The Many Benefits of Transit Benefits

The Many Benefits of Transit Benefits

In recent years, several US cities, including New York, Washington, DC, and San Francisco, have introduced mandates requiring large employers to offer tax-free transit benefits to employees who commute to work. “However,” SHRM’s Joanne Sammer writes in a primer on the subject, “mandates and tax considerations should not be the only drivers of transit benefit design”:

Asking employees what they need to better manage their commutes to work could yield some important insight into how to expand these programs to meet the needs of a broader array of employees. In doing so, employers can build a program that can both reduce payroll taxes and help to attract and retain a talented workforce.

A 2016 survey of 76 Canadian and U.S. employers conducted by Best Workplaces for Commuters, a public-private partnership that promotes transit benefits, and the Association for Commuter Transportation found that:

  • 69 percent of employers offering employee transit benefit programs reduced their need for parking spaces.
  • 53 percent reduced local traffic congestion.
  • 59 percent improved community relations.

Here at CEB, we’ve recently been hearing a lot of questions from our members about commuter benefits (how much is offered, what methods of commuting are covered, etc.), indicating that this is an area of increasing interest to employers.

In addition to local government mandates or incentives, this trend may also be driven by factors such as urbanization and a growing preference, particularly among millennials, for mass transit and car sharing over vehicle ownership. And of course, in a highly competitive talent market, commuter benefits are another way for employers to differentiate their reward packages from those of their competitors.

Commuter benefits may also present some interesting opportunities if organizations design them around the needs of different employees. For instance, a 2015 study looked at the “gender travel gap”—how much time men and women spend in transit each day for work and for housework—and found that men typically travel longer distances to get to work, especially once they have children, while women still do the lion’s share of housework-related travel (errands, picking up children from school, etc.). If different cohorts of employees have distinctive commuting habits and needs, transit benefits that focus on ride-sharing or biking or public transportation might have similarly distinctive effects on the workforce.