Special Report: Parking

By the Numbers: Impacts of Paid Parking at Work on Commuter Modal Share

Despite the obvious moans and groans, paid parking at work has the potential to play a significant role in reshaping our transportation mode share in Hamilton.

By Matt Pinder
Published July 08, 2015

Free parking at work is one of those things that you don't really appreciate until it's gone. Employers charging for parking is controversial, to say the least. Many people believe that employers should be removing commuting barriers rather than creating new ones.

From a transportation demand management perspective, however, paid parking can be a highly effective tool for encouraging alternative forms of transportation.

Travel is really about choice, and when presented with choices, people will choose the one that's best for them. When one of those choices is disincentivized (i.e. charging for parking at work), the other available options become more favourable.

How effective is this strategy? I decided to use the 2011 Transportation Tomorrow Survey (TTS) to find out. The 2011 TTS surveyed residents in the Greater Golden Horseshoe in the fall of 2011 and 2012 on their travel habits.

Over 160,000 interviews were completed in the 2011 TTS, making it one of the largest travel surveys ever undertaken anywhere. Using statistical analysis, the data is then expanded to provide a high-accuracy representation of people's travel habits, on the region, city, and even municipal ward level.

My first sample looked at the City of Hamilton as a whole. The graph below show the modal split of trips from home to work for commuters living in Hamilton who are offered free parking by their employers.

Chart: Hamilton commuter mode split with free parking at work
Chart: Hamilton commuter mode split with free parking at work

The result is pretty typical to the Canadian average with 91 percent of modal share going to automobile travel and the remaining 9 percent split between transit, walking and cycling.

Here's what the split looks like for Hamilton commuters who have no free parking at work:

Chart: Hamilton commuter mode split with no free parking at work
Chart: Hamilton commuter mode split with no free parking at work

The difference is startling. Hamiltonians who don't have free parking at work are 3 times more likely to walk, 4 times more likely to take the bus, 2 times more likely to bicycle, and 1.5 times more likely to carpool to work!

Modal Share for Hamiltonians With and Without Free parking at Work (2011 TTS Survey)
Mode Free Parking Paid Parking Difference
Auto driver 82% 52% -30%
Transit 8% 12% 4%
Auto passenger 5% 24% 19%
Walk 3% 9% 7%
Cycle 1% 2% 2%
Other 1% 0% 0%
Total Commuters (Expanded) 232,061 54,370

But there are many factors at play influencing people's modal decisions. In many cases, there really aren't any realistic alternatives to driving to work, especially for rural Hamiltonians.

So to make a more level playing field for analysis, I decided to narrow my scope to specifically Ward 2 in Hamilton. Ward 2 is one of Hamilton's most urban wards, with quality transit access and better suited for active commute modes.

First, the split for commuters with free parking:

Chart: Hamilton Ward 2 commuter split with free parking at work
Chart: Hamilton Ward 2 commuter split with free parking at work

The results again are quite consistent with the national average. The high level of transit service in Ward 1 is reflected in a 14 percent transit modal share, but automobile travel still occupies 78 percent of the pie.

But when you analyze the split of commuters who aren't offered free parking, things get really interesting:

Chart: Hamilton Ward 2 commuter split with no free parking at work
Chart: Hamilton Ward 2 commuter split with no free parking at work

Boom! Hamiltonians who live in Ward 2 and are not offered free parking at work are 2.5 times less likely to commute using an automobile, twice as likely to take transit or cycle, and a whopping 7 times more likely to walk to work!

Modal Share for Ward 2 Residents With and Without Free parking at Work (2011 TTS Survey)
Mode Free Parking Paid Parking Change
Auto driver 67% 22% -46%
Transit 15% 27% 12%
Auto passenger 9% 10% 1%
Walk 4% 36% 32%
Cycle 2% 4% 1%
Other 1% 1% -1%
Total Commuters (Expanded) 12,216 6,316

The conclusion is clear: when all other variables are kept constant and the cost of driving increases, the usage of alternative modes increases drastically, especially in environments that offer a diverse range of transportation choices.

While there is no silver bullet to solving the congestion crisis our region is currently facing, increasing the cost of driving is an important tool available to cities. Taxes, tolls, and parking charges, though unappealing, need to be taken seriously as strategies to reduce automobile demand.

While our cities also need thoughtful planning for alternative modes of transportation by providing frequent transit, bike lanes, and walkable communities, without increasing the user cost of driving, many of the positive outcomes of these measures are lost.

This article was first published on Matt Pinder's website.

Matt Pinder is a cyclist, driver, transit user, and proud graduate from McMaster University. Currently working as a transportation researcher, he is passionate about the future of mobility.

