Paid not to park at work driving mobility change

Free parking at the office is a popular work perk, but is it fair?

That’s what Bloomberg asks, adding that “parking cash out” policies give commuters flexibility to choose between free parking or another benefit of equal value, including using e-mobility to get to and from work.

“Commuters can continue to drive and park free, or they can take the cash value of the parking subsidy and use it for anything they want, such as putting it toward the rent of an apartment within walking or biking distance of work,” says Bloomberg, which bases its report on US tax rules.

“Cities, states and the federal government are trying to reduce traffic congestion, air pollution and carbon emissions, but a Catch-22 in the federal tax code works against these goals,” it adds.

“The income tax exemption for employer-paid parking subsidises solo driving to work, which helps explain why 81% of American commuters drive to work alone.”

It says this creates three big problems.

“First, free parking at work increases the number of cars driven to work by about a third, mostly at peak hours.

“Second, higher-income commuters are more likely to get tax-exempt parking subsidies. The tax exemption is also worth nothing to the 44% of American households who pay no income tax because of their low incomes.

“Third, free parking doesn’t help transit riders, who are disproportionately communities of colour. In Los Angeles, for example, 92% of Metro riders are people of colour.”

Bloomberg says repealing the tax exemption for a popular fringe benefit is unlikely but more action is expected.

“In a bid to reduce driving and increase fairness, the District of Columbia enacted its Transportation Benefits Equity Amendment in 2020. If an employer with 20 or more employees subsidises parking at work, the law requires the employer to offer an equal benefit to employees who do not drive.”

California enacted a similar cash-out law in 1992.

The California Air Resources Board examined the law’s effects in a travel study of 1694 commuters at eight firms in Southern California.

The 1997 study found that after employers offered the cash option, solo driving to work fell 17%, carpooling increased 64%, transit ridership increased 50%, and walking or biking increased 39%, Bloomberg says.

“These changes reduced vehicle travel to work by 12% — equivalent to removing from the road one of every eight cars driven to work.

“Employers reported that parking cash out was cheap, easy to manage and fair. It also helped them to recruit and retain workers.”

Bloomberg says compliance with the cash-out law costs employers little because the laws in both California and the District of Columbia apply only to parking spaces an employer rents from a third party.

“If commuters can choose between free parking or its cash value, all those who take the cash and stop driving will be better off (or they wouldn’t choose the cash). Even the remaining solo drivers will be better off because parking cash out reduces traffic congestion.”