Understanding Changes in Demographics, Preferences, and Markets for Public Transportation (2018)

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1 The future of public transportation in the United States will be influenced by a set of factors reflecting underlying demand and a set of factors reflecting supply. While much has been written about alternative possible services and prices (supply), less is known about how characteristics of future markets might influence the future role of transit over the next decades. Transit managers and those who advocate transit more generally often must focus on near-term issues (e.g., providing cost-effective services on significantly constrained annual budgets). At the same time, the same managers must prepare longer-term capital plans and provide close cooperation with metropolitan planning organizations, whose focus is usually on longer-term issues. Thus, whether the region is contemplating a major long-term investment in fixed facilities or the local transit agency needs to float a bond to fund a new maintenance facility, leaders of the transit community need to have an understanding about how markets for their services are likely to change over a two- or three-decade period. Thus, transit managers, planners, and stakeholders need to understand how multiple future factors might influence the nature of demand for transit services in the United States. For this study, TCRP Research Report 201: Understanding Changes in Demographics, Prefer- ences, and Markets for Public Transportation, the research team created a set of future scenarios for transit markets to understand how shifts in demographics, attitudes, and levels of service might affect demand for transit. The study focuses primarily on factors beyond travel times and costs (i.e., beyond supply characteristics) and seeks to improve the understanding of the background conditions that affect market behavior. This research incorporated differing assumptions about demographics, the transit orien- tation of the neighborhood, and market-based preferences, including values and attitudes. All three elements would be needed to support the development and analysis of alternative scenarios for the future of the transit industry. All three elements are also needed to better understand the possible impacts of technology-based services such as transportation network companies (TNCs) in both the complementary and competitive role with transit ridership. This report concludes with eight major findings: 1. Demographic factors are critical for predicting future markets for transit. 2. Location is critical for predicting the future markets for transit. 3. Market-based preferences are critical for predicting the future markets for transit. 4. Age, preferences, and location together affected changes over the past decade. 5. Age, preferences, and location together can explain expected changes for the future. 6. Transit level of service is more important than having a population that is pro-transit. S U M M A R Y Understanding Changes in Demographics, Preferences, and Markets for Public Transportation

2 Understanding Changes in Demographics, Preferences, and Markets for Public Transportation 7. TNCs will offer more competition to transit. 8. The results of the study have important implications for the leaders of the transit community. The research team created seven technical appendices to accompany this report. These appendices include a bibliography and literature review and additional information on the subjects covered in Chapters 2 through 7 of the report: • Technical Appendix 1. Literature Review and Project Bibliography, • Technical Appendix 2. Demographics in Support of Chapter 2, • Technical Appendix 3. Geography and Neighborhood Type in Support of Chapter 3, • Technical Appendix 4. Survey and Market Segmentation in Support of Chapter 4, • Technical Appendix 5. Analysis of Preference in Support of Chapter 5, • Technical Appendix 6. Integrated Behavioral Modeling in Support of Chapter 6, and • Technical Appendix 7. Information and Communications Technology in Support of Chapter 7. These appendices are not printed herein but can be downloaded from the TRB website (trb.org) by searching for “TCRP Research Report 201”. Implications of Demographic Shift in Age The study found that there will be a major demographic shift that could affect the makeup of the transit market over the next three decades. The millennial generation is now the largest single age-based component of the United States population and will get pro- portionately larger. As of 2010 [the best census year for comparison with the results of the 2009 National Household Travel Survey (NHTS)] there were 1 million more millennials in the United States than baby boomers; by 2030, it is forecast that there will be 22 million more millennials than baby boomers. A cohort now in the age bracket roughly between 15 and 35 will be in the age bracket between 35 and 55 in 20 years. The project explored in some detail the market behavior of population age groups under 35, with particular attention to those between the ages of 25 and 35. This pattern of demographic shift over time is important for transit policy makers for two reasons: first, because this cohort (the millennial generation) is the largest such group, and its dominance will simply increase over the next two decades, and second, because, in general, this generation has patterns of transit use that are quite positive. The millennial generation has a set of attitudes and preferences that sets it apart from the older demo- graphic categories, including its views toward urbanism and auto dependence: • Those under 35 years old are more likely than older groups to report that it is important to them to live in a neighborhood with ethnic diversity and shops and restaurants within walking distance. • Millennials are more likely than any other group to prefer to live in the city. • Over the past 12 years, the percentage of those under 35 who would prefer to live in a big city increased significantly, with nearly 40% stating that preference in the 2016 TCRP survey conducted for the current study, TCRP Project H-51. • In the 2014 TransitCenter survey, which used a somewhat different set of location options, about 60% of millennials stated they would prefer to live in the suburbs (TransitCenter 2014). • Younger age groups believe they are less dependent on cars than their parents. • Younger age groups are far more open to sharing a vehicle than the older groups. • The youngest age group (those less than 25 years of age) reported using a friend’s car at four times the rate of older groups.

