According to the minister, the decision on where employees work should be left to negotiations between employees and their bosses.
“We want to see more people come back to work so that the CBDs (central business districts) can enliven, certainly, but more importantly, we want to see successful, prosperous businesses that can employ more people in a productive way,” she said.
Amid attempts to get people back in offices post-pandemic, some organisations have declared they will be offering reduced salaries to employees who will work from home.
But for employees already working fully remote, a previous Ipsos survey revealed that more than half of them (55%) would take lesser pay if it meant they get to work remotely. Majority (80%) of the respondents, however, said they will accept on-site work as long as it offers high compensation.
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Kevin O’Leary, renowned investor and star of “Shark Tank,” has challenged Tesla Inc. CEO Elon Musk‘s controversial assertion that working from home is “immoral.” O’Leary, who oversees a vast business empire consisting of 54 companies, has expressed his support for remote work and rejects any notion of immorality associated with it.
Musk, the influential figure behind Tesla and Twitter, recently launched a scathing critique of remote work, questioning its ethical implications. He argued that while some individuals enjoy the luxury of working from home, essential workers like delivery drivers and factory employees do not have the same privilege.
O’Leary countered Musk’s notion that remote work is a moral issue. In an interview with CNBC, he bluntly stated, “No” when asked whether working from home is unethical. O’Leary’s stance on this matter aligns with the preferences of a significant portion of the American workforce. A recent study by McKinsey & Co. revealed that 87% of employees in the United States would opt for flexible work arrangements if given the opportunity.
The McKinsey study further emphasized the importance for employers to embrace technology, adopt policies and provide training to facilitate seamless integration of remote and on-site work. O’Leary shares this perspective, acknowledging the changing landscape of work and the need to embrace innovative practices.
See more on startup investing from Benzinga:
Speaking with CNN, O’Leary acknowledged the unique circumstances of Musk’s businesses, such as Tesla and SpaceX, which heavily rely on collaboration among engineers. He emphasized that this should not overshadow the success and viability of remote work in other sectors of the economy. Many industries have already embraced hybrid working models, and O’Leary argued that the pandemic has demonstrated the effectiveness of remote project management.
With his extensive business portfolio spanning various states and sectors, O’Leary revealed that 40% of his companies have permanently transitioned to remote work. He highlighted the financial benefits, noting that post-pandemic, these businesses are projected to generate a 20% increase in free cash flow. O’Leary sees this as evidence that remote work is not only effective but also cost-efficient, particularly in terms of reducing real estate expenses.
“Forty-four percent of our employees across our venture portfolio work remotely, and they ain’t coming into the office, period,” O’Leary said in a CNN interview in March.
For example, O’Leary has accumulated a nearly $50 million position in a startup called StartEngine. The platform allows anyone to invest in startups, including raising $15 million this year alone from retail investors. The startup has long touted the benefits of their work-from-home model. This allows them to recruit from anywhere in the world, save on costs and gives flexibility to workers looking for work-from-home positions.
But his support for remote work doesn’t mean he tolerates slacking off. With his strict standards, O’Leary emphasizes the importance of maintaining a strong work ethic, even when working remotely.
While this remote work arrangement may seem unconventional to some, O’Leary views it as a mutually beneficial trade-off. He states, “I call my employees 24/7. That’s the deal. If you don’t work in the office, I can call you at two in the morning if we have a crisis, and they’re gonna answer. That’s the way they’re used to it now.”
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In a 2019 interview with CNBC, before the pandemic reshaped work dynamics, O’Leary emphasized that he expects his team members to be responsive, even when they are on vacation. Given that his employees are dispersed across various locations, spanning the country and sometimes the globe, he recognizes the need for round-the-clock availability. The focus is on achieving results rather than adhering to a strict 9-to-5 schedule.
“Do I expect my employees to respond to me when they’re on vacation? 100%,” O’Leary asserted. He further emphasized that his employees are expected to fulfill their responsibilities, whether they work 24/7 or adopt alternative schedules, as long as the job gets done. This flexible approach aligns with the evolving nature of the economy, where rigid working hours are no longer the sole measure of productivity.
