|Although mass transit users are the most likely to participate in a consumer benefits program, 18% of participants in the survey had been solo drivers. Click to enlarge.|
Eighteen percent of employees signing up for tax-free commuter benefits switches from driving a car to commuting by mass transit to get to work, according to a study conducted by BusinessWeek Research Services (BWRS) and commissioned by TransitCenter, Inc., a nonprofit organization that develops tax-free transit benefits as a means to promote mass transit use.
Since 1993, employers have been able to offer employees a tax-free benefit for commuting by mass transit and eligible vanpools or to pay for commuter parking primarily at transit or ridesharing locations under IRS tax code section 132(f). Tax-free commuter benefits can be structured as an employee-funded tax-free payroll deduction; as an employer-funded benefit; or the costs can be shared by employer and employee.
The benefit can be delivered in the form of transit provider-specific passes, universally accepted vouchers and terminal–restricted debit cards, or through a reimbursement model under specific conditions defined by the IRS. Current IRS limits allow for participants to set aside up to $115 a month tax-free to pay for transit and vanpool commuting costs, and up to $220 for commuter parking.
The study also found that 53% of employees whose companies don’t currently offer tax-free commuter benefits would participate in a program if it was offered.
Switching from driving to riding mass transit reduces CO2 emissions by 20 pounds per person per day—or more than 4,800 pounds per year—according to the American Public Transportation Association (APTA).
While commuter benefits have often been seen as a ‘nice to have’ for encouraging mass transit, we increasingly see it as a ‘necessary to have’ if we want to see an immediate and long-lasting impact on CO2 levels. If every company offered commuter benefits, the positive impact on CO2 levels would be a major contribution by corporate America in the effort to preserve the environment and in supporting the needs of commuters.—Larry Filler, president and CEO of TransitCenter
Among the study’s findings:
92% of respondents were concerned about the high cost of fuel; 80% were concerned about the cost of commuting to work.
92% had some degree of concern about the impact of global warming on the environment.
About 50% said their commute was getting worse.
47% are looking for subsidized commuter benefits from their companies.
40% report that their employers offer tax-free commuter benefits programs;
Among those who reported working at a company offering commuter benefits, 62% say they participate in the program.
Mass transit respondents are the most likely to participate in a tax-free commuter benefits program. 72% of participants were already taking mass transit when they decided to enroll in a commuter benefits program; 18% were solo drivers; and 10% used other means.
Among employees who signed up for commuter benefits, 41% increased their use of mass transit, and 46% increased their mass transit usage during weekends.
The study covered 1,048 respondents in Chicago, New York and San Francisco in October 2007. These cities were chosen due to their geographically dispersed markets and high concentration of commuters as identified by the US Census’ 2005 American Community Survey. Qualified respondents either resided within the city limits or within an 80-90 mile radius of one of these cities. The survey has a 95% confidence level with a margin of error of +/- 3 percent.