Summary 3 Millennials are now predicted to decrease their transit use patterns as the cohort ages over the next two decades. Although millennials have delayed household formation as compared with past generations, most fully expect that as they age and start families, they will choose to move to the suburbs and will use transit less. Thus, a critical market group presently consuming transit at high rates will most likely soon see a sharp decline in its transit use. Proactive policies should be developed to deal with this potential outcome. All of this serves to set the demographic context for the next few decades. A loyal group of users with at least some very pro-transit values and preferences will be proceed- ing through middle age, where it will experience powerful forces that serve to decrease transit ridership. Figure ES-1 shows the impact of age-based factors on the propensity of different age groups to use transit. The implications are clear; as this cohort proceeds through the age groups and through phases of the life cycle (e.g., increasing presence of children in the household), its transit use rates will decline with age. The remaining question is the extent to which this pro-transit cohort can retain some portion of its positive travel behavior patterns, not whether it can totally avoid the age-based downward pattern illustrated in Figure ES-1. Race and Ethnicity and Transit Ridership Additional demographic factors have powerful and consistent implications for attitudes toward and use of public transportation. Transit riders are more diverse than they were previously, now nearly evenly split nationwide between white, African-American, and Hispanic riders. Chapter 2 describes how nonwhite populations have higher rates of tran- sit use than white populations for every transit mode and for walking/biking. Hispanic populations also have higher transit use than non-Hispanics for every transit mode and for walking/biking, a pattern that remains dominant even when income level or home location are controlled for. Location Is Critical Understanding where people live is essential to understanding how much they choose transit today and how much they might choose it in the future under various scenarios tested in this study. The way in which geographic factors interact with propensity to use transit is explored in some detail in Chapter 3. 0 5 10 15 20 25 30 18–29 30–39 40–49 50–59 60–69 ≥70 Age Group P er ce nt ag e U si ng T ra ns it O nc e a W ee k Figure ES-1. Effect of age on transit use.

4 Understanding Changes in Demographics, Preferences, and Markets for Public Transportation Transit Use by Residential Neighborhood Type The nature of neighborhoods has a strong impact on transit ridership; neighborhoods with higher density and more pedestrian-oriented design tend to support higher levels of transit services. The combination of such land use patterns and a higher level of transit service is referred to in this report as being “transit-oriented.” The transit orientation of a residential neighborhood can be categorized by the extent to which it supports transit ridership, as demonstrated in the Environmental Protection Agency’s (EPA’s) Smart Loca- tion Database project (EPA n.d.). Researchers in that program developed a new evaluative metric that takes the form of the ratio of transit accessibility divided by highway accessibil- ity, with number of jobs per travel time as the metric for each. The overall transit orientation of any area can be characterized with this transit–highway ratio, a method that its developers report can stand as a surrogate for traditional indexes such as density, design, and diversity. Consistent with expectations, the 2014 TransitCenter survey (TransitCenter 2014), which covered 42 metropolitan areas, found that 23% of trips were made by transit in the neigh- borhoods with the highest comparative transit accessibility; just 3% of trips were made by transit in neighborhoods with the lowest level of accessibility. Clearly, the nature of the neighborhood in which one lives is a key factor in understanding transit use. What Will They Do in the Future? More than 50% of the millennials in the sample live in cities now as compared with less than 40% of the older age groups. When respondents look 10 years in the future, fewer in all age groups except the oldest (65 years and older) expect to live in a city. Furthermore, millennials predict a substantial reduction in their personal public transit use, whereas the older two age groups see an increase. The project’s attitudinal research suggests the millennials will not continue to prefer the densely settled urban setting. A careful review of the factors documented above shows that millennials (particularly those in the group aged 25 to 34) are acutely aware that their lives will soon change, and many will be looking for better schools and more living space. They are ready to move on and more willing than other groups to increase their commute by 40 minutes to get a bigger home. As urban as their present situation might be, and as much as they want to live in an urban setting, they expect to appreciate the suburbs more as they age and even admit their future home may look like their parents’ home. The youngest group (those under age 25) most expects it will have to drive more with increasing age. Transit Level of Service Is More Important Than Having a Population That Is Pro-Transit This project created a new method that examines all three forces (demographics, geo- graphics, and psychographics) in influencing transit markets simultaneously in an integrated modeling process. The unified model integrates several service assumptions with multiple demographic and market preference assumptions. The results from the new model help us understand how market preference variation relates to transit choices. As explored in both Chapter 1 and Chapter 6, future scenarios were modeled in which all the population in the future year adopts a set of preferences positive for transit. At pres- ent, those under 30 have many market-based preferences associated with higher rates of public transportation, as do those with a graduate education. The model predicted that in a scenario in which the entire population had the set of preferences of the under-30

