The Poverty Tax: How 'Free' Parking Hurts Those Who Can Least Afford It
Key Takeaways
- ‘Free’ parking is provided to drivers in various ways, including commuter, on-street, retail, residential, and employer parking.
- It is well known that ‘free’ parking encourages car use, increases congestion and carbon emissions, and is expensive to provide.
- Although less well-known, ‘free’ parking disproportionately costs households on low incomes and those unable to drive, worsening poverty.
- These impacts include higher transport costs, fewer and lower quality transport options, lower wages, higher costs for goods and services and higher housing costs.
- Policy solutions are well-established, such as charging for parking, unbundling parking from housing and investing in local improvements. Still, many jurisdictions persist with one or more forms of free parking.
- Policies to end free parking are not implemented for various reasons, including lack of awareness, political risk, car-first planning and immature asset management.
- Transport leaders should take steps to create the conditions for change, including improved analysis, mature asset management, making free parking subsidies transparent and moving away from predict and provide transport planning to a vision-led approach.
What next?
Analyse how much ‘free parking’ costs the government in capital costs and ongoing subsidies and look at the benefits of an alternative set of policies.
Introduction
Housing, food, and transport are the three biggest expenses for most households. Yet a hidden force makes all three more expensive: "free" parking.
Let's be clear: there's no such thing as free parking, just like there's no such thing as a free lunch. Someone always pays, and often, it's those who can least afford it.
Every free parking spot at shops, workplaces, train stations, and along streets carries costs that aren't immediately visible. These costs ripple through our economy in surprising ways, particularly hitting low-income households.
When a government provides "free" commuter parking near transport hubs, that land could have been affordable housing. When cities mandate parking minimums for apartments, non-car-owning residents pay higher rents for spaces they don't use. When your employer offers "free" parking, it likely comes at the cost of your wages.
Despite the growing evidence that free parking worsens poverty, increases congestion, drives up carbon emissions, and makes housing less affordable, many places stubbornly maintain these policies. Why?
This blog explores the hidden ways "free" parking worsens poverty, why these harmful policies persist, and what transport leaders can do to create better community outcomes.
The Many Faces of "Free" Parking
"Free" parking isn't just one policy; it appears in several forms, each creating its own hidden costs:
Commuter Parking: The Transport Paradox
Near transport hubs, free commuter parking seems logical, encouraging public transport use, right? But this creates a contradiction: we subsidise car ownership to promote public transport use.
This logic is likely to be true if the only change you made to the transport system was to take away or not provide commuter parking in the first place. However, taking a more system-oriented perspective, free commuter parking contributes to a sub-optimal outcome.
For a start, it assumes that commuters either have access to free or subsidised parking at their destination or would use other ‘free’ parking options near a station, such as in the street. In essence, the argument for free commuter parking is to compensate for free parking elsewhere in the system.
All of this free parking encourages car use, but free commuter parking also creates significant ‘opportunity’ costs, that is, the alternatives to free commuter parking. These include using the land for something else, such as housing or charging for parking and using the money to pay for public transport for people to access the station. Or, we could not build the parking facility in the first place and use the money saved to invest in other infrastructure such as public and active transport so people can access the station more easily.
On-Street Parking: The Public Space Giveaway
Many governments routinely give away a valuable asset, curb space, for free vehicle storage. In high-demand areas, this creates the familiar "cruising" that increases congestion and emissions as drivers circle blocks looking for spaces.
Again, free on-street parking creates opportunity costs. An on-street parking space is a valuable asset. The owner (usually a local authority) effectively subsidises the driver by not charging for it. Instead, if the parking was priced effectively, it would improve accessibility in more congested areas and allow the proceeds to be invested in providing alternatives to driving. It would also prevent drivers from simply changing where they park if commuter parking was no longer free.
The sums involved can be large. For example, in the 2022-23 financial year, Inner London councils generated approximately £881 million in parking revenues.
Of course, preserving free on-street parking is also a justification given for mandatory residential parking.
Residential Parking Requirements: The Housing Cost Multiplier
Historically, many jurisdictions have mandated parking minimums on new developments to ensure sufficient parking is available, partly so that the new development does not result in people parking in the free on-street parking in the surrounding area.