As O’Leary prepares for the 15th season of “Shark Tank,” he anticipates a wave in entrepreneurs seeking investment opportunities. The economic terrain, shaped by changing dynamics and limited venture capital availability, has led to an unprecedented influx of applications. O’Leary maintains an optimistic outlook, expecting a surge in deal flow, and eagerly anticipates securing favorable terms.
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This article Kevin O’Leary Challenges Elon Musk’s ‘Immoral’ View On Remote Work — ‘They Ain’t Coming Into The Office, Period’ originally appeared on Benzinga.com
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The work-from-home evolution over the past three years has had more twists and turns than a rollercoaster. So much so that some might forget employees have allowed remote work in some form since the 1960s. A recent whitepaper from the Stanford Institute for Economic Policy Research titled The Evolution of Working from Home pushes back against the notion that remote work is declining. According to the paper’s authors, Jose Maria Barrero, Nicholas Bloom, and Steven J. Davis, data suggests that the amount of time people spend working from home in the U.S. will likely increase with technological advancements—much like in prior decades.
In the 1960s, most Americans who worked from home were in agriculture or roles revolving around craft activities. U.S. workers spent about 0.4% of their time working remotely in 1965. That percentage increased to 0.6% of workers’ time in 1985, and by the 1990s, remote work had expanded to include white-collar workers. However, it was still limited due to telecommunication hurdles. Remote work often required physically driving or mailing paperwork between home and office locations, write the report’s authors.
Nonetheless, the percentage of people working remotely grew steadily. Work-from-home rates “roughly doubled every 15 years going back to the 1960s,” according to the report. By 2016, about 4% of workers in the U.S. reported working remotely, and the amount of time employees spent occasionally working remotely rose as well. In 2019, about 5% of workers’ time was spent at home, quintupling to about 25% by 2023.
Despite this increase, 60% of Americans are required to work in person, a divide that’s largely driven by educational attainment.
“The biggest single predictor of whether someone gets to work from home is education, with college graduates doing more than twice as much as workers who only have a high school degree,” according to the report. But as technology advances, researchers anticipate “work-friendly innovations” will fuel a new phase of remote work adoption in the next two decades.
During that time, workers can expect to spend 30% to 40% of their weeks working from home. The pandemic has already proven this trend, jumpstarting “a surge in research and development into new hardware and software products to support working from home,” the report says.
If history tells us anything, don’t get too caught up in the work-from-home debate. Instead, prepare to tighten up your remote or hybrid work policies because the practice is here to stay.
Amber Burton
amber.burton@fortune.com
@amberbburton
Reporter’s Notebook
The most compelling data, quotes, and insights from the field.
CHROs may soon have another role funneling into them as more companies hire executives to help oversee employees’ mental health: the chief wellness officer.
“Faced with the prospect of employee burnout and widespread mental health impacts of COVID, companies are turning to the new role as a way to retain workers and help employees,” writes Fortune’s Trey Williams.
Around the Table
A round-up of the most important HR headlines, studies, podcasts, and long-reads.
– A New York City law went into effect on Wednesday regulating employers’ disclosure and use of automation and A.I. in hiring decisions. Wall Street Journal
– The federal government is the latest institution to cut back the size of its office footprint after embracing remote work arrangements. Insider
– Mass layoffs in Big Tech have hit temporary and contract workers like janitors and cooks the hardest, who also receive lower severance packages than their white-collar peers. Washington Post
Watercooler
Everything you need to know from Fortune.
Layoff philosophy. Airbnb CEO Brian Chesky says conducting multiple rounds of layoffs takes a significant mental toll on surviving employees. “If you’re going to cut, you need to cut once, and therefore you better cut deep enough,” he said. —Orianna Rosa Royle
So long, from Soros. George Soros’s philanthropic foundation laid off 40% of its staff just months after Soros’s son, Alexander, was named chair of the board. —Chloe Taylor
Remote work heaven. While many workers in major U.S. cities are returning to offices, digital nomads are still thriving in slightly smaller markets like Columbus, Ohio; Portland, Ore.; and Kansas City, Mo. Check out the top 10 places where remote work is still widespread. —Orianna Rosa Royle
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The median salary for a Texas state government employee is about $50,000 a year, but that doesn’t mean you can’t make a whole lot more money if you have the chops.
