Schaller Consulting

Home Press Publications Taxi Research

Free Parking, Congested Streets

The Skewed Economic Incentives to Drive in Manhattan


The role of free parking in encouraging driving into Manhattan has recently received attention with renewed focus on the economic costs of traffic congestion and with release of Census data showing that government workers are twice as likely to drive to work in the Manhattan Central Business District (CBD) as private sector workers.

This report shows that the role of free parking as a financial incentive to drive to the CBD goes beyond government workers. A survey of over 1,600 motorists in the Manhattan CBD shows that fewer than one-half of those parking in the CBD personally pay for parking. The majority of CBD parkers have employer-provided parking, are reimbursed by their employer or park at unmetered curbside spaces.

Key findings from the survey are:

  • 38% of motorists parking in the CBD parked in a garage or parking lot and personally paid the parking fee.
  • 5% parked on-street and paid the metered fee.
  • 38% had parking provided to them or were reimbursed the cost. This group includes private sector workers with employer-provided parking, government employees using parking permits, construction workers parking at job sites and self-employed persons for whom parking is a business expense.
  • 19% parked at unmetered on-street spaces.
Previous studies have shown that the cost and availability of parking is the biggest factor influencing potential motorists' choice between driving and taking public transportation. The results of this large survey of Manhattan drivers shows that free or reimbursed parking is an inducement for the majority of motorists who choose to drive to the CBD rather than use public transportation or other means of travel.

The study also shows that parking cost is not a factor for an even larger proportion of all motorists in the CBD. Of drivers who were surveyed as they approached river crossings leading out of the CBD, only one-quarter had paid to park in the CBD:

  • 39% were passing through the CBD without stopping or parking.
  • 4% had made stops in the CBD but not parked (includes picking up and dropping off of people and packages).
  • 33% had parked but either did not pay or were reimbursed the cost.
  • 25% parked and personally paid the cost (22% off-street and 3% on-street).
The report also found that:

  • 71% of motorists interviewed parked in a garage while 29% parked on the street.
  • Off-street parking cost 14 times more than on-street parking, $24.42 versus $1.73.
  • One-half of those parking in the CBD live in New York City.
  • At the time the interviewing was conducted (midday through the evening rush hour), over 80% of the through traffic originated in New York City.

Since the 1970s, off-street parking restrictions have been the City's primary policy tool to discourage people from driving into the Manhattan CBD. Partially as a result of these policies, Manhattan has the highest off-street parking costs in the United States. This study shows that this policy has failed to stem traffic into the Manhattan CBD because the large majority of people driving in the CBD do not pay for parking.

The central implication of this finding is that other economic incentives need to be implemented to discourage driving in the CBD. Incentives should include:

  • Restrict the availability and use of government-issued parking placards, used by many government workers to park for free.
  • Increase the price of on-street parking and expand the number of metered spaces, with the goal of creating a sufficient vacancy rate to sharply reduce the number of drivers searching for parking.
  • Encourage private companies to restrict the provision of employer-provided parking.
  • Provide incentives for employers to establish parking "cash-out" for any employees to whom they currently provide subsidized parking. In cash-out programs, employers who provide subsidized or free parking also offer to these employees, as an alternative, a payment equal to the cost to the employer for the parking space. Thus, an employer who pays $300 a month for certain employees' parking would offer the employees $300 in cash if they stop driving to work.

  • Institute congestion pricing in the Manhattan CBD. Pricing should be applied in a targeted fashion to discourage those motorists who by driving at the busiest times and places most contribute to traffic congestion.
Current economic incentives are skewed in favor of driving since motorists do not incur the cost of delay they create for others, nor, as this study finds, do most of them pay for the value of the real estate they park on. While avoiding these costs, they create real costs for the city's economy and quality of life. Fixing the economic incentives is thus simply a matter of requiring drivers to pay the costs of the space that they use.

This package would have a multitude of benefits for the city:

  • Less traffic from drivers searching for a free or inexpensive parking space.
  • Less traffic congestion from drivers double-parking because they cannot find a curbside space.
  • Faster and more reliable bus service.
  • Less noise, pollution and danger from traffic.
  • Reduced traffic delay.
The on-street parking fees and, most importantly, congestion pricing would also create a new source of revenue that could be used for improving the public streetscape and for public transportation improvements. Expanded and more reliable transit service will be vital in light of the increase in transit trips that will be generated by a rationalized set of economic incentives for drivers.

Home | Press | Publications | Taxi Research