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By Dylan (registered) | Posted July 08, 2015 at 07:39:30

It's ridiculous that in most instances taking public transit to work is as expensive as driving a single occupancy automobile.

For me to commute to Toronto via Go and TTC costs me about $6,000 annually, which is comparable to what a car would cost me. My incentive for taking transit is the preservation of my own sanity, not having to drive in to Toronto. But where is my financial reward for using a mode of transport that is less demanding on infrastructure, reduces congestion, is better for the environment, and gives money back to public corporations rather than international vampires in big oil and insurance?

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By Ballszac (anonymous) | Posted July 09, 2015 at 10:20:51 in reply to Comment 112652

I second that. I make the same commute. GO transit is not 'public transit' but transit for the rich. Taking the train everyday is certainly making me poor. We really need to lower and integrate the fares better for me, and those in the same boat, to choose transit over driving!

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By highasageorgiapine (registered) | Posted July 08, 2015 at 09:14:20

as alluded to, our poor active commuting infrastructure makes it difficult, if not impossible, for many people to use non-auto commuting. by focusing in on paid benefits you are simply saving corporations and businesses money at the expense of individuals while doing nothing to actually support the growth of the infrastructure that would make it more palatable for people to leave their cars behind.

targeted taxes and tolls should really be a starting point for discussion, as this would generate revenue that could be directly used for infrastructure rather than just strong arm people into using our awful services while companies can pat themselves on the back for helping their bottom line in the name of the "environment."

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By kevlahan (registered) | Posted July 08, 2015 at 09:38:30 in reply to Comment 112657

But this article specifically addresses that point by comparing car commuting percentages for people who have and don't have free parking at work.

If it were in fact "impossible" (or even very difficult) to get to work except by car one would expect very little difference, whereas simply having to pay (probably not much) for parking encourages a lot of people to look for alternatives.

Remember that monthly parking rates would likely to be at least a bit higher than the $87 HSR pass rate to encourage most people to take the bus instead of drive. I doubt that many employers charge anywhere near that rate (and even private downtown parking is significantly cheaper). I really don't understand how the City can claim parking is in short supply when it is cheaper than a bus pass!

Another way of levelling the playing field would be for employers to offer a choice of free transit passes or free parking. In France employers with more than 9 employees pay a tax between 0.6% and 1.8% (depending on population and level of transit service)... on total salaries to cover transit. The idea is that these businesses rely on transit to get their employees to work. In return, they get half price transit passes for each employee.

Comment edited by kevlahan on 2015-07-08 09:43:52

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By highasageorgiapine (registered) | Posted July 08, 2015 at 10:04:16 in reply to Comment 112660

certain employers have also offered to pay double mileage for those who bike for work, which would be a strong motivator. given some recent studies in health behaviour show that monetary incentives (directly paying a person for behaviour change) have a greater success rate than other incentives, it would be a worthwhile idea to consider for employers who have health insurance for their employees.

i was never able to claim mileage at all for my employer when biking, amounting to probably hundreds of dollars in a few months.

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By tedhorton (registered) - website | Posted July 08, 2015 at 09:24:35

Do you have the same numbers/graphics for more suburban wards? It would be interesting to see if there is a similar, if smaller, impact despite the cries of being unable to charge for parking if transit isn't perfect.

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By Matt Pinder (anonymous) | Posted July 09, 2015 at 22:20:45 in reply to Comment 112658

Hey tedhorton, thanks for the comment. I ran the numbers for Ward 13 Dundas to get an answer to your question. I can't post graphs in the comments, but here's the data:

FREE PARKING AT WORK
Auto Driver - 92%
Auto Passenger - 4%
Walk - 2%
Transit - 1%
Cycle - 0%

NO FREE PARKING AT WORK
Auto Driver - 65%
Auto Passenger - 10%
Walk - 3%
Transit - 18%
Cycle - 3%

The numbers say it all. Even in more rural settings, people still have choices, and when driving becomes less attractive, people are more likely to exercise other options! Looks like in Dundas, transit and carpooling are the most popular alternatives. This makes sense since the more spread-out environment would be less supportive of walking and cycling.

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By tedhorton (registered) - website | Posted July 10, 2015 at 11:21:11 in reply to Comment 112712

Very interesting stuff! Do you know if the data is openly available to take a look at? I'd be quite interested in seeing if similar trends hold true in other areas of the GTA - I know quite well that paying for parking disincentivizes it, but making the argument to push for more paid parking always gets people asking for local examples and local data, as if principles and comparable cases aren't enough. I live and work in a municipality in York Region, and it would be great to be able to make a similar report about our area.

Comment edited by tedhorton on 2015-07-10 11:22:13

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By Matt Pinder (anonymous) | Posted July 10, 2015 at 13:01:19 in reply to Comment 112719

I believe the information is available for personal use. You need to contact the University of Toronto Data Management group for access. They'll give you a username and you'll be good to go!