Here are some of the highest-paying remote or hybrid jobs currently being advertised by Texas state agencies, according to postings on the state Workforce Solutions Office website. Each job differs in required experience, education and certifications.
Associate lawyer: $86,000-$199,000 a year
This position works on securities and capital market transactions at King & Spalding’s law office in Houston. Other duties include offerings on common and preferred stock, hybrid securities and investment grade debt. The job listing closes on July 10.
Associate director of data insights: $62,000-$121,000 a year
This position leads a team focused on artificial intelligence and machine learning, to analyze market and customer actions for strategy and tactical marketing. In the job, you will build models, analyze data and communicate insights. The job listing closes on July 17.
Vice president at financial advisor company: $200,000-$250,000 a year
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Agency: Houlihan Lokey Financial Advisors, Inc.
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Work type: Hybrid in Dallas
This position is responsible for creation and and oversight of financial models, client presentation and marketing collateral. In addition, the person will prepare, analyze and explain historical financial information, along with coordinating with business on M&A transactions. The job listing closes on Aug. 2.
Hardware engineer: $189,000-$219,000 a year
The position will design, develop, modify and evaluate electronics or systems related to Microsoft technologies. In addition, the position will define design approaches, technical specifications and parameters for Microsoft devices. The job listing closes on July 26.
Software engineer: $108,000-$187,000 a year
The position will create a plan, execute and deliver programs aligning with the business goals and outcomes. More job offerings include integrating the latest technology concepts and components into new applications, along with performing high and low-level design reviews. The job listing closes on July 11.
Infrastructure developer: $83,000-$138,000 a year
The position will design, develop and maintain infrastructure resources in strategic private cloud environment. The person will enhance microservices using industry design patterns, along with supporting application deployments at strategic data centers. The job listing closes on July 23.
Software engineer manager: $175,000-$201,000 a year
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Agency: TrussWorks
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Work type: Remote
The position will support client projects through a mix of technical leaderships, team coaching and empowerment and leading by example. The position will work on projects as a senior technical contributor, with other engineers in a player/coach model. The job listing closes on July 29.
Senior delivery director: $108,000-$188,000 a year
The position works with clients to understand and analyze business issues and requirements. In addition, the position works to solve client problems, along with constructing and developing technical solutions. The job listing closes on July 31.
Lead software engineer: $171,000-$193,000 a year
The position will design simple and scalable solutions for complex problems, along with delivering leading-edge software products for the company. The person will also contribute to engineering efforts by applying knowledge of modern software design and application performance. The job listing closes on Aug. 14.
Software development engineer: $170,000-$185,000 a year
The position will design, develop and test user experience applications in a variety of programming languages and frameworks. The person will also design and develop new features for iOS applications and implement automated test for continued verification. The job listing closes on July 20.
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A look at flexibility, productivity, and mental health of working from home
ALBAWABA – Three years post the pandemic that sent countless professionals into remote working arrangements, the landscape of Working from Home is taking an unexpected turn, according to a recent Bloomberg report.
There’s palpable tension between employers yearning for the bustling energy of the office and employees who have grown accustomed to the convenience of working from home.
Both parties are making concessions. Bloomberg reports that some corporate leaders initially embraced the remote-work revolution, but are now experiencing an epiphany about the drawbacks.
For instance, Martin Sorrell, founder of WPP Plc and chairman of S4 Capital Plc, claims that what began as a productive arrangement later gave rise to concerns regarding diminishing corporate culture and engagement.
However, for employees, the reluctance to fully give up on working from home is well-founded.
The model has proven to be an invaluable resource, especially for parents and those with long commutes. It has offered unparalleled flexibility in managing work-life balance.
A Pew Research Center survey conducted in March revealed that despite the downsides, about a third of Americans eligible to work from home still prefer to do so.
Rise of hybrid work
Recognizing the merits of both the traditional and remote working models, many companies are adopting hybrid arrangements.
This allows employees to work from home on certain days and requires them to be in the office on others. Google, for instance, mandated a three-day office attendance, making it a factor in performance reviews.
