Transit benefits often appeal to new employees who are imagining their new roles and their new commutes. But new employees often face a delay from these pretax programs, because pretax programs require employees to make their elections prior to the month in which they use the benefit. This arrangement risks setting up habits where the commuter, waiting for their transit pass to kick in, starts driving in, gets familiar with this new routine, and then doesn’t end up making the switch to transit. 

A tale of two commutes

Tara started a new job on January 1. She was excited about this new job for several reasons, including that she’d be able to take a direct bus to get to work. Her company offered her a pretax transit benefit, allowing Tara to set aside some of her income before taxes to buy a transit pass. Unfortunately, as is common, the earliest Tara could place her order was on her first day. As a result, her employer wasn’t able to order her pass until later in January, and Tara didn’t receive her first transit pass until February. On Tara’s first day, and for her whole first month, she drove. After a month of driving to work, Tara got into a rhythm with it, and decided not to order another transit pass for March.

Alex also started a new job on January 1. Unlike Tara, Alex received his transit benefit elections in his onboarding packet, before his start date. Alex’s employer was able to process his request in advance, and Alex was able to ride transit with pretax funds on his first day. Alex started his job with transit and never looked back.

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The Benefit to Employers

There are several reasons employers should consider offering transit benefits to their teams – attracting and retaining top talent, supporting return to office policies, and encouraging employee wellness, just to name a few. But for some employers, transit is a more practical concern, because it’s also the best alternative to providing parking.

Parking is not cheap! Structured parking costs between $25,000 to $50,000 per space, in addition to the cost of the land. Employers that lease or own employee parking are doing so at great cost. When the spaces are being leased, that’s a substantial recurring expense. When employers maintain their own lots or garages, that land could often be used for other, more productive purposes. Hospitals, universities, special events, retail, and other sectors are always looking for ways to reduce employee demand for parking to free up more spaces for patients, students, guests, and shoppers.

The concept of shifting people away from parking towards other modes has a name: Transportation Demand Management or TDM. Transit benefit programs are one of the most cost-effective TDM strategies for parking-constrained employers. 

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New commutes are an opportunity

Life tells us that established habits are hard to break. Research specifically backs up that once commute routines are set, these habits become increasingly difficult to change. As one university administrator puts it:

“This delay is a point of frustration for customers, but more importantly it can be a determining factor in commute choices, and specifically a disincentive to sustainable commuting. New employees are currently presented with an opportunity to sign up for parking on day-one, or to receive a transit subsidy often on month-three of their employment.” How do we do better by our employees?

Consider the examples above. Initially, Tara would have preferred taking transit to reduce wear and tear on her car. And her employer would likely prefer to reduce demand for parking. But a month-long habit is hard to break. Nobody in Tara’s scenario wanted that outcome.

Then consider what Alex’s employer was able to do. By delivering Alex’s benefit before his first day, his employer ensured that Alex would set up a habit that would serve him for his entire tenure at the company. Both employee and employer are better off.

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Modern transit benefits employees that actually want to use

There are multiple ways that employers can set up their new hires to receive transit benefits for their first day, based on lead time, subsidy policies, and administrative capacity. Transit passes, bike memberships, bike or scooter rentals, and commuter debit cards can all work differently. To talk through the approaches that work best for your organization, contact a Jawnt account manager today.