I totally agree - having data like this is very valuable when trying to enact or justify policy.

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By Pxtl (registered) - website | Posted July 08, 2015 at 10:48:58

A frustration with parking lots is that the bulk discount is counter to the behavior that wants to be encouraged. The Monthly pass means that, if an employee wants to take a bus or a SoBi bike one day, they may actually be wasting money because they've already got the spot paid for the day. Also, the gap between the hourly and the daily rate means consumers downtown are discouraged because if you've got 2 or more driving destinations, you could wind up paying more than a full daily rate for only a couple of hours of parking.

This hits me directly: I commute by bike on days when I'm not picking up my kids from camp. I pay daily parking when I drive. Now, my lot has a smaller gap between the daily and monthly rate - if I drive more than 14 days in a month, I should have purchased a pass.

If you think about it, the ratio of "monthly vs. daily" is a good metric. With about 20 workdays in a month, a zero-subsidy on monthly passes would be 1:20. Most city lots have a ratio of 1:10 or 1:12. The private lot I park at is actually better than the city lots with a ratio of 1:14.

It's ridiculous when private parking-lot companies are actually better than the city lots about this.

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By kevlahan (registered) | Posted July 08, 2015 at 10:56:37 in reply to Comment 112662

That's the way most transit passes work: you essentially just get the weekends and evenings free and you need to do a round trip commute every working day to break even.

For example, for the HSR:

monthly pass: $87

daily rate for two trips using presto: $4

break even: 21.75 days (which is almost exactly the number of working days per month: 4.3333 weeks per month X 5 days per week = 21.67)

There is really no discount on the monthly pass for people who only commute by bus and don't use it for other trips.

Why is parking priced so differently? Daily parking rates should be cheaper relative to monthly rates (or, equivalently, monthly rates should be higher). Obviously lots that have only monthly or only daily parking are a different matter since daily lots also want to keep turnover high.

Comment edited by kevlahan on 2015-07-08 11:02:08

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By KevinLove (registered) | Posted July 08, 2015 at 12:48:23

I highly recommend Donald Shoup's book "The High Cost of Free Parking." This is an expansion of this groundbreaking paper.

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By KevinLove (registered) | Posted July 08, 2015 at 12:52:27

As a professional Accountant, I will note that for an employer to provide "free" car parking is a taxable benefit. Or at least is was when I did personal taxes many years ago. I'll have to do a bit of research and see if this is still true.

For those employees who use this car parking, this benefit should be added to their T4 and they should be paying income tax on it.

Unfortunately, CRA is not enforcing the law against car drivers... And has not for many years... sigh...

Failure to collect taxes owed means, of course, that the rest of us have to pay more to make up for the loss.

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By highasageorgiapine (registered) | Posted July 08, 2015 at 14:00:39 in reply to Comment 112666

it is a taxable benefit still.

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By kevlahan (registered) | Posted July 08, 2015 at 14:11:13 in reply to Comment 112669

But I'm pretty sure almost no employers (e.g. the school board) actually calculates the value of free parking for employees and declares it as a taxable benefit on their T4s.

Indeed, one of the reasons the school board wanted to rebuild on the mountain was to have hundreds of free parking spots for employees (and the cost of "off site parking" was one factor in their decision spreadsheet)! As far as I know, no public schools in Hamilton charge staff for parking.

The only case I can imagine where free parking appears as a taxable benefit is where some employees (or customers) have to pay for parking in the same area.

Comment edited by kevlahan on 2015-07-08 14:13:35

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By jorvay (registered) | Posted July 08, 2015 at 15:24:34 in reply to Comment 112670

Well if that isn't just the most infuriating thing I've read all day.

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By KevinLove (registered) | Posted July 08, 2015 at 21:58:59

I just checked with the Government of Canada website at:

http://www.cra-arc.gc.ca/E/pub/tg/t4130/...

An excerpt from page 27.

Employer-provided parking is usually a taxable benefit for an employee, whether or not the employer owns the lot. The amount of the benefit is based on the fair market value of the parking, minus any payment the employee makes to use the space.

So yes, school board employees should be paying income tax and CPP and EI contributions on their taxable benefit of employer supplied car parking.

Perhaps we should make complaints about this. Every dollar of tax that these car drivers are not paying has to be made up for by the rest of us.

And, as has been demonstrated by the article, even the pittance that car drivers have to pay for car parking in Hamilton has the effect of deterring car driving to work. Perhaps having car parking added as a taxable benefit to their T4 will have a similar effect of discouraging car driving.

