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New Report: Corporations Profit at Riders’ Expense Under Baker/Polito’s MBTA

For immediate release (Wednesday, December 15, 2021)

For more information, contact admin@publictransitpublicgood.org 

New Report: Corporations Profit at Riders’ Expense Under Baker/Polito’s MBTA 

John Laing and Cubic rake in an estimated $288 million in profits and overhead costs through MBTA’s fare collection privatization scheme, acc. to the report

Transit advocates renew calls for low-income fare and urge voters to pass the Fair Share Amendment in the 2022 election

Massachusetts — Two billionaire corporations are set to make an estimated $288 million in profits and overhead costs through the MBTA’s privatized fare collection system, while low-income riders bear the lopsided burden of MBTA fares, a new report reveals.   

According to the report, Un-Fare Deal, by the Public Transit Public Good coalition, less than half of the $935.4 million fare collection privatization contract with Cubic and the John Laing Group will go directly toward construction and operation. The controversial contract, which was renegotiated last year at a 30% cost increase, is estimated to include as much as $372 million in unnecessary costs, corporate overhead and profit.

In addition, riders will see costs rise, as Fare Transformation plans include a new charge of up to $5 for every CharlieCard

“This report is the epitome of the Baker/Polito administration’s corporate-driven policies,” said Mike Vartabedian, Assistant Directing Business Representative, International Association of Machinists and Aerospace Workers (IAM), District 15. “Governor Baker and Lt. Gov. Polito vetoed low-income fare legislation passed on Beacon Hill but on the other hand have put in effect this privatized fare collection contract that is only hurting riders and our communities.”

The report calls attention to the burden on people with low incomes, who struggle to make ends meet, in the face of decades of escalating fares. Low-income riders made up more than half of MBTA riders at the height of the pandemic, dropping down to about 40% by February 2021, still higher than pre-pandemic figures. According to the analysis of the report, fares have risen faster than inflation, with cash fares nearly tripling since 1999. Public transit is less expensive on a household level than owning an automobile or using the taxi or app-based ride services, so for many low-income people, the MBTA is the best or only option. But MBTA fare increases hit low-income riders hard. 

In a 2015 report, Roxbury residents have the highest percentage of residents living below the poverty level in Boston (36.2%) and are disproportionately diagnosed and hospitalized with preventable diseases,” said Emmanuel De Barros, Alternatives for Community and Environment. “Instead of helping our communities by lowering the price of this critical service, the Baker administration has been inventing new ways to take money out of our wallets and put it in the wallets of CEOs. Our families rely heavily on the MBTA, and a reduced fare for low-income families would let us put that money towards housing, food, child care, etc.”

MBTA fares cost more, as a portion of the household budget, for low-income people. The report analyzes that for a rider in the lowest fifth of earners in Massachusetts, a year of monthly MBTA passes costs the equivalent of 2.5 weeks’ income (or more), but for a rider in the highest fifth, it costs just over two days’ worth of income. 

“The inequality is startling. Our public transit system is not accessible or equitable,” said Karen Chen, Chinese Progressive Association. “Those who need it the most are paying more than their fair share, while billionaire corporations are padding their pockets.”

The MBTA’s much-delayed and controversial privatization contract with corporations Cubic and the John Laing Group for a new, automated fare collection system is a prime example of corporate profiteering off our public transit system. According to the report, MBTA’s Fare Transformation is a “transformation for the worse” for workers and riders, raising the risk of racist fare enforcement practices and creating new barriers to mobility for low-income people, underbanked people, and people traveling at night, as well as some seniors and people with disabilities.

“The Fare Transformation contract takes money away from riders and gives it to Cubic and John Laing,” said Sam Montaño, Director of Organizing at GreenRoots. “These corporations are looking out for their investors first, not riders.”

Cubic fare payment systems have a long track record of overcharging riders and other problems. In late 2019 and early 2020, New York City Metropolitan Transit Authority (MTA) riders reported being double charged when entering the subway using OMNY on their mobile devices. In Chicago, multiple class-action lawsuits were brought against Cubic with claims that riders were not properly credited funds on their fare cards, were double charged, or were charged fees for “phantom rides.”

“Under Governor Baker, the MBTA has said it can’t afford a low-income fare, but it can afford to enrich big corporations,” said Montaño. “We need a fare policy that helps uplift working families across the state. We are urging our legislators to pass H.3526 to create a low-income fare program at the MBTA and one that will open a path to similar programs at the Commonwealth’s Regional Transit Authorities. Public transit should be fully funded by the wealthy corporations and people who can afford it most, not low-income riders like those we serve in Chelsea and East Boston. We need new progressive sources of revenue like the Fair Share Amendment we’ll be voting on next November. H.3526 may be the only way for our communities to keep using our public transit system.” 

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About Public Transit Public Good Coalition: 

Public Transit Public Good is a partnership of transit workers and riders throughout Massachusetts fighting for the future of public transit. Community Labor United convenes PTPG. Visit publictransitpublicgood.org to learn more.

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