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Hunger for profit endangers rail workers, public

They’re not investing in safety; instead, they’re buying back stocks. It’s all in the name of greed.”

Alex Beckman, TTD’s legislative representative

Wall Street’s insatiable thirst for profit has created a dangerous environment in the railroad industry, especially after wide implementation of stock buybacks and precision scheduled railroading, or PSR. The railroad owners’ actions demonstrate unconcern for their employees—the very people who make their profit—and for public safety, as evidenced in Norfolk Southern’s lukewarm response to this year’s train derailment and subsequent environmental disaster in East Palestine, Ohio.

Train derailments have become commonplace across the United States. According to the U.S. Bureau of Transportation Statistics, the U.S. experiences an average of 1,704 train derailments per year. By comparison, Europe, with its extensive train system, averaged just 6 in 2016, which is common for most years.

Hedge-fund owned railroads have a heavy lobbying presence in Congress. Lobbyists have successfully pushed for lax regulations and scant disclosure requirements on what the trains haul through towns and cities across North America. According to Common Dreams, a progressive news outlet, the rail industry has spent $654 million on lobbying over the past 20 years. All so regulators can legally avert their eyes from trains hauling hazardous materials without full disclosure, making cleanup at crash sites potentially harmful to emergency workers.

The combo of lax regulations and PSR also affects the union members who work for the railroads, including Boilermakers, who perform maintenance, wreck repair and work on railway equipment.

With the heavy implementation of PSR, many union workers were laid off. PSR means longer, heavier trains, smaller crews and having trains in reserve. Fewer workers are needed. Between PSR and stock buybacks, railroads are making record profits, but at what expense?

Problems with PSR

Under the guise of increasing safety and performance, precision scheduled railroading began in the 1990s but came under wider use around 2019, according to IR Chris Browning. It seems the only thing PSR has done is increase profits and enrich shareholders. That greed is causing problems on the tracks.

“It’s precision and Wall Street investors wanting more money back,” said Railroad Division Director John Mansker. “Union Pacific just fired their CEO because he didn’t make enough money for investors. He earned $50 billion [for the railroad] over five years and the hedge funds didn’t think it was enough.”

Browning agrees.

“It’s all about the almighty dollar. They’re not doing anything