Money Talk. Pissed at my Public Transit Authority
By: Jim Sestito
Tags: Financial Planning, Public Transportation, Budget, Rant

Money Talk. Pissed at my Public Transit Authority

There is a simple approach to getting a person's spending in order. Here goes:

Track spending. Religiously, more detail the better for longer the better. Categorize. Again more detail the better. Analyze. Make a list of your biggest spenders.

For most people it will go

a. housing

b. transportation (auto)

c. Food

d. other e. other f. other

4. CUT YOUR BIGGEST EXPENSES.

Likely your top three expenses make up anywhere from 50 to 80 percent of your total spending. That’s right. Three things — up to 80 percent.

Why would anyone put energy anywhere else but those three items. You can cut your clothing spending 50%. Great. If it was $4,000 a year now it’s $2,000 good job.

Or. Cut your auto expense by just 30%. Say you have a two car family and spend $9,000 total for each car or $18,000 annually. Say you swap one new car for a used car — save that 30% or $5,400 annually. Keep the clothes.

Say you cut your housing by 25%. At 40K annually on housing a 25% cut would be $10,000. That sounds a lot better than cutting the $1,000 you spend on ‘drinks with friends.’.

Start at your most expensive category for the best return on your time and effort.

Photo by Arthur Lambillotte on Unsplash

My public transit authority doesn’t get this and I’m pissed.

Every city has been crushed in it’s own way by COVID-19. Here in Boston we were no exception. We have reached a peak unemployment nearing 20%. A specific town such as Lawrence, MA reached as high as 30%.

With 20% of the workforce not working and more people working from home ridership on our transit system (the T) has dropped dramatically. Since riders are paying customers this means that revenue has dropped dramatically for the T.

The T’s solution to make up revenue: cut services. Simply to run less trains and buses.

The problem. Service isn’t their biggest expense and it’s not even close. Service expenses are in the mid 100 millions annually.

The biggest? Payroll. If you add regular wages, overtime, payroll taxes, health insurance, and pension it comes out to 831 million dollars annually.

Now I’m all for people having jobs but I’m all for people having jobs.

Cutting service is cutting the main commuting options for thousands of essentials workers in our city and state. We’re talking health care pros, grocery store workers, sanitation professionals, construction, and more. You know all the people we count on to help us live our comfortable lives in some sort of normalcy.

Public transit is an essential function of any city. Without our transit system we will be overwhelmed with automobiles when unemployment reaches normal levels. Pollution and traffic related fatalities will rise as our streets become home to even more 5,000 pound steel death machines.

Transit allows those who live assessable to such to live a live without the financial burden of a car. The second highest expense for most Americans. Being able to forgo a $400–1000 commute for an $80 a month commute is an incredible wealth equalizer.

Once again those in the inner city and such demographic are hit the hardest by an event that happened by no fault of their own. The service cuts will hit minority communities the hardest while white collar workers will earn full salaries to a tune of almost a billion dollars combined.

To have a financial meltdown and take it out on your customers.

Imagine for a minute Spotify was to have a similar revenue issue as the T. Imagine they limited you to only Bruce Springsteen songs until further notice do to revenue decreases involved with COVID. But they will keep all staff and the CEO would retain his full salary.

No.

Just this year companies such as Airbnb have laid off over 25% of their workers. They hope this is temporary and fully expect to be at full employment staff when the pandemic is over. But Airbnb didn’t limit it’s customers to only renting studio lofts on the Jersey Shore.

All day at the shore in the winter — Photo by Ilya Ilford on Unsplash

A public transit company with 831 million in salary and the best idea to weather this financial storm was to cut the public transit?

A company should be financially ready for an emergency.

The irony here is the T was making the news for all the wrong reasons in 2019 as well. They had three different train derailments and people were starting to despise the state of the equipment. Musty stations, unknown bus stop locations, shotty on time performance.

Shortly after this uproar it was made clear the T was not spending for capital expenses before they become crisis. Rather continuing to inflate their salaries and make poor investment choices with their pension fund. In the midst of a 10 year bull market it is inexcusable for a companies pension fund and investments to have lost money in that time. The T pulled this off.

And now it shows. We have subpar service but people still need to get to places. They have no other options. So they follow the schedule and get to their train or bus. But what now if that train or bus isn’t there? What if no one loses their job with a company who is performing poorly? What if riders don’t come back? If you build it they will come. But if you don’t run your trains, they won’t.

The anger in my writing should be clear. I love public transportation. It’s such a simple solutions to many of our worlds issues as well as individual issues. I’ve seen people meet on the T that would become married. People network and become promosted. People increase their net worth due to the cost savings. Elders able to travel freely again without being burdened by a car. It works for ages 8 to 80.

Beside my current disappointment there is a message for a business person or someone looking to improve their finances it’s this.

Start with your biggest expenses when cutting costs.

Always have an emergency fund set aside for such times.

For goodness sake run the trains, all the time.