The Case Against Commuting

SMITH BRAIN TRUST – Does anyone really like commuting?

Maryland Smith’s Albert “Pete” Kyle is not a fan. It’s not just the hassle that bothers him – it’s all the associated costs.

“Commuting is expensive,” says Kyle, the Charles E. Smith Chair in Finance and Distinguished University Professor at the University of Maryland’s Robert H. Smith School of Business. “You have to pay for your own car, Metro ticket, gasoline, parking and insurance. It’s an expensive cost associated with participating in the workforce.”

Those expenses aren’t tax-deductible and, therefore, de-incentivize people from commuting to work.

“I currently pay my employer for a parking pass, but I am still taxed on that income used to buy the permit,” Kyle notes. “That’s a market inefficiency in that it would deter me from being in the workforce and is an even bigger issue for people in lower-income brackets.”

But it’s the time spent commuting that carries the biggest cost for most people, Kyle says, because that time is uncompensated.

“I think of commuting as work time, so it means you are working a 10-hour day rather than an eight-hour day. That is two extra hours of stress and certain commutes tend to be more stressful than others,” says Kyle.

Imagine that a young professional works an eight-hour day, and spends two hours every workday commuting. Imagine, meanwhile, that an equally qualified colleague who lives near the office spends two hours each weekday putting in extra time at work, networking with clients and higher-ups and going to the gym. The non-commuting colleague simply has more productive hours in every day, Kyle notes, and may therefore be more likely, all things being equal, to be considered for promotions, higher-profile assignments and pay increases.

Commuting costs hit working professionals with families even harder, Kyle says. According to a 2017 study from the Brookings Institution, the average cost of a full-time child-care program in the United States tops $16,000 a year. And for every hour of commuting, there’s another hour of child care to pay.

It’s one reason why Kyle supports government-subsidized daycare. “I am quite confident that would result in more government revenue,” he says, noting that it would incentivize parents to continue working (and therefore paying taxes), even when faced with associated child-care expenses.

“What commuting does is essentially drive marginal workers out of the workforce,” says Kyle. “If you’re wanting to work, but it’s not quite worth it, then the hassle of commuting in terms of time and cost might keep you out of the workforce.”

Ultimately, he adds, with each worker that exits the labor market, there’s a potential ding to U.S. gross domestic product, widely considered the broadest measure of an economy’s output.

Of course, there are other ways to minimize the costs of commuting, Kyle says, using public transportation, for example, or carpooling with coworkers or with services like UberPool or Lyft Shared Rides.

For those who can though, Kyle says that nothing beats walking to work.

“It’s generally healthy and I wouldn’t consider it a huge cost. It takes time, but it’s a good use of time even outside of work. It’s the optimal commute.”