However, these hybrid models are not without challenges.
According to a PwC study, 50 percent of UK businesses report a decline in staff mental health since the onset of COVID-19. The UK-based business consultancy, Ayming, concurs that motivation levels at work have been on the decline for the past three years.
Pursuit of productivity
There’s growing concern among employers that productivity might be taking a hit with remote working. The United States (US) Bureau of Labor Statistics reported that productivity in the US declined in the first quarter of the year.
This is a critical issue that demands attention, as productivity is intrinsically linked to profits.
A crucial element to address is the absence of guidance on when employees should be in the office.
It’s essential to define circumstances that warrant physical presence, such as team meetings or onboarding new members.
Christine Armstrong, a UK-based workplace researcher, suggests that managers actively engage with teams to develop schedules that suit everyone’s personal circumstances.
Mental health and corporate culture
The isolation resulting from extensive periods of working from home can adversely affect mental health.
The US Surgeon General, Vivek Murthy, likened the damage from social isolation to smoking 15 cigarettes a day. This is echoed by Hannah Ingram, a marketing manager in England, who experienced loneliness and a drop in productivity due to the absence of social interaction, according to Bloomberg’s report.
To cultivate a thriving corporate culture, companies need to reimagine HR processes.
Jonathan Best, Chief Customer Officer at GoodShape, highlighted to Bloomberg the importance of informal interactions which are largely absent in remote working. Replacing these with structured virtual engagements is vital for sustaining team spirit and company culture.
Road ahead
As the debate over “working from home” versus “returning to the office” rages on, it’s evident that an equilibrium must be achieved. This requires adaptation, open communication, and understanding from both employers and employees.
Moving forward, it’s imperative that organizations develop robust frameworks that not only encourage productivity but also prioritize mental health and foster corporate culture.
The transition to a new normal is an ongoing journey, and collaboration will be the glue that holds the corporate world together in these changing times.
In conclusion, the Working from Home landscape is an ever-evolving one.
The burden lies on both employers and employees to embrace change, innovate, and adapt to safeguard careers, profits, and most importantly, mental well-being.
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“All things remote inspections, return to the office and the definition of branch offices.”
Those are the three topics that Kayte Toczylowski, the vice president of member relations and education at the brokerage industry’s regulator, said “come up in pretty much every meeting I have with member firms.” Her words came during an interview with Financial Industry Regulatory Authority CEO Robert Cook on the second day of FINRA’s annual conference this week in Washington D.C.
But work-from-home questions in wealth management don’t apply only to the nearly 3,400 brokerage firms that FINRA oversees directly. Remote work issues remain subjects of intense interest for people of all stripes in the wealth management industry, including more than 35,000 investment advisors registered with the SEC.
Scoop, a company that helps business clients with remote work arrangements, reported this month that only 20% of financial services firms require their employees to be in the office every work day. The survey, conducted through a poll of 251 industry firms, found that 41% of respondents allow their employees to spend some of their work time away from the office. That’s despite headline-grabbing pushes by industry giants like JPMorgan Chase to insist employees start coming back in.
‘I don’t know how much better your life can be’
For many financial planners, the new ability to work from home brought on by COVID-19 marked a welcome change from their grinding routines. Chris Ward, the founder of EntryPoint Wealth Management in Edgewood, Kentucky, said that before the pandemic, he spent at least an hour every day commuting to and from his former employer in nearby Cincinnati, a financial services firm he declined to name. When traffic was bad, the drive could take an hour and a half.
He left that job in 2020 to form EntryPoint, which he runs out of an attached garage at his home. Ward said the change has allowed him to work when he feels most energetic and productive — often 7 a.m. to noon instead of the usual 9 to 5. He has an agreement with a separate office whose address he can use for mailing and marketing purposes.
Many of his clients, who tend to be older, still prefer to meet in person. So he’ll arrange to sit down in a local coffee shop. Ward said he can’t really see any drawbacks to his new work arrangements.
“I don’t know how much better your life can be,” he said. “I wish this is something I was inclined to pursue sooner rather than later.”