Comment edited by KevinLove on 2015-07-08 22:03:27

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By highasageorgiapine (registered) | Posted July 09, 2015 at 09:31:48

i would imagine that these public workplaces do calculate this. i'm a public servant and had this done in a "free" lot, despite very rarely driving for work. it's not really fair to assume they don't.

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By arienc (registered) | Posted July 10, 2015 at 18:18:46 in reply to Comment 112682

Burlington didn't until one of the council members pointed it out.

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By kevlahan (registered) | Posted July 09, 2015 at 11:25:12 in reply to Comment 112682

That's interesting. How much was declared on your T4 for free parking as a taxable benefit? I'd be interested to know the amount.

I'd be interested to hear from a teacher whether they declare free parking as a taxable benefit ... or anyone else who has free parking at work. There must be quite a few RTH readers in this situation.

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By Fair market value (anonymous) | Posted July 09, 2015 at 14:52:19

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By AnjoMan (registered) | Posted July 13, 2015 at 09:50:34 in reply to Comment 112697

Lol this is objectively false because a) much of downtown parking is literally priced and b) even 'free' parking such as private driveways incur a cost because we have to build roads, sewer, water and electrical infrastructure around those spaces. It might be free to the user, but we are paying for it in dollars and cents.

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By Not Anjo (anonymous) | Posted July 13, 2015 at 13:32:36

So you declare washroom breaks and waterfountain drinks as taxable benefits?

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By Dylan (registered) | Posted July 13, 2015 at 17:34:12 in reply to Comment 112746

Well no, because they're a worker right not a perk and it would be impossible to put a monetary value on it.

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By By Law (anonymous) | Posted July 13, 2015 at 17:51:28 in reply to Comment 112748

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By Dylan (registered) | Posted July 13, 2015 at 18:24:44 in reply to Comment 112749

Yes, and no. An employer must provide a washroom and drinkable water in the workplace, and for an employer to restrict access to those to fixed unpaid times, would be opening up the door to other violations I would think.

Regardless, it's certainly not analogous to providing free parking, which is most certainly not a right of workers.

Comment edited by Dylan on 2015-07-13 18:33:39

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By Law (anonymous) | Posted July 17, 2015 at 09:01:51 in reply to Comment 112751

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By Inputs (anonymous) | Posted July 13, 2015 at 21:07:36 in reply to Comment 112751

In the absence of the taxation argument, everything that an employer pays for it a cost of doing business, is an input, and ultimately is accounted for in the final price of a product. Slicing off parking as opposed to safety equipment or toilets of heat or raw material is essentially a subjective determination.

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By Rights (anonymous) | Posted July 13, 2015 at 21:03:07 in reply to Comment 112751

A right is essentially an enforceable agreement. A thing becomes a right when people agree it should be a right. My guess is as between them workers feel that the employers owe them the right to park at their place of employment. Stelco had huge lots. Every rural employer not serviced by public transit has a parking lot. My guess is that in their contractual relations, the issue of the right to park never even came up because it was a tacit agreement between the parties that people could park for free. Revenue Canada poking about to raise revenue so public employees can have better pensions means little.

There are many tings provided through employment that Revenue Canada does not deem taxable even though they could argue they should be. Just because the Ontario labour code requires the provision of the benefit does not mean that Revenue Canada is bound not to tax the benefit.

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By Arguably (anonymous) | Posted July 13, 2015 at 21:13:03 in reply to Comment 112755

Workers should be able to right off their cars as a cost of doing business.

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By Ted Mitchell (registered) | Posted July 13, 2015 at 19:09:55

The only part of car operation that reflects marginal costs fairly is fuel. For everything else, depreciation, insurance, maintenance, parking, you pay mostly up front. So, if we want to decrease car use, move as many of the fixed costs to use costs. Insurance could be moved entirely to gas tax for baseline coverage. And hidden parking costs such as you find in municipal tax also need to be rolled into gas tax.

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By Cobalt (anonymous) | Posted July 17, 2015 at 00:08:38

Does this study consider the nature of the job. I would imagine that the employers who can provide incentives like free staff parking may be a certain tier of employer. If Ward 2 is prodominantly service workers making $12/hour is owning a car even an option - does Tim Horton even allow employees to park onsite at work? the choice to walk or take transit may not be solely because parking isn't offered - it may be the only viable option for a number of reasons.

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By silly (anonymous) | Posted July 17, 2015 at 09:07:05

you are maniac behind the wheel and have had several accidents and a handfull of tickets. You think your insurance costs should be the same as mine? with no accidents in 25 years and no tickets in 22? That is why every owner has their own insurance at their own rates.

Your 2 year old Malibu depreciates at a much different rate then my 15 year old Honda. We all make choices that directly affect our driving costs.

Make better choices.

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