Summary 5 group and the best-educated group combined, transit ridership would increase by 13%. In a future scenario based on the attitude sets of those older than 65 and those with no higher education, the model predicted that transit ridership would decrease by 8%. The research team then applied the same model to explore possible future scenarios based on assumptions about the quality of transit services offered, as described in Chap- ter 6. When the quality of TNC services was held constant, the model predicted that with improved transit services, ridership would increase by 30%, as discussed in Chapter 1. (Note: The 30% increase is not an actual forecast, but rather a portion of a larger what-if scenario exercise.) The new integrated travel demand model can separate the impacts of hard explanatory factors (e.g., times, costs) on the propensity to choose transit from those of soft explanatory factors (e.g., attitudes, preferences). The study concluded that • Improving transit service has a much larger impact on transit use than does having a population with the attitudes, preference, and demographics of the most pro-transit members of the population and • The fate of transit probably lies primarily with those designing the routes and services. That is, transit’s fate is not primarily determined by difficult-to-analyze issues such as future values, preferences, and attitudes or future demographic mixes. Transportation Network Companies Will Offer More Competition The integrated model described above offers some sense of scale for the vulnerability of various transit markets to new competing services from the TNCs. As reported in Chapter 6, an optimistic scenario for the future of transit is one in which both bus and train service are improved, resulting in a 30% increase for transit; this scenario holds future TNC services (both private and shared) constant. However, when improvements to TNC services are also assumed, the increase in transit use is only 22%. In other words, TNCs may have an impact on transit agencies even if the agencies improve their services as they explore and develop new forms of services. Implications for the Leaders of the Transit Community Chapter 1 presents a wide variety of implications and recommendations for leaders in the transit community. Some influencing factors are simply out of the control of those who would advocate more transit ridership: the progression of the separate cohorts through the age groups will happen independently of what transit proponents do or do not do, as will the ethnic composition of the local area population. Other factors, however, can be influenced by public policy, even if that policy is generated outside the transit agency. The research concludes that new types of transit services will be urgently needed in areas of lesser density, where walking and neighborhoods that are transit attractive and accessible will be essential, even within the context of so-called suburban settings. To improve transit use, urban planners will need to stress the importance of urban design, livability, and walk- ability and emphasize the need for better coordination of planning, zoning, and housing policy with transportation planning and policy. Finally, while it may be difficult to influence traveler preferences (including longer-term values and shorter-term attitudes), those in the transit community can try to affect the

6 Understanding Changes in Demographics, Preferences, and Markets for Public Transportation formation of attitudes. This is particularly important for those under 35, who, this research found, are highly influenced by peer pressure and the opinions of those within their imme- diate social networks. Although attitudes are less important than the design of routes and services, transit agencies can pursue efforts to influence attitudes toward their services through marketing (e.g., branding, image building, and promotion). Additionally, the design of services is highly correlated with the land use that is being served, and land use is influenced by many partners of transit agencies, such as regional and local leaders and planners through their policies, initiatives, and decisions. Attitudes and related demand for transit are influenced by density, diversity, and design, which are not within the control of transit managers. The three “D’s” also greatly influence the design of affordable services. For these reasons, the phrase “leadership of the transit community” should be interpreted broadly to incorporate all whose actions contribute to the creation of a supportive transit market setting.