As entrenched as hybrid and fully remote schedules may now be in the wealth management industry, nothing comes without a tradeoff. From possible alienation from clients to compliance headaches, employment at a distance has its own pitfalls.
Here are some tips and practices that other industry representatives and experts have adopted in the past three years to make remote work work for them:
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Just a few days after expressing his concerns about the unequal nature of remote work, Elon Musk took to Twitter to offer a concise perspective on the issue.
What Happened: While replying to a tweet that said, “It’s morally wrong to not commute to work in a Tesla,” Musk acknowledged that while certain jobs “can be done effectively at home,” it is unrealistic and “out of touch” to expect the majority of people to have that option.
Using a historical analogy, Musk likened the idea of widespread remote work to the phrase, “Let them eat cake,” suggesting that it is an impractical solution for most individuals.
On Tuesday, during an interview with CNBC’s David Faber, Musk expressed his criticism of remote work, saying it was “morally wrong” when service workers still had to show up in person.
He questioned the fairness of the “laptop classes” benefiting from the luxury of working from home while service workers had no alternative but to be present at their workplaces.
This discussion arose in the context of the return-to-office policies that have sparked significant concerns among Silicon Valley and U.S. tech workers, especially since many of them were initially promised generous remote work mandates by top executives.
Why It Matters: Musk has been time and again quite vocal in his opposition to the work-from-home practice.
In November 2022, he banned remote work at Twitter in his first email to the employees since buying the social media company, saying that the social media platform needs “intense work” in the office.
Then, in March this year, Musk sent out his plans for returning to the office to his Twitter employees in the middle of the night.
Read Next: Micromanaging Or Masterstroke? Elon Musk Reportedly Takes Control Of Tesla’s Hiring Process
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If you’re reading this while working remotely, Elon Musk is judging you.
In a recent interview with CNBC, the tech CEO came down hard on work-from-home culture, saying he thinks it’s “morally wrong.”
Musk, who told Tesla workers last year to return to the office or “depart Tesla,” has long been vocal about his belief that people are more productive in person. However, on Tuesday, he said it’s not only about productivity, it’s also a “moral issue.”
“The people who make your food that gets delivered can’t work from home. But you can? Does that seem morally right?” he said in the interview. “It’s messed up to assume that they have to go to work, but you don’t.”
Musk, also the CEO of SpaceX, said he believes people should “put 40 hours in” and that it doesn’t “necessarily need to be Monday through Friday.” He said he works seven days a week, and that days in a year where he does not put in “some meaningful amount of work” only add up to “about two or three.”
Despite Musk’s opinion, in a 2022 Cisco survey, 78% of respondents said remote and hybrid work improved their overall well-being. Still, there is an argument for one glaring problem posed by remote work beyond the CEO’s argument of productivity and morality: commercial real estate.
Remote work has upended the commercial real estate industry
Across the U.S., nearly 20% of office spaces are vacant, and those numbers almost double in big cities like New York and San Francisco, where less than half of the cities’ office spaces are occupied, according to property management company, Kastle Systems.
The trouble with vacant buildings isn’t just the eeriness they possess or the dust they collect, but the trillions in debt they potentially foreshadow. According to Morgan Stanley, nearly $1.5 trillion in commercial real estate debt will be due by the end of 2025, and a potential surge of loan defaults could be catastrophic for an already fragile banking system plagued by three bank failures in 2023 thus far.
Related: Fully Remote Work May Be A Relic of the Past, According to a New Report
However, according to the Bureau of Labor Statistics, 72.5% of businesses said their workers rarely or never worked from home in 2022, marking a close return to the pre-pandemic number of 76.7%.
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This story originally appeared on Business Insider.
Less than a year into his first full-time job out of school, Jason, a 22-year-old software engineer based on the West Coast, decided he wanted to earn some extra money to supplement his $75,000 salary.
Jason’s position was fully remote, and he told Insider he was able to get all his work done in only 10 to 15 hours per week — so he figured he had the time to do something else.
He thought about trying out a side hustle like growing microgreens, taking odd jobs posted on Craigslist, or doing freelance programming work, but said he ultimately decided to look for a second full-time or part-time job.
