Getting the Railroads Back on the Track
When President Bush said the other day that a railroad strike “could severely disrupt the economy” and prolong the recession, it may have come as a surprise to many Americans that railroads were still so important.
Yet the fact is, railroads still haul most of the nation’s coal, lumber, chemicals, paper and food products, as well as most of the automobiles--which travel most of the way from factory to dealer by rail. Railroads are also responsible for commuter services in many major cities.
More to the point, if the railroad strike--which was scheduled to begin today--went for two weeks, 500,000 employees in many industries would suffer layoffs, according to Transportation Secretary Samuel K. Skinner.
However, the strike is most unlikely to last two weeks. Congress will step in as it has on 11 occasions in the last 30 years with emergency legislation to get the trains running again. Then Congress will impose a settlement of the labor dispute along lines laid down by a Presidential Emergency Board, which recently studied the railroad labor situation for eight months.
And if you’re wondering why this industry’s labor problems must be settled by Congress and blue-ribbon presidential panels, a single Emergency Board recommendation will help explain matters. The board ruled that a “normal” day’s work in the railroad industry should be extended to 130 miles travel from 108 miles now--which itself is a recent addition to the original 100-mile-day laid down by President Woodrow Wilson in 1916.
That’s right, Woodrow Wilson. The railroads’ wage standards are laid down on a formula that says eight hours work, or 108 miles travel, whichever comes first, earns a day’s pay--now an average of $120 per day. The formula was devised in a time when trains ran roughly 12.5 miles per hour, taking account of frequent stops. Today the average train speed, again allowing for stops, is said to be 22 m.p.h.--but trains on long runs, Chicago to Los Angeles, say, go 75 m.p.h. That means a railroad worker can go 216 miles in roughly three hours and make two days’ pay.
The upshot is that railroad labor costs are massively uncompetitive with those of trucking companies. The average annual railroad wage is roughly $42,000 to $55,000 with fringe benefits. The average trucker’s wage is $26,000 to $30,000.
So the truckers have a tremendous edge in bidding for business. And they’ve been winning--the railroads’ share of intercity freight as measured by revenues has fallen to 14% from 75% half a century ago.
Truth is, the railroad industry is a monument to featherbedding, misregulation and resistance to change. Which is no joke. The railroads serve as an example of how we all pay a price when vital industries are allowed to languish and decay.
Think about it. Because we haven’t paid serious attention to trains in recent years, we have highway congestion but no serious efforts to build high-speed experimental trains--such as they have on the Tokyo-Osaka corridor in Japan or the Paris-Marseille run in France.
We have air pollution, but almost no one has suggested that trains are a solution, even though they can haul a great deal with fewer emissions than convoys of trucks.
There could be hope. The presidential panel’s attempt in the current dispute to change decades-old work rules could mark a turn for the better.
The railroads’ troubles are not all labor’s fault. Rail managements, although they’ve improved lately, often paid more attention to financial wheeling and dealing than to rails and service. So such names as Pennsylvania, New York Central, Chicago, Milwaukee and Rock Island have disappeared.
It’s a historic business. Built by visionaries and robber barons such as Edward H. Harriman, Jay Gould and James Hill, the railroads’ long-distance operations pioneered modern management and communications systems.
Railroad unions were pioneers, too. The railway labor brotherhoods established the rights of working people to organize and bargain collectively. But the unions have declined, from a high point of 1.5 million members in 1955 to 235,000 today.
Regulation is partly to blame. In the 1920s, some railroad companies, seeing their business properly as transportation, wanted to get into the new airline field. Nothing doing, said the Interstate Commerce Commission, which had been set up to regulate the railroads in 1911. Regulation was reactionary. Because rail barons had gouged shippers with extortionate rates in the 19th Century, the ICC imposed slow and laborious rate-setting regulations in the 20th Century.
With the advent of interstate highways in the 1950s, truckers began to pass the railroads by.
Things could change. Railroad companies have modernized and are providing innovative service. The Santa Fe railroad has a freight hauling joint venture with J. B. Hunt, a trucking company. CSX, the old C&O; railroad, owns a shipping company and is carrying goods to Kuwait as it carried supplies to operation Desert Storm.
But the railroads could do a lot more. “They have an environmental advantage going for them,” says analyst Graeme Anne Lidgerwood of First Boston. And it’s an industry just made for technology--for greater use of satellite guidance and computers.
If they changed their ways, the major intercity railroads--the Union Pacific, Norfolk-Southern, Santa Fe and others--could take business back from trucks. The proof is in short-line railroads, such as the San Diego & Imperial Valley Railroad and about 200 others across the country that specialize in short-distance hauling. Like mini-mills in steel, the short-line roads have changed ancient work rules and wage schedules. And they have taken business back back from trucks and prospered.
The point is, Congress may stop a strike, but it can’t really produce change. Only railroad management and unions can do that. Maybe they could be pioneers for the 21st Century as they were for the 19th.
