drivers switched to carpools than to transit, which shows that offering cash instead of parking can work where public transit is not available. By encouraging carpools, the offer of cash exploits the vacant seats in cars already on the road to work.

Employers praised "cash for parking" for its simplicity and fairness, and said it also helped them recruit workers.

The cash-out plan reduces traffic congestion, conserves gasoline and improves air quality without increasing employers' costs. It gives commuters a new reason to ride the rails we already have. All these economic and environmental advantages result from subsidizing people, not parking.