In November of 2021, he started a second full-time remote software engineering role. Today, he said he typically works 20 to 30 hours a week total across the two jobs and earned a combined $144,000 last year, according to documents viewed by Insider.
And he hasn’t told either employer he’s double-dipping. Jason’s real name is known to Insider but has been excluded to avoid any professional repercussions.
“I wanted to increase my income,” he said. “I felt my workload at my first job was low enough, and I knew that if I couldn’t handle it then I could simply quit one of the jobs.”
While juggling two roles can be stressful at times — like when he has overlapping meetings or receives unexpected work — Jason said that in some ways, his working arrangement reduces his stress.
“I’m more willing to say ‘No’ to tasks at one of my jobs since I know I have a backup job,” he said.
Jason is one of many Americans who have taken on additional work in part due to high inflation, but he’s among a smaller group of white-collar workers secretly holding multiple full-time remote jobs to, in many cases, double their salaries.
But the window to pull this off may be closing, as many companies are calling employees back to the office and listing fewer fully remote positions. As of March, roughly 13% of job postings were remote, according to the staffing firm Manpower Group, down from 17% in March 2022 but up from the pre-pandemic level of 4%.
And as knowledge of this phenomenon grows, some members of the overemployment community are worried they’ll eventually be found out. While holding two jobs at once doesn’t violate federal or state laws, it could breach employment contracts and get people fired, employment lawyers told The Wall Street Journal. It’s already happened to some workers.
The desk in his apartment where Jason usually works. Jason via BI
5 strategies to work two remote jobs and get away with it
Jason said he uses five different strategies to juggle both jobs and not get caught.
First, he said he tries to overestimate how long his tasks will take to give himself more time to manage the workload from both jobs.
“If I finish a task, I will hold on to it for a while before I submit it for review,” he said.
Second, he said he makes sure he doesn’t overperform at his jobs and attract extra attention and assignments.
“Whenever possible, I try to seem somewhat incompetent so that my coworkers are more understanding when I take a while to finish a task and so they don’t give me lots of difficult tasks,” he said.
Third, Jason said he dedicates less time to some work when he can get away with it.
“There are certain tasks I have like reviewing other people’s work, so sometimes I will not properly review their work so that I have more time to work at my other job,” he said.
Fourth, he said he’s learned to turn down projects.
“Whenever I get asked to take on more work, I will sometimes say ‘No’ since I already have work on my plate,” he said.
Fifth, he said he makes sure his colleagues are aware when the completion of his tasks is being held up by others.
“Whenever this happens, I make sure to mention this to my coworkers and managers so that they expect the work to be delayed,” he said.
Why he’s not worried about an overemployment crackdown
Since taking on two full-time remote jobs, Jason said he has immersed himself in the “overemployed community” online — the r/Overemployed subreddit has 176,000 members.
He said many members of the community are concerned about overemployment becoming too widespread or receiving too much press, because then employers might work to identify and crack down on these employees.
But Jason said he’s never been particularly concerned about this.
“I didn’t think enough people would be able to manage overemployment either because of their career, specific job, stress tolerance, desire to work more, etc and I still think that’s true,” he said, adding that he doesn’t think most employers would care enough to crack down on it — particularly if their employees are getting their work done.
Going forward, Jason said that he hopes to dedicate more of his time to a new business he started last December, though it’s still in the early stages.
In the meantime, he said he plans to continues to keep working at both jobs, and that the extra income has helped him have the financial security and life he desires. He said he’s pretty frugal — he doesn’t own a car, rarely goes out to eat, and lives in a one-bedroom apartment that costs $1,200 a month.
“For me, my current lifestyle feels like I’ve made it because I pretty much have everything I want,” he said.
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(TNS) — The post-pandemic reality for America’s public transportation is bleak. Work from home has solidly set in, leaving transit agencies that rely on fare-box revenue facing a fiscal cliff.
As pandemic aid dwindles, the nation’s biggest transit systems face a roughly $6.6 billion shortfall through fiscal year 2026, according to a Bloomberg tally of the top eight US transportation agencies based on passenger trips. Rising labor costs and inflation are hitting as farebox revenue stagnates after ridership collapsed. Those eight agencies serve regions that combined contribute about $6 trillion annually to the national economy.
