NYU Rudin Center Report: New York Regional Economy to Suffer Catastrophic Effects If MTA Fails to Receive Federal Aid

The NYU Rudin Center for Transportation and Appleseed, a New York City-based consulting firm, today (Oct. 28) issued a new report “Economic Consequences of Pandemic-Related Proposed MTA Cutbacks in Transportation Services and Capital Spending,” highlighting the immediate potential impact of cutbacks in the agency’s operations and capital spending on the economy of New York City and the twelve-county MTA region should Washington fail to provide emergency COVID relief funding.  

 Examining the potential impact of cutbacks now being considered by the MTA, the report estimates that proposed reductions of up to 40 percent for subway and up to 50 percent for commuter rail, the associated reduction in 8,000 positions, and a delay or elimination of capital spending next year, would result in as many as 450,000 lost jobs in the MTA region by 2022, a reduction of $50 billion in annual earnings, and a reduction of approximately $65 billion in the regional GDP.  The catastrophic losses would occur in 2021 alone with additional impacts projected far beyond next year.

"Proposed cutbacks in MTA spending and service will undermine the capacity of New York City and the surrounding region. to recover from the economic effects of the pandemic,” said Mitchell L. Moss, director of the NYU Rudin Center for Transportation. “Simply put, without reliable and safe subway, bus and commuter rail services, the future of the city and region is in doubt. Students will not be able to. get to school, essential workers to their jobs, and offices will remain empty.”

MTA Chairman and CEO Foye said, “The study provides outside validation of what we’ve been saying for months: without a massive infusion of federal help, the MTA as we know it will cease to exist and the downstate region will be devastated. Ultimately, it’s very simple: the national and regional economy will not recover without a robust mass transit system. Washington Republicans need to do the right thing and deliver $12 billion in aid and get the job done for New York and the nation.”  

Since March, the Covid-19 pandemic has had a devastating impact on New York City’s economy. From February through April, the city lost 902,000 private-sector wage-and-salary jobs, a decline of 22 percent. From February through May. the number of employed city residents fell by 948,000, a decline of 24 percent, and by June, the city’s unemployment rate had risen to 20.4 percent, the highest since the Great Depression. 

Among New York’s public service systems, none was hit harder than the Metropolitan Transportation Authority’s subway, bus, and commuter rail networks. At the height of the pandemic, subway and commuter rail ridership had declined by more than 90 percent, and bus ridership by more than 70 percent.

Along with drop-offs in ridership, the MTA has experienced a severe decline in revenues – both farebox revenues and income from dedicated taxes and fees. Among transit agencies in the nation, the MTA has one of the highest farebox recovery ratios making these substantial declines particularly devastating. When combined with higher COVID-related costs, these revenue losses have plunged the MTA into the most severe financial crisis in the agency’s history – even worse than the Great Depression.

The report’s findings include a preliminary analysis of the dire impact that cutbacks in capital spending and services would have on the economy of the MTA region without an infusion of $12 billion in new federal aid. Overall, the report demonstrates that the cutbacks in MTA services now being considered, by eroding the region’s competitiveness as a location for high-value businesses and a home for highly skilled workers, would seriously impair the region’s ability to recover from the disruptions caused by the pandemic, resulting in the loss of as many as 450,000 jobs in the MTA region by 2022, up to $50 billion in lost earnings, and a reduction of up to $65 billion in the region’s gross domestic product.     

Additional findings include:

--Major cutbacks in transit service will also have particularly serious consequences for low-income and minority communities and workers – people who have already been hit hard by the twin blow of infectious disease and economic dislocation. Low-income workers rely heavily on public transit.

--Closing the projected gap in the MTA’s operating budget for 2021 could require a reduction of the agency’s workforce by 8,000 positions, directly and indirectly resulting in a loss of 13,380 jobs, with more than $1.4 billion in earnings, in the MTA region. 

--A reduction in capital spending by $4.8 billion below the level previously planned for 2021 would directly and indirectly result in a loss of 23,264 jobs, with nearly $2.0 billion in earnings, in the region. Reductions in capital spend beyond the $4.8 billion planned for 2021 would directly and indirectly result in even greater job losses. 

--Reductions in the frequency of subway, bus and commuter rail service, increased crowding and other factors would result in longer travel times, collectively costing commuters and other riders more than $1.7 billion in lost time each year.  

--While the MTA should continue to explore opportunities to reduce its costs and find new sources of revenue, neither of these options can in the near term provide sufficient relief to avert severe reductions in MTA investments and services. Substantial federal financial assistance now appears to be the only feasible alternative.