These parking mandates make housing significantly more expensive, with estimates that one parking space per unit increases costs by approximately 12.5%, and two parking spaces can increase costs by up to 25% as the land and infrastructure for the parking need to be paid for.
Due to the well-documented negative impacts, many jurisdictions have moved away from parking minimums on residential development in recent years.
Retail Parking: The Hidden Shopping Tax
Those vast car parks surrounding shopping centres aren't a gift from retailers; they're a cost passed directly to consumers through higher prices on goods and services.
Free retail parking subsidises one mode of transport while making locations less accessible by foot, bike, or public transport. It spreads destinations farther apart, making car ownership increasingly necessary for basic needs.
The result? Those who shop without cars subsidise parking for those who drive while facing less convenient access themselves.
Workplace Parking: The Invisible Pay Cut
When employers provide "free" parking, research shows the costs often come from employee wages.
This creates an unfair system where employees who walk, bike, or take public transport effectively subsidise their colleagues who drive, often receiving lower wages without the benefit of "free" parking.
Put together, these various forms of "free" parking create a self-reinforcing system that increases car dependency, raises costs across the board, and disproportionately burdens those with lower incomes.
The Hidden Impact on Poverty and Inequality
Before the car, transport expenses for low-income families were minimal; most people walked to work, shops, and community services. Today, the hidden costs of our "free" parking policies have dramatically changed this equation, creating a system that disproportionately burdens those with the least resources.
"Free" parking sounds beneficial to people with low incomes. After all, not having to pay for something must be good, right? The reality is much more complex and often cruelly ironic. Those with lower incomes end up paying for parking they don't use or benefit from in multiple ways:
Public Transport Deficits: Less Service for Those Who Need It Most
Low-income households are significantly less likely to own cars. In the United States, approximately 30% of first income quintile households and 10% of second income quintile households don't own vehicles. They depend on public transport to access jobs, education, healthcare, and essential services.
When governments allocate limited transport budgets to free parking infrastructure rather than public transport services and active transport infrastructure, they effectively prioritise resources from non-drivers to drivers. Those free commuter parking spaces represent millions in capital and maintenance costs that could fund more frequent or expanded services.
Additionally, the traffic congestion created by free parking policies slows down buses and increases commute times, creating a time penalty for those who can least afford it.
Forced Car Ownership: The Ultimate Poverty Trap
When public transport is inadequate due to underfunding, many low-income households face an impossible choice: own a car they can barely afford or accept severe limitations on job opportunities and essential services.
The cost of car ownership, including purchase, insurance, maintenance, fuel, and parking, can consume a significant proportion of a low-income household's budget.
Housing Cost Inflation: Paying for Parking You Don't Use
Mandatory parking requirements in housing developments create a particularly unfair burden. For the lowest income quintile, one parking space represents approximately 6% of their annual budget, and two spaces consume about 12%, costs they must pay regardless of whether they own a vehicle.
Wage Depression: The Parking Paycheck Penalty
If a low-income household is in work, they may receive lower wages so their employer can provide free parking, even if they don’t use it.
Price Inflation: The Hidden Shopping Surcharge
Goods and services are more expensive as businesses need to cover the costs of the ‘free’ parking they provide. This means that people who walk, bike, or take public transport to shop effectively subsidise parking for those who drive.
Lost Housing Opportunities: Cars Over People
Perhaps most concerning is the opportunity cost of dedicating valuable public land to car storage. Government-owned land near train stations occupied by commuter parking could instead provide well-located affordable housing, giving low-income families both affordable homes and affordable transport options.
The Transport Wealth Gap
The cumulative effect of these policies is a transport system that systematically transfers wealth from lower-income households to higher-income ones. Those with more resources receive substantial subsidies for their preferred mode of transport, while those with fewer resources face higher costs and fewer options.
When we factor in how free parking encourages sprawling development patterns that make car ownership increasingly necessary, we see a self-reinforcing cycle of inequality: transport policies that benefit those who already have more while limiting opportunities for economic mobility among those who have less.
