/ 15 November 2015

Commuting costs the poor dearly

Times are changing and commuters will ultimately decide how they want to travel.
Times are changing and commuters will ultimately decide how they want to travel.

A substantial number of South Africans live far from their workplaces, which means travel to work is costly in terms of time and money.

This is partly a result of the apartheid and pre-apartheid policies that separated racial groups, mainly by moving black, coloured and Indian households away from areas close to central business districts.

High costs of commuting may contribute to high rates of poverty, lower productivity and less time spent with the family.

In this article, I investigate how much money and time workers spend getting to and from work, and how this has changed between 1993 and 2013. I also estimate the effective reduction in hourly wages as a result of the time and monetary costs imposed on workers. Finally, I explore the extent to which the direct public-transport subsidy provided by the government is targeted at low-income workers.

I have used data from three nationally representative surveys to analyse changes in commuting patterns and commuting costs between 1993 and 2013. The surveys are the 1993 Project for Statistics on Living Standards and Development conducted by the Southern Africa Labour Research and Development Unit and the 2003 and 2013 National Travel Surveys (NTS) conducted by Statistics South Africa.

Commuting times

According to data from the 2003 NTS, black South Africans spent an average of 88 minutes a day travelling to and from work. This was just less than double the average commute time in the United States in 2002, a country that is known for its long commuting times and poor public transport.

On average, in 2003, white South Africans spent 54 minutes a day commuting (NTS 2003). This was 34 minutes a day less than the average for black South Africans, but the average for white people was still higher than the average in the US and all 23 European Union countries listed in a 2008 article by Stutzer & Frey.

Ten years later, the 2013 NTS suggested that the average travelling times had increased by another 14 minutes for both black and white South Africans. These lead to much wasted time, lower productivity and higher frustration levels.

Graphic: The costs of commuting

Modes of transport
Table 1 shows that driving and using minibus taxis were the two most important forms of commuting in 2013. Together, these accounted for just less than 50% of commuting. If car passengers are included, this amounts to around 57%.

Walking, although important, has become a less common way of getting to work – 20% of people walked in 2013 compared with 28% in 1993.

The data from Table 1 also suggests that directly state-subsidised public transport (train and bus) was used by less than 9% of the working population to get to work in 2013 (down from about 12% in 1993).

It should be kept in mind that the government also spends a lot of money on the road network, which presumably benefits all motor vehicle commuters.

Table 2 shows the time spent commuting according to the mode of transport (one way).

People who use public transport generally spend much longer commuting than those who drive cars. Minibus taxi users also spend more time in transit than those in cars, but considerably less than those using buses or trains.

The table also shows that commuting times generally increased for all modes of transport between 1993 and 2013.

Financial cost
Commuting costs money and time. Data from the 2013 NTS show that people who drive, use taxis or several modes of transport (a combination of bus, train and taxi) spend on average more than 15% of their gross income getting to and from work.

Time and the monetary costs of transport can be thought of as a kind of tax that people pay on the incomes they earn from work. This “tax” varies between modes of transport (and levels of income). High costs of commuting (in terms of time and money) can thus lower the returns to work and may decrease the number of people who are willing to work, or look for work.

As an example, consider a full-time worker with a monthly income of R3?000 (not far from the median earnings in South Africa), which amounts to an hourly wage of about R17. First, if R300 is spent on transport a month (not an uncommon amount for someone taking a publicly subsidised bus), the net monthly income would be 10% lower (R2?700) and the hourly wage net of transport costs would amount to R15.70.

Second, if we added two hours spent commuting a day (a little more than the average in 2013) to an eight-hour work day, then the effective hourly wages would come down to R12.50.

This would equate to a 28% decline in hourly wages compared with the wages of an individual who paid no transport costs and spent no time commuting (for example, those who work from home or who work very near to home).

Using the NTS 2003, I computed these effective “tax” rates for the various forms of transport. The median reduction in effective hourly wages once transport costs are subtracted and hours spent commuting are added is 26% for minibuses, 29% for train users, 31% for bus users and 39% for those using several modes.

These median values mean that more than half of the workers using several modes of transport have their hourly wage reduced by 40% or more because of transport costs. Similarly, the reduction is 26% or higher for half of all minibus users.

The implicit “tax” effect of transport costs and times could be reduced by transport subsidies. Here I consider the effect of existing government subsidies on users of different modes of transport, comparing low-income and higher-income commuters.

The National Land Transport Transition Act of 2000 states that public transport subsidies should be targeted at “currently marginalised users and those who have poor access to social and economic activity”.

Given this goal, it is interesting to explore the extent to which spending on public transport is targeted at low-income individuals.

Public subsidies are distributed to private bus operators, the new Bus Rapid Transport systems in larger cities, the Passenger Rail Agency of South Africa (Prasa, the provider of intra-city train services), and to the Gautrain, which is largely targeted at middle-class users. Minibus taxi operations are not subsidised, but there is a taxi recapitalisation programme that pays an incentive when older, smaller taxis are scrapped, as well as a grant to buy newer taxis. Taxis and buses also benefit from spending on the road network.

Table 1 shows that minibus taxis carried about 71% of all commuters who travelled by bus, train or taxi in 2013. Despite this, Figure 1 from the department of transport indicates that the vast majority of spending on public transport goes to the bus and train network (these figures exclude spending on the road network, which also benefits buses and taxis).

Minibus taxis receive only about 1% of the total direct public transport spending by the government in the form of the scrap-and-replacement allowance for old taxis. In Figure 1, this can be seen in the thin black slice at the bottom of the diagram.

Given the goal of the state to subsidise public transport for marginalised users, it is of interest to explore the extent to which spending on public transport is targeted at low-income individuals.

Table 3 shows the distribution of modes of transport in terms of the quintile of earnings from employment in 2013. Row one shows that, for the workers in the lowest 20% of the income distribution (the first, poorest quintile), 45% walked to work in 2013, compared with 7% of those in the highest (richest) 20% of the income distribution.

Row two shows that driving to work is done mostly by the higher-income groups, whereas minibus taxi is the most common way in which those in the second and third quintiles (row six) commute.

From rows one and 10, it is clear that a majority of those in the lowest income quintile either walk to work or work at home. Only 7.3% (1.8% plus 5.5%) of those commuters in the lowest quintile use buses or trains that are likely to be subsidised by the state. In comparison, this value is 12.7% in quintile two, 11.4% in quintile three, 8.3% in quintile four and 4.3% in the top quintile.

This means the benefits of the government’s transport subsidies seem to benefit those in the lower middle of the income distribution (quintiles two and three) most.

The table shows that taxis transport a large number of commuters across all income groups, and not just the poor, although they certainly do transport a substantial number of low-income workers.

The time and monetary costs of commuting in South Africa are high, which means commuters face large effective taxes on commuting. Public transport users in particular have extremely large reductions in their effective hourly wages when commuting times are added to net monetary travel costs.

The direct government public transport subsidy is paid to bus operators and Prasa and not to minibus taxis, which carry the largest share of public transport users. Indeed, between 1993 and 2013, there has been a shift from walking, buses and trains to minibus taxis.

All commuters benefit from public spending on the road network.

Policies that improve public transport, encourage the densification of cities and towns, target subsidies for public transport and allow poor commuters to live closer to work could contribute to reducing the cost and times of commuting. That would increase the effective wages received by workers.

Andrew Kerr is a senior researcher for DataFirst at the University of Cape Town, and co-owner of taximap.co.za. This is an edited version of a story that first appeared on Econ3x3.org