Future Retirement Success
  • Politics
  • Business
  • Investing
  • Stocks
  • Politics
  • Business
  • Investing
  • Stocks

Future Retirement Success

Investing

San Francisco Loses Tens of Millions of Dollars on Cable Car Service

by September 12, 2023
September 12, 2023
San Francisco Loses Tens of Millions of Dollars on Cable Car Service

Marc Joffe

If you’ve visited San Francisco recently, you know that a ride on the city’s famous cable cars is not cheap. The standard fare is $8 (regardless of distance) and an average trip is less than a mile and a half. I used to think that the city transit system, SF Muni, used the cable car to subsidize its bus and light rail services, but a deep dive into the numbers disabused me of this notion.

Despite the high fare, the cable car service loses copious amounts of money. It serves as a case study of how difficult it is to run a railroad profitably, especially when the operator is a government agency. Privatizing the cable car service is a better route to follow.

For the cable cars, the last full fiscal year of operation for which financial data are available was the year ending June 30, 2019. The system shut down between March 2020 and August 2021. We’re still waiting for fiscal year 2023 numbers to come in, but, given the drop in San Francisco tourism, they are likely to be worse than FY 2019.

San Francisco’s famous cable car is seen on Hyde Street in San Francisco, California, United States on October 27, 2021. (Photo by Tayfun Coskun/​Anadolu Agency via Getty Images)

For FY 2019, the federal government’s National Transit Database (NTD) shows that the San Francisco cable car system collected $24 million in revenues and incurred $70 million in operating costs, resulting in a reported operating loss of $46 million. The NTD figures overstate the system’s performance because they do not include depreciation expenses.

The key driver of the cable car’s unprofitability is the high cost of labor. Salaries and benefits accounted for 92% of San Francisco cable car expenditures in FY 2019. Of the $12.32 cost per passenger trip that year, $11.34 was labor‐​related.

Cable cars are especially labor intensive because each one requires two SF Muni employees: one to start and stop the vehicle, and another to collect fares. And cable car staff are expensive to employ. One operator profiled recently in local media (who, as a courtesy, I will not name) has a base salary of more than $86,000 annually according to Transparent California. But his total compensation works out to almost $154,000 when overtime pay, employer‐​paid health and dental benefits, employer contributions to his defined benefit pension, and other benefits are included.

Although a cable car operator works 40 hours per week, an experienced transit employee is entitled to 15 paid holidays, 15 paid vacation days, and 13 paid sick days annually, as specified by city policies and the union’s memorandum of understanding. The all‐​in cost of employing a cable car operator works out to around $70 per hour.

When cable cars are fully loaded with sixty passengers (seated and standing), they may generate enough revenue to compensate the two onboard employees as well as SF Muni’s support staff. But ridership varies by time, day, and season. Break‐​even operation may be possible if service is only offered at peak times, but the City Charter requires Muni to run cable cars for the same hours it did in 1971, which was about 16–18 hours each day including weekends.

Riding a cable car is an integral part of the San Francisco tourist experience, but like many tourist amenities, the system should be able to operate profitably without taxpayer subsidies. Because the cable cars run near alternative bus lines, they are not essential for local commuters. Consequently, the city would be best served by privatizing the service and amending the charter to permit fewer hours of service.

A private operator offering service only at peak times, potentially at a higher price and with non‐​union labor, should be able to profitably offer a beloved tourist amenity while saving money for beleaguered city taxpayers.

0
FacebookTwitterGoogle +Pinterest
previous post
Triple lock means state pension set to rise by 8.5% in April
next post
Chesapeake Energy: A Stock That Could Pump Much More

You may also like

Expensing Could Help Manufacturing’s Productivity Problem

June 12, 2024

Enhancing Transparency over Emergency Spending Reporting: A Call...

October 12, 2023

The United States Remains a Manufacturing Powerhouse

October 25, 2023

Illegal Immigrants in Georgia Have a Low Incarceration...

January 6, 2025

Congress’s Shade on Suspended Solar Duties Shines Light...

May 8, 2023

The Long-Term Reputational Costs of Trumpian Protectionism

March 22, 2025

“Our Allies Then Bent Over Backwards to Help...

March 11, 2024

States May Liberalize CPA Licensing

October 9, 2024

Tariffs, Uncertainty, and Small Businesses

March 14, 2025

What the Social Security Fairness Act Tells Us...

January 15, 2025

    Get free access to all of the retirement secrets and income strategies from our experts! or Join The Exclusive Subscription Today And Get the Premium Articles Acess for Free

    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • Trump warns of ‘serious consequences’ if Elon Musk funds Democrats

      June 7, 2025
    • Musk jokes about reconsidering stance on Big Beautiful Bill after Schiff’s praise

      June 7, 2025
    • Musk deletes explosive posts about Trump and Epstein files

      June 7, 2025
    • House witness flips script on Dem who ambushed him during hearing with unearthed tweet: ‘Iceberg is ahead’

      June 7, 2025
    • Call with China’s Xi, and Trump-Musk exchange fueled barbs during 20th week in office

      June 7, 2025
    • Trump’s conservative allies warn Congress faces critical ‘test’ with $9.4B spending cut proposal

      June 7, 2025

    Categories

    • Business (8,152)
    • Investing (2,019)
    • Politics (15,568)
    • Stocks (3,136)
    • About us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: futureretirementsuccess.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2025 futureretirementsuccess.com | All Rights Reserved