Proven Policy Solutions: From Policy to Practice
The good news is that to fix ‘free’ parking, we're not starting from scratch. Governments around the world are implementing effective policies to end "free" parking while creating more vibrant, accessible communities. These include:
Market-Rate Pricing: Putting Public Assets to Work
When parking is priced appropriately, remarkable things happen. Demand becomes manageable, cruising for spaces decreases, and revenue is generated that can be reinvested in community improvements.
Success Story: San Francisco's SFpark program uses demand-responsive pricing, adjusting rates based on occupancy levels. This ensures spaces are available when needed while generating revenue that supports public transport.
Parking Benefit Districts: Creating Local Value
One powerful policy approach is creating parking benefit districts, where revenue from priced parking stays in the neighbourhood to fund local improvements. This can transform parking into a community asset.
Success Story: Old Pasadena, California, transformed from a declining commercial district to a vibrant destination by implementing metered parking with revenue dedicated to public improvements. The district now generates over $1 million annually for streetscape improvements, maintenance, and safety programs.
Unbundling Parking: Pay Only for What You Use
"Unbundling" separates parking costs from housing or commercial space costs, allowing people to pay only for the parking they actually need. This simple change can substantially reduce housing costs for car-free households.
Success Story: Seattle eliminated parking requirements in many areas while encouraging developers to unbundle parking costs. The result? A 40% reduction in parking spaces in new developments and rental savings of 15-20% for non-car-owning residents.
Parking Cash-Out Programs: Equal Benefits for All
Parking cash-out programs require employers who provide free parking to offer the cash equivalent to employees who don't use it. This ensures that public transport users, cyclists, and pedestrians receive the same benefits as drivers.
Success Story: When California implemented a parking cash-out law, participating employers saw a decrease in driving to work, while carpooling increased, public transport use rose, and walking/cycling grew.
Reduced or Eliminated Minimum Parking Requirements
Removing mandatory minimum parking requirements allows developers to build the right amount of parking based on actual demand rather than arbitrary formulas. This reduces housing costs and encourages more efficient land use.
Success Story: Minneapolis eliminated parking minimums citywide in 2021. Early results show more affordable housing development, adaptive reuse of existing buildings, and vibrant small-scale commercial projects that would have been impossible under previous requirements.
Implementation Considerations: Getting It Right
Successful implementation of these solutions depends on careful attention to context and community needs:
- Phased Implementation: Gradual changes allow for adjustment and demonstration of benefits
- Transparent Revenue Use: Clearly showing how parking revenue improves local services and builds public support
- Distribution Provisions: Programs to ensure low-income residents and small businesses aren't adversely affected
- Complementary Transport Improvements: Ensuring viable alternatives to driving are available
- Clear Communication: Helping the public understand the full costs of free parking and the benefits of reform
These proven solutions demonstrate that ending "free" parking is possible.
Why These Solutions Aren't Widely Adopted.
Despite compelling evidence and successful case studies, parking reform faces significant resistance. Understanding these barriers is essential for creating effective change strategies.
The Invisibility Problem: Hidden Costs Stay Hidden
The actual costs of "free" parking remain largely invisible to most people. When parking is bundled into housing costs, embedded in lower wages, or spread across higher consumer prices, these connections aren't obvious. This invisibility creates a perception that parking is free, making reform seem like it's taking something away rather than correcting a hidden subsidy.
Political Asymmetry: Concentrated Benefits, Diffuse Costs
The politics of parking create a classic imbalance: those who benefit from free parking (drivers who use specific spaces) are acutely aware of their benefit and motivated to preserve it. Meanwhile, those who bear the costs experience these impacts in diffuse ways that don't trigger political mobilisation.
Status Quo Bias: Psychological Resistance to Change
Once established, "free" parking creates an expectation that becomes difficult to change. Behavioural economics shows that people value preventing losses more highly than acquiring gains of the same magnitude, meaning the perceived "loss" of free parking feels more significant than the gains from better-managed parking systems.
Planning Inertia: "We've Always Done It This Way"
Many transport and planning departments continue using outdated approaches like "predict and provide" models that forecast parking demand based on historical patterns, then aim to meet that demand without questioning underlying assumptions or considering alternatives.
The Car-Centric Paradigm: Designing for Vehicles, Not People
Decades of car-centred planning have created institutional cultures where access for cars is the default priority. This mindset frames parking as an essential service rather than one transport element to be balanced with other community needs.
Data and Analysis Gaps: Flying Blind
Many jurisdictions lack comprehensive data on their parking assets, usage patterns, and true costs. Without this information, decision-makers can't accurately assess current conditions or the potential impacts of policy changes.
Fragmented Governance: Who's in Charge Here?
Responsibility for parking policy often spans multiple government departments, transport, planning, economic development, and housing, creating coordination challenges and diffusing accountability. No single entity "owns" the parking problem or its solution.
Fear of Economic Impact: Business Anxiety
Many business owners and local officials fear that ending free parking will harm retail districts despite evidence suggesting the opposite. This economic anxiety creates powerful resistance to change.
Concerns for Low-Income Households
Well-intentioned concerns are often raised to oppose parking pricing but without a comprehensive analysis of how current "free" parking policies disproportionately burden lower-income households.
Creating Conditions for Change: A Roadmap for Transport Leaders
Shifting away from "free" parking policies requires more than technical solutions. It requires strategic leadership that builds understanding, creates political space for change, and implements reforms thoughtfully. Here's how transport professionals can create conditions for lasting change:
Make the Invisible Visible. Improve analysis into the true costs of free parking, including making the subsidies transparent and how households on low incomes are impacted by transport.
Elevate Parking to Strategic Asset Management Improve Asset Management so we use our assets more efficiently and consider the whole of government outcomes on the assets we use. This may require:
- Moving the responsibility for the decisions on using an asset away from an operational part of transport
- Establishing performance metrics beyond occupancy, including revenue generation, turnover rates, and contribution to broader government goals and
- Creating dedicated funds from parking revenues that reinvest proceeds in local improvements.
Replace "Predict and Provide" with Vision-Led Planning, therefore removing the assumption that the solution is to provide more parking.
Implement Incremental Changes with Visible Benefits. Big-bang approaches to parking reform risk generating resistance. Incremental changes with clear benefits can build support over time:
- Begin with pilot programs in areas experiencing parking pressure
- Direct initial revenue to highly visible local improvements
- Document and publicise outcomes, particularly positive business impacts
- Use successful pilots to build momentum for broader implementation
Create Proactive Alternative Solutions to Anticipated Demands for More Parking. When parking becomes scarce, the siren calls for larger parking provision become louder. Transport professionals need to be on the front foot with alternative solutions, such as charging for parking and improved public and active transport provision.
Build Powerful Reform Coalitions. Parking reform gains momentum when diverse stakeholders recognise shared interests in change, for example, collaborating with small business associations on the benefits of ending free parking.
Share Success Stories and Best Practices. Great resources are available for reforming parking, such as the Parking Reform Network, which has documented places that have reduced or eliminated parking requirements. These can be used to provide training programs for transport professionals.
Conclusion
The myth of "free" parking has persisted for decades, quietly shaping our cities and transport systems in ways that systematically disadvantage those with the least resources. As we've explored, these policies create hidden costs that disproportionately fall on low-income households: higher housing prices, reduced transit service, lower wages, and more expensive goods and services.
The good news is that the solutions are well-established and proven. Cities from San Francisco to Minneapolis and Vancouver to London demonstrate that better parking policies create better communities. When we price parking appropriately, remove arbitrary requirements, and manage our parking assets strategically, we create opportunities to invest in transport options that work for everyone.
Transport professionals have a unique responsibility in addressing this challenge. We understand the technical aspects of parking management but must also become translators who can make these complex issues understandable to policymakers and the public. We must become coalition builders who can connect parking reform to better outcomes. And we must become leaders who can guide communities through challenging but necessary changes.
The journey away from "free" parking won't happen overnight. It requires patience, strategic thinking, and incremental steps that build trust and demonstrate benefits. But each step, whether it's a pilot program for performance-based pricing, the removal of parking minimums from zoning codes, or simply better data collection about parking usage, moves us toward transport systems that work for everyone, not just those who can afford to drive.
As you consider your community's parking policies, ask: Who bears the hidden costs of "free" parking in your city? Who would benefit from reform? And what small step could you take tomorrow to create better transport choices?