Local officials are pressing for help. Last month, the California Transit Association asked the state for $5.15 billion over the next five fiscal years. Without more money, transit officials across the country warn that the public can expect steep ticket price increases and drastic cuts to train and bus schedules, while long-planned expansion projects are on the chopping block. That pleading worked for New York’s Metropolitan Transportation Authority when state lawmakers recently approved a massive bailout.
“If it doesn’t get the kind of funding it needs not just to survive but thrive, service will decrease, people will be unable to rely on it, they will be forced to buy cars if they can, take on massive debt to afford those cars.” said Stephanie Lotshaw, acting executive director at TransitCenter, a public transit advocacy group. “All of these outcomes that we are trying to rectify will get worse if we don’t, if we let these systems fail.”
Before the pandemic, about 7.8 million people — or 5% of the US workforce — used public transit, according to the US Census Bureau. That included about 2 million in the New York City region and more than one-third of workers in the San Francisco Bay area. Ridership nationwide has rebounded to about 70% of pre-pandemic levels, but experts warn a full rebound may never happen.
Here are the financial problems facing the eight biggest transit agencies:
New York’s Metropolitan Transportation Authority
New York’s Metropolitan Transportation Authority, the nation’s largest mass-transit system, estimates that it may take until 2026 for system-wide ridership to reach 80% of 2019 usage.
The MTA had initially projected a $600 million deficit this year that was estimated to grow to $3 billion in 2025 as federal pandemic aid runs out. It won a reprieve when New York Governor Kathy Hochul and lawmakers reached a last-minute deal in April to raise the payroll tax on New York City’s largest businesses to bring in about $1.1 billion for the agency. Lawmakers also agreed to provide another $300 million in one-time state aid to the transit agency. Another $65 million will allow the MTA to reduce this year’s planned 5.5% fare hike.
“This is a national problem,” Janno Lieber, the MTA’s chief executive officer, said in March. “Solving the MTA deficit is not a one year thing, we gotta do it in a way that is going to be a permanent solution for years to come.”
Bay Area Rapid Transit District
San Francisco’s Bay Area Rapid Transit, which serves six million people in a region that’s home to Twitter Inc., Salesforce Inc., and Uber Technologies Inc., in 2019 saw about 66% of its operating budget from fares, one of the highest percentages in the nation.
Ridership has only returned to about 40% of pre-pandemic levels. That means that when federal funding runs out, the agency projects a deficit of $340 million in fiscal year 2027-2028. The city’s public transit has been hit particularly hard because of its heavy concentration of technology jobs that can easily be done from home and from the rout in the industry that’s led to tens of thousands of layoffs.
“If BART doesn’t find new funding sources and the federal emergency money runs out, cutting service and operating hours, and closing some stations will be on the table,” General Manager Bob Powers said.
That fiscal strain is threatening its AA credit rating, which could make it more expensive to borrow. And that’s crucial as it ponders building a second trans-bay tube at a cost of about $29 billion. BART is also expanding to downtown San Jose and Santa Clara, an approximately $9 billion project.
Leaders in the region are drafting a ballot measure for 2026 that would ask voters there to fund public transportation. And lawmakers who represent the region are appealing for steady state funding at a time when Governor Gavin Newsom is proposing slashing $2.7 billion from the transportation sector.
The San Francisco Municipal Transportation Agency, which operates buses and cable cars in the city, has seen its ridership climb to about two-thirds of pandemic-levels. Still, it’s anticipating a $130 million deficit in fiscal 2025. That gap had been covered by the federal government, but that money is expected to run out in the next two years, leaving the agency $234 million in the hole by 2028.
Los Angeles County Metropolitan Transportation Authority
The subway, bus and light rail system in Los Angeles known as Metro last year saw ridership reach about 70% of 2019 levels, with a system-wide farebox recovery estimated at 6%, which is the percentage of expenses that are covered by fares. Metro officials say they can lean on federal assistance through the end of the upcoming fiscal year that begins in July. After that, Metro is anticipating a $400 million deficit in 2025, and $1 billion shortfall in 2026.
