[Did you know that railroads are the most profitable industry
sector in America? No, that’s not a good thing.]
[[link removed]]

STRIKE SETTLED. NOW LET’S NATIONALIZE THE RAILROADS.  
[[link removed]]


 

Timothy Noah
September 16, 2022
The New Republic
[[link removed]]


*
[[link removed].]
*
[[link removed]]
*
*
[[link removed]]

_ Did you know that railroads are the most profitable industry sector
in America? No, that’s not a good thing. _

, Bill Clark/CQ-ROLL CALL/Getty

 

The threat of a paralyzing rail strike was narrowly averted on
Thursday
[[link removed]] through
last-minute labor negotiations by the Biden administration. There are
many political and economic reasons to feel enormous relief (assuming
the accord gets ratified by union rank and file). But it hardly means
the nation’s rail system is in good health.

Before this week, most Americans probably had little idea that they
remain so utterly dependent on rail freight; about one-third of all
freight in the United States travels by rail. As much as that is, it
isn’t enough. To the extent rail freight could be made to displace
trucks, that would greatly reduce America’s carbon footprint. Trucks
belch out nearly 10 times
[[link removed]] as
many greenhouse emissions per ton-mile as trains.

But rail freight’s market share isn’t expanding; it’s shrinking
[[link removed]], and rail service
is getting crappier, because the financiers who control the industry
expect an obscenely high return on investment. At its heart, that’s
what this week’s labor dispute was about. It’s time to think about
nationalizing rail freight.

The power flexed this week was that of labor, not management, making
this look like a story about unions. And yes, the 12 rail unions
involved in these negotiations, representing workers for Class I
railway companies (the biggest), possess more clout than we’re
accustomed to seeing in the labor movement. Like dockworkers, rail
workers are immune to the erosion of the U.S. manufacturing base
because it doesn’t really matter where the goods they move
originated or where they’re going. Consequently, like dockworkers,
railway workers earn excellent pay. Last year, the median hourly wage
for railway workers was about $31
[[link removed]],
compared to a median hourly wage for autoworkers of about $25
[[link removed]]. Median total
compensation (wages plus benefits) for the Class I railway workers
affected by the new agreement is about $130,000
[[link removed]]. A railway worker in
their twenties with only a high school diploma or a GED can bring
home
[[link removed]] a
six-figure salary.

On Wednesday, Labor Secretary Marty Walsh convened the labor
negotiations that produced the tentative agreement. I’ve
been critical
[[link removed]] of
Walsh, but this is a clear victory for which he deserves credit, along
with Deputy Labor Secretary Julie Su and the White House economic
team, including President Joe Biden, who reportedly was involved
directly in the negotiations. (Transportation Secretary Pete Buttigieg
and Agriculture Secretary Tom Vilsack also played a role.) The
agreement includes a 24 percent pay increase over five years plus a
$5,000 bonus, and it’s retroactive to 2020 because the rail workers
have been working without a contract for three years.

Money wasn’t the sticking point. A Presidential Emergency
Board proposed
[[link removed]] the
24 percent pay hike in July. (The unions requested 31 percent, the
railroads offered 17 percent, and the emergency board split the
difference.) The point of dispute was that the railroads were imposing
Dickensian work rules governing time off. Workers were required to be
on call 24/7. If they declined an assignment, they lost points. The
workers started with about 30 points. If they took a sick day, they
lost (according to a 2021 Union Pacific document
[[link removed]]) between three
and eight points. If they declined an assignment for some other
reason, they lost 10 points. If they burned through all their points
within a 90-day period, the workers were subject to disciplinary
proceedings.

The unions were demanding more predictable schedules. They were
particularly incensed that workers were penalized for doctor visits
and medical procedures—during a Covid pandemic, no less. In the end,
the railroads agreed
[[link removed]] to
an additional paid day off and to allow workers to go to the doctor or
get a medical procedure done without having to forfeit points. The
points system itself, though, remains in place.

Perhaps you’re wondering—and if you aren’t, you certainly should
be—why an industry that’s supposed to pride itself on predictable
schedules for train departures and arrivals can’t produce
predictable schedules for its workers. You probably have some quaint
picture in your head—perhaps the Stage Manager in _Our
Town__,_ examining his pocket watch as Shorty Watkins, down at the
depot, watches the Albany train pull in. Passenger service still
operates like that (or is supposed to), but not freight. Freight
schedules are pure chaos, and the railroads aren’t willing to employ
enough workers to make that chaos even minimally functional. Instead,
the railroads cut the Class I workforce by 29 percent over the past
six years, a net loss
[[link removed]] of
about 45,000 employees.

The culprit is something called Precision Scheduled Railroading. PSR
is a system dreamed up in 1993 by the late E. Hunter Harrison, who at
the time was chief executive of CSX Corp., the legacy company of the
old Chesapeake & Ohio Railway. PSR isn’t about predictable
schedules. It’s about moving freight cars on a just-in-time basis.
The idea is that you move freight cars as they arrive in the depot,
rather than waiting to accumulate a great many freight cars to move in
a single, long train. “This approach eliminates
variability,” according to
[[link removed]] a
Union Pacific P.R. document, “allows for more precise supply chain
management, and results in more consistent transit times.”

