Policy Refresh: Reinvigorate your commuter benefits for 2020 beyond…
With the arrival of 2020—and commuter benefits mandates being rolled out in regions across the country— there’s no better time than now to revisit and revamp your commuter policies for the year ahead.
The most common question we get asked at Luum by employers is:
Where do I start?
And coming in a close second:
If I can only implement one policy change, which is the most effective in changing commuter behaviors?
As it turns out, these are two very different questions with two very different answers.
While there’s no “one size fits all” in commuter benefits, when surveyed, employers resoundingly replied that a transit subsidy is the most impactful policy to kick off your commuter benefits program.
However, if we had a magic wand for only one policy change in 2020 to significantly shift commuter behavior away from driving alone, the answer is clear: charge a daily rate for parking. Our data shows that daily rates have the most significant impact on behavior change because entrenched habits become daily choices. Research proves that ‘sticks’ or ‘disincentives’ are the most impactful at changing behaviors.
If the thought of charging for parking was scary, startling, or had you muttering ‘not a chance’ under your breath, stay with me. You are not alone. This is why most commuter benefits programs do not (I repeat: Do Not) implement parking charges overnight.
Most commuter benefits programs do not begin with daily parking charges, especially without any subsidies in place for alternative modes. And the very best commuter benefit programs build off of other policies and, together, create a holistic program balanced with incentives and disincentives (monetary and otherwise) that shift the commute culture at your organization away from driving alone.
Commuter benefits programs slowly work up to charging for parking—often planning it for years, phasing into it with measured policy changes. We’ve all lived in a world for much, if not all, of our lives that vastly subsidizes and hides the true cost of parking. Because of this, it is only natural that we feel entitled to free or subsidized parking. Shifting attitudes is just as difficult as changing behaviors, so let’s take it back and look at where most employers start.
Common Commuter Benefits Policies
The employers who approach us typically don’t have dynamic technology in place to run their commuter benefit program. Because of this, we commonly see some combination of the following policies at play:
The Goose Egg
This policy is easy to describe – it’s nothing. No commuter benefits program is in place because the employer sees it as the employees’ responsibility to get themselves to work. Historically, employers haven’t seen the commute as their responsibility. That sentiment is changing as many employers realize that commute traffic wouldn’t exist without them – the employer. They realize they must be part of the solution, and therefore start offering commuter benefits. Lucky for us and the environment, employers competing for the same talent begin offering commuter benefits, too – recognizing them as a key part of the employee experience.
The Blind Side
This policy is simple – as a commute ‘benefit,’ employers offer free parking, this is very short-sighted. Employees who drive to work report higher levels of stress and lower job satisfaction compared to train commuters, and there are long term health benefits of alternative commuting. Plus, if every employee drives alone to work, just think about how much added real estate is needed to store their empty hunks of metal for 8-10 hours a day. Given the cost of one parking space ($200-400 per month depending on the city), this is no small cost for the employer and sets them up for unnecessary expenses and challenges in the future.
Finally, I’ve heard many companies cite employee retention as the main reason against charging for parking. While an understandable concern, there is no research to back this claim.
In fact, I was just at the Association for Commuter Transportation (ACT) conference in November when the Commute Program Manager for a major tech company told the audience how they started charging for parking at their office in Texas – of all places! Charging for parking is not the norm in this city, and while some employees grumbled at the change the first week or two, it didn’t last long. Fast forward a few months, and no employees have left the company due to the parking charges and parking demand has been cut in half. Boom!
Just like pensions are becoming ‘old school,’ so are some commuter benefit programs that rely only on existing (and often outmoded) programs. The Pensioner tacks on pre-tax benefits for parking and transit through their FSA/HSA providers and relies on a regional entity to nudge carpooling through their open platform. The problem is, when pre-tax benefits are buried within the HR system, they have historically low participation, and ‘nudges’ have been proven ineffective at changing commuter behaviors. Traditional pension programs are mandatory opt-in, while commuter benefits are optional and often fail to be promoted, and bundled, as part of a holistic commuter program.
The Beer Fund
While this policy may sound great for a fun Friday night, it falls short. The Beer Fund is simply giving employees who agree not to drive a set amount of dollars per month extra (we’ve heard around a hundred bucks is pretty normal) on their paycheck. While this shows equity in offering non-drivers a benefit similar to the benefit they offer drivers (free or subsidized parking), it falls short because it has zero alignment to business goals. Instead, employers should specifically reward modes of their choosing with a daily bonus, thereby providing flexibility and promoting sustainable commuting behaviors.
This was the commute program at my first internship in Seattle back in college. It wasn’t ideal. In the Catch-22, employees have to pick one or the other – a subsidized transit pass or a subsidized parking space. Without even breaching the inequity, transit passes are about a third of the cost of parking spaces in Seattle, this policy has one major problem similar to the Beer Fund: it locks employees into one mode choice and doesn’t provide flexibility. I chose the bus pass, but still wanted to drive sometimes so I could leave the office straight for the mountains on a Friday afternoon. If I had chosen the free parking space when I started, I would have driven most days due to sunk cost fallacy. This policy is in direct opposition to the sentiment that it’s about driving less, not never driving.
The California Rick-Roll
This policy gets its name as a stereotype of Silicon Valley, but you can find it across the country. The California Rick-Roll consists of free parking, corporate shuttles, and valet parking for garage overflow. Free parking and valet parking are short term fixes. Plus, along with corporate shuttles, they are crazy expensive. This doesn’t solve for nor even recognize the true problem: free parking. Now employers are getting smarter and using technology to understand their commute program ROI, therefore offering options that remove the source of the problem, not the result.
Where To Go From Here
If you are starting at any one of these policies – you are not alone, and you have a lot of opportunity for positive change. To what, you ask? What is the ideal combination we should strive for?
The Perfect Weave
Yes, that’s a pun about Luum. But it also represents the perfect blend of disincentives and incentives – specific to your employees and your context – about which we spoke earlier. This holistic benefit program offers flexible daily choice for employees through daily parking charges offset by a daily commute bonus for alternative modes. These employers fully or partially subsidize transit cards, offer pre-tax benefits for transit and parking, reimbursement employees for MaaS app commuting – commonly for the first or last mile connectors like scooter or bike share, and carpool or rideshare apps.
These are all brought together and administered in a single system that provides data insights to employers so they can clearly see the ROI on their commute programs. These employers boast massive reductions in parking demand, a positive commute culture, and employees who feel that their employer truly cares for their entire work experience – which starts and ends each day with a commute.
New Year, New Mode
Resolutions are great because they force us to reflect and be intentional with the changes we want to see in ourselves and our environments. However, they don’t happen overnight, and require a great deal of effort to successfully implement. To get to the Perfect Weave at any organization there must be cross-departmental collaboration, change management, and, at times, discomfort.
Resolve to do these things in 2020:
Nudges alone don’t work – we can’t be subtle and rely only on behavioral change research to change commute behaviors. You need bold policy changes. Ideally incentives and disincentives – to truly shift entrenched habitual commute behaviors. You won’t get there overnight. It takes time to change entrenched commute policies and the associated behaviors. But step by step, you can reach your goals and have the Perfect Weave in your commuter benefits program. There’s no better time to start than now. Kick off that dream commuter benefits program in 2020!