Metro says that in order to bring back and retain ridership the system has implemented a series of discounted and free fare programs, which puts further strain on the availability of eligible funding and its take from sales taxes dedicated to transit.
And now that California is mandating the phaseout of diesel fuel that transition has costly implications for LA Metro, which has one the nation’s largest bus fleets. Metro is looking to reach its zero emissions target by 2030. The agency is also seeking to expand its subway system ahead of the 2028 Olympics, another expensive endeavor.
Massachusetts Bay Transportation Authority
MBTA, which offers subway, bus, commuter rail and ferry service to eastern Massachusetts and parts of Rhode Island, faces a shortfall of $139 million in fiscal 2025 and $475 million in fiscal 2026, according to projections using conservative ridership figures. The agency says that one-time reserve revenues are projected to fix the budget gaps in fiscal 2024 and 2025 but say the actual shortfalls will come down.
That deficit comes after a federal safety report last year criticized the transit agency for prioritizing long-term projects over day-to-day necessities.
Aside from its deficit, like many transit agencies, MBTA is suffering from labor shortages. A report released April 3 by the Massachusetts Taxpayers Foundation says the system needs to hire and train 2,800 workers in the next 12 months to safely and reliably operate and maintain its agency. In an effort to hire workers the agency is offering a $7,500 sign-on bonus for eligible roles, such as bus operators, rail repairers.
Washington Metropolitan Area Transit Authority
At the Washington Metropolitan Area Transit Authority, which serves an area that is home to almost 283,000 federal workers, weekday rail ridership has only reached about 50% of pre-pandemic levels with bus at about 80%. The authority is projecting a budget shortfall of $738 million in fiscal 2025, a gap that will grow to more than $900 million by fiscal year 2029.
Metro, as the agency is known, operates 97 train stations and 128 miles of track and 1,500 buses serving 4 million people within a 1,500-square mile jurisdiction.
Washington’s commuters are slow to come back as federal employees embrace working from home and and have been reluctant to return to the office. The slow return has the city’s Democratic mayor joining Republicans to end teleworking.
Officials say they expect revenue growth of $28.5 million thanks to improving ridership, parking, advertising and joint development revenue.
Southeastern Pennsylvania Transportation Authority
SEPTA, which serves five counties in the greater Philadelphia area and connects to transit systems in Delaware and New Jersey, is back to about 60% of pre-pandemic ridership. It is seeing about 600,000 passenger trips per day, compared to about one million pre-Covid.
The system is expected to see federal funding run out in early to mid 2024 with a $240 million deficit annually. The transit provider is anticipating significant fare increases and services reductions starting in fiscal year 2025. Pre-Covid, about 38% of SEPTA’s operating budget expenses were paid by fare revenue, compared to about 21% now with ridership lagging 2019 levels.
New Jersey Transit
New Jersey Transit, the largest US statewide commuter bus and rail provider, says weekday rail ridership is back to about 80% to 90% of what it was before the outbreak, President Kevin Corbett said at an April board meeting.
Still it anticipates a $119 million gap for fiscal year 2025, the last year the agency has Covid aid, according to budget documents. That’s expected to climb to a $957.8 million shortfall in 2027.
The agency has proposed a $2.87 billion budget for fiscal year 2024, including a $140 million state subsidy that’s up $40 million from the previous year, budget documents show.
Chicago Transit Authority
From hedge fund Citadel to the headquarters of Boeing Co., some high-profile companies have left Chicago, adding to the fiscal challenges facing the Chicago Transit Authority as remote works keeps ridership at about 54% of pre-Covid levels, according to 2022 data. The CTA is facing projecting budget holes of approximately $400 million annually going forward with federal relief funds available to cover the gaps through early 2026.
CTA president Dorval Carter in an interview said that crime is impacting the agency’s ridership recovery along with remote work.
Carter said the CTA is looking to diversify its subsidy streams so that it can be in a better position to have financial stability. Whether that will be so-called congestion pricing, which is on the table in New York City, or working with the state to find long-term funding solutions, the CTA is exploring ways to fill their shortfalls.
© 2023 Bloomberg News. Distributed by Tribune Content Agency, LLC.
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