New Jersey Transit’s Biggest Issue is Poor Management and a Lack of Innovation


New Jersey Transit’s Biggest Issue is Poor Management and a Lack of Innovation

Improving management oversight and using innovation to improve transit should be top priorities for agency

Secretary of Transportation, Anthony Foxx, recently threatened a federal takeover of New Jersey Transit. The Federal Transit Administration (FTA) rarely takes control of a local transit agency. To date FTA has taken over one agency only, the Washington Metropolitan Transportation Agency in DC, due to severe safety incidents such as trains catching on fire. The fact that FTA is considering taking over the agency, shows the agency has significant problems, namely management inefficiency and a lack of innovation.

But that’s not the way the New York Times sees it. According to the Times, New Jersey Transit, particularly the commuter rail system, was once a fantastic system. In fact the agency’s only problem is a lack of state funding from a cheapskate Governor sitting in Trenton. In the Times’ view, with a little more funding, the transit agency railroad would be a model for the nation. One example identified in the Times article was commuter rail service breakdowns. NJ Transit trains break down every 85,000 miles while the Long Island Rail Road and the Metro North Railroad break down every 200,000 miles, or about 40% as often.

New Jersey Transit does not have a funding problem at least compared with its peer agencies. Let’s take a detailed look at the numbers at NJ Transit, Metro North and Metropolitan Transportation Authority’s Long Island Railroad. Each is a commuter rail system of similar size and with similar ridership.

All three commuter railroads have several funding sources for operating expenditures. The first is farebox revenue, which is the amount passengers pay to take the train. For farebox revenue: NJ Transit collects $541, Metro North collects $678 million and the LIRR collects $701 million.

Unlike for roadways or aviation, in which passengers pay almost all of the costs to build and maintain the system, farebox revenue covers only a portion of the costs so additional funding is needed to close the gap. Each system receives this funding in several ways. Commuter rail systems generate revenue through transit oriented development and food service: NJ Transit generates $104 million, Metro North $62 million and LIRR $50 million.

Each agency also receives Local, State and Federal funding as well: NJ Transit receives $2.1 billion, Metro North $1.2 billion and the LIRR receives $1.4 billion. A table detailing each category is below.

New York Metro Area Commuter Railroad Funding Sources

Service Fares Directly


Local State Federal Total
New Jersey Transit $936M $104M $195M $356M $555M $2.1B
New Jersey Transit Rail $541M
Metro North $678M $62M $78M $375M $0M $1.2B
Long Island Railroad $701M $50M $136M $468M $0M $1.4B


Each commuter railroad has several funding sources for capital expenditures as well. NJ Transit collects $485 million in federal and local funding. Metro North receives $283 million and the LIRR receives $428 million.

It is important to note that New Jersey Transit operates more than just a commuter rail system. In the table above, with the exception of farebox revenue, all of New Jersey Transit’s revenue is split between commuter rail, light rail and bus. But based on service characteristics, NJ Transit’s commuter rail operations still received the equivalent amount or more funding than Metro North and Long Island Railroad. State funding is a little lower than for the New York lines, but local funding is somewhat higher. All in all New Jersey Transit’s commuter rail receives equivalent funding to New York’s commuter rail lines.

So instead of whining about funding, NJ transit leaders should improve agency efficiency and encourage innovation.

The first step would be to reduce salaries or cut staffers. The average New Jersey transit worker makes $34.00 dollars per hour equating to an average annual salary of $71,000. The average New Jersey per capita income is about half at $36,000. The New Jersey transit average is for all positions: mechanics, janitors, and conductors. But more troubling than the high salaries is the 4,856 employees needed to operate the 8 commuter rail lines. At the same time NJ Transit operates more than 300 bus routes with just 6,280 employees. So why are so many employees needed for commuter rail?

Second, New Jersey should examine redesigning its transit network. Both bus and where feasible rail networks should be redesigned at least every 10 years as development patterns change. Houston’s Metro was able to increase its ridership by 20% with no real increase in funding simply by creating a grid-based network instead of a radial-network. New Jersey transit can do the same thing with local bus service in central and northern New Jersey. Some rail lines are redundant. Do both the Morristown Line and the Montclair-Boonton Line have to serve the same stops in Northwestern New Jersey? Do the Main Line and Bergen County Line have to serve the same stops in northern New Jersey?

Third, New Jersey transit should examine contracting out all transit service. Private companies can often provide better, cheaper primary service than the state. New Jersey should open a procurement process in which the state get 3 private bids and a public bid from New Jersey transit. Whichever proposal public or private that offers the best overall value should operate the service. Currently, only X of X lines primary lines are operated by the private sector. Better service could be operated on many of the other lines if the state would open a competitive bidding process.

Fourth, New Jersey transit should actively partner with Uber and Lyft to provide service for the elderly and disabled in urban areas and to all riders in rural areas. Uber has teamed with more than 20 major transit providers in the past year including transit agencies in Atlanta and Dallas to more cost effectively transport passengers in suburban and rural areas. These partnerships allow the transit agency to focus resources on more popular routes with higher ridership.

Finally, New Jersey lawmakers should welcome supplementary bus services with open arms. Currently, the relationship between NJ Transit and supplementary service is less than warm and fuzzy. Leap bus operates supplementary service in Boston and San Francisco by using real time information to determine routes where bus service is late or insufficient and supplementing those routes. Chariot operates in San Francisco and provides more luxurious service including food, wi-fi and plusher seats. Chariot has induced some travelers who would have made the commute alone, to take transit.

Taking cheap shots against politicians won’t solve the problem. New Jersey’s commuter rail system is not underfunded. Rather both bus and rail operations have been poorly managed under a 1950 mentality. Redesigning service and opening opportunities for the private sector offers the best long-term transit solution.