Each day, rail lines and buses ferry millions of Americans between their homes and workplaces. But in major cities, these critical systems are staring at a fiscal crunch. Ridership remains well below pre-pandemic levels and fare revenue has plummeted while operating costs surge.
To solve public transit’s money problems, politicians are turning to a familiar playbook: asking taxpayers to foot the bill for a bailout. But more government money would merely paper over the failings of a federal law passed more than 50 years ago. Commonly known as Section 13(c), the little-known provision of federal transit law jacks up operating costs by locking in 20th-century labor practices and blocking innovation. Repealing the law would save taxpayers from shelling out more money for systems that desperately need reform, not subsidies.
Public transit is still struggling to dig out of a pandemic hole. Last year, monthly transit ridership nationwide was at 81 percent of 2019 levels, according to data from the Federal Transit Administration, largely because of the rise in remote work. Major transit systems lost riders and revenue, but workforces still grew nearly 6 percent between 2019 and 2024. Take the New York subway, America’s flagship public transit system. By 2025, the subway had recovered only 85 percent of its 2019 ridership. The Big Apple’s Metropolitan Transportation Authority faced a $600 million structural annual deficit in 2023 and hiked payroll taxes and tolls to get its budget back on track. San Francisco’s Bay Area Rapid Transit is in even worse shape. BART has recovered only 47 percent of its pre-pandemic riders and is facing a structural deficit of about $400 million. The city-county government’s solution is, of course, to ask for higher taxes and more taxpayer money.
The pandemic resulted in a collapse in transit productivity, but spending more to deliver less has long characterized transit systems in the United States. Transit ridership had been declining in the years before the pandemic while workforces expanded. This led to a roughly 20 percent drop in transit labor productivity between 2013 and 2019, as measured by the Bureau of Labor Statistics.
But more public money won’t lower operating costs, which account for approximately two-thirds of total transit spending. Overspending on operations means forgoing services that benefit riders, such as higher-frequency trains and expanded bus routes, disproportionately harming low-income Americans.
There are two promising approaches to limiting labor costs: automation and competitive contracting.
Fully automated rail transit lines have been built or are under construction in more than five dozen cities globally. A 2023 study comparing rail lines in the U.S. with fully automated lines abroad estimated automation could reduce U.S. operating costs by 46 percent. Automated road vehicles are also showing promise. One firm developing a pilot project in Atlanta says its driverless vehicles could cost 30 percent as much as other forms of public transit.
Other countries also routinely operate their transit systems as public-private partnerships. Under this model, poorly performing vendors can be terminated for cause and replaced by competitors. A 2017 study estimated that contracting out bus service in the U.S. could reduce operating costs by 30 percent.
But both competitive contracting and automating transit face substantial barriers. Section 13(c) established transit employee labor protections designed to ensure collective bargaining agreements continued to be honored during the period when transit systems were transitioning from heavily unionized private ownership to — at the time — sparsely unionized government ownership.
The law requires the Labor Department to certify “protective arrangements” for employees of transit agencies that receive federal funding. These include the preservation of rights and benefits under existing collective bargaining agreements, protection against adverse effects on employment, and other requirements that present obstacles to operational changes.
Federal threats in response to potential violations of the outdated law are taken seriously by local transit agencies. When states have moved to cut transit costs, the federal government pressures them to comply with Section 13(c) by forcing them to choose between reforms and grant money. In 2021, the Biden administration threatened to cut off federal grants to California over statewide public-employee pension reforms passed in 2013. This would have cost Golden State transit agencies about $12 billion if federal courts had not intervened.
In this environment, transit agencies wishing to automate or contract out service face a choice between incurring substantial up-front costs to pay off affected employees or waiting until the affected workers retire and collective bargaining agreements are renegotiated. Transit agencies, increasingly dependent on annual appropriations, have little incentive or means to do either.
This tension between labor and efforts to modernize transit is playing out in our nation’s capital. The Washington Metropolitan Area Transit Authority is seeking to make major capital investments that could eventually enable full automation of the Metro. But the union representing Metro employees is predictably opposed. That conflict will make it hard to lower costs, eventually passing on higher fares and lower-quality service to riders.
Chances for reform look bleak. Even though the workers the federal law was designed to help have long since retired, labor protections have become the third rail of transit policy. Section 13(c) exists on top of federal, state and local labor laws that apply to public-sector workers. It makes transit employees arguably the most protected labor class in America. Repealing it would take a big step toward saving public transit without reaching back into taxpayer wallets.
A version of this column first appeared at The Washington Post.