The psychology of daily versus monthly parking fees

By Brian Lutenegger

The Seattle Times recently reported on the experiences of several major employers trying innovative ways to charge for commuter parking. These employers found that how parking for commuters is priced—on a daily vs. a monthly basis—makes a big difference in their employees’ commuting habits. By allowing their employees the flexibility to choose their commute mode on a day-to-day basis, these companies show sustained decreases in the number of employees commuting alone to work in their cars.

When the Bill & Melinda Gates Foundation opened its new headquarters near downtown Seattle in 2011, the city required that it no longer offer free parking and that it reduce the number of employees who drive to work alone. By 2012, this number fell from nearly 90 percent to 42 percent. By 2016, only 34 percent of employees drove to work alone.

The Gates Foundation attributes part of the change to its excellent transportation benefits: free transit cards, locker rooms, bike storage areas, and a financial incentive of $3 per day for choosing any alternative transportation.

However, the organization found that the biggest motivator predicting employees’ commuting habits was whether parking was priced on a daily basis or monthly basis. The Gates Foundation charges a $12 daily rate until the employee reaches the average rate for the neighborhood, which is $120.

A monthly parking permit functions like a big fee on the first day, and then subsequent days are “free.” Once a commuter pays for a full month, there is little incentive to skip a day and take public transit or bike to work, and most commuters will drive to work every day. If parking is charged by the day, there is an incentive to think about each day’s commute. Daily fee programs are no more expensive for employers or employees and are relatively easily implemented.

Other companies in Seattle—such as Delta Dental of Washington and Swedish Medical Center—have experienced similar changes in employee commuting behavior when they moved to downtown Seattle, began subsidizing transit, and charged for parking by the day.

Overall, according to a Commute Seattle survey, despite 45,000 additional workers in and around downtown between 2010 and 2016, solo commutes by car increased by only 2,255. Mode share of commuters driving alone fell from 35 percent to 30 percent over the same time, as covered in this previous SSTI blog post.

Washington State—a national leader in transportation demand management— requires metro areas like Seattle to reduce employee commute trips to large workplaces by car. The programs are run at the local level as partnerships with other local agencies and employers with at least 100 full-time staff. The Washington Department of Transportation provides technical assistance to these local efforts and a governor-appointed board sets overall direction.

Of course, not every company is as successful as those profiled here—only 124 out of 243 in Seattle are meeting their goal. But overall, as a result of  Seattle’s rigorous Commute Trip Reduction Program, mode share for solo commute trips by car continue to fall. Charging for parking on a daily rather than monthly basis is one factor leading to that success. This gives employees the flexibility to make a daily decision about their commute based on the weather, personal circumstances, or other factors that may change from one day to the next.

Brian Lutenegger is a Program Fellow at Smart Growth America