That’s the theory. In practice, according to
[[link removed]] the
Presidential Emergency Board, since the advent of PSR, trains have
gotten longer, averaging 9,500 feet as opposed to 7,000 feet, and
nearly one-third less frequent. Shippers are paying more, and labor
costs are falling as employment dips. Consequently, profits are up.
Way up.

PSR, wrote
[[link removed]] House
Transportation Committee Chair Pete DeFazio last year
in _Fortune,_ “is not some fancy optimization strategy to increase
freight volume or improve operations and reduce emissions; rather, it
is a business strategy promoted by Wall Street to boost short-term
profits.” The railroad companies have been Wall Street’s
plaything throughout their half-century decline. Financiers endlessly
pull rail companies apart, recombine the pieces at random, and sell
off rights of way whenever possible. (Those rail-to-trail bike paths
don’t come free.) The Class 1 railroad BNSF, for instance—a.k.a.
the Burlington Northern and Santa Fe Railroads—is owned by Warren
Buffett’s Berkshire Hathaway. Even for a “value investor” like
Buffett, who shuns PSR, running a railroad today isn’t about moving
freight; it’s about pushing costs down and revenues up.

The result has been that railroads—_railroads!_—were, as of 2019,
the most profitable industry sector in America, according to
[[link removed]] the _American
Journal of Transportation__,_ with a profit margin of 51 percent. By
comparison, real estate (the selling of the world’s most finite
resource, land) ranked number two at 41 percent, and tobacco (an
addictive substance) was number three at 31 percent.

Railroads are more profitable than the banks that control them. But to
be clear, it’s the banks that are in charge, not the railroads. The
trains are an afterthought.

Since 2004, railroad profits have increased 676 percent
[[link removed]] and
railroad stock prices have increased 1,250 percent
[[link removed]].
This is the sort of return more commonly associated with criminal
enterprises. “Profit margins can’t rise further,” wrote
[[link removed]] Bloomberg
Opinion columnist Thomas Black last month, “without inflicting even
more damage on customers and workers.” That was Bloomberg Opinion
talking, not the _Daily Worker._

Philip Longman of the Open Markets Institute points out
[[link removed]] that
the federal government didn’t just stand by when the nation’s
railroads were built back in the mid-nineteenth century. Taxpayers
subsidized their construction in exchange for charters requiring
railroads to serve all customers on equal terms. Today these charters
go unenforced. The Interstate Commerce Commission, which President
Bill Clinton closed down in 1995, regulated train routes and
schedules, something that President Jimmy Carter decided was
unnecessary when he deregulated trains along with airplanes and trucks
in the 1970s. It was an interesting experiment. It failed.

Writing last year in _The Washington Monthly__,_ Longman suggested
[[link removed]] that
the railroads might be ripe for nationalization. There’s a precedent
for doing so in times of national emergency, which is a fair
description of our current climate crisis; President Woodrow Wilson
nationalized the railroads during World War One. Alternatively,
Longman suggests, we could nationalize only the tracks. That would
not, he noted, be “all that different from how the Interstate
Highway System works.” America’s train tracks are in terrible
shape. If the federal government acquired them and then brought them
up to the level of U.S. highways, maybe high-speed passenger rail, a
technology widely available in Europe and Japan for four decades,
could finally arrive on these shores. (Don’t talk to me about
Amtrak’s Acela, which theoretically can do 150 mph but typically
travels from Washington to New York at a poky 70 mph.
[[link removed].])

Clearly, we’ve got to do something. This week’s rail crisis
provided a window on how dysfunctional the American railroad industry
is. By the time Wall Street’s done picking over the bones,
there’ll be nothing left. Labor’s threat to shut down rail freight
was a cry for help. Let’s save our railroads while they’re still
there.

_TIMOTHY NOAH is a New Republic staff writer and author of The
Great Divergence: America’s Growing Inequality Crisis and What We
Can Do About It._

_THE NEW REPUBLIC was founded in 1914 as an intellectual call to arms
for public-minded intellectuals advocating liberal reform in a new
industrial age. Now, two decades into a new century, TNR remains, if
anything, more committed than ever to its first principles—and most
of all, to the need to rethink outworn assumptions and political
superstitions as radically changing conditions demand. Visit The New
Republic website to subscribe or donate. [[link removed]]_

* railroads
[[link removed]]
* strike
[[link removed]]
* Politics
[[link removed]]
* freight train workers
[[link removed]]
* nationalization
[[link removed]]
* big business
[[link removed]]

*
[[link removed].]
*
[[link removed]]
*
*
[[link removed]]

 

 

 

INTERPRET THE WORLD AND CHANGE IT

 

 

Submit via web
[[link removed]]

Submit via email
Frequently asked questions
[[link removed]]

Manage subscription
[[link removed]]

Visit xxxxxx.org
[[link removed]]

Twitter [[link removed]]

Facebook [[link removed]]

 




[link removed]

To unsubscribe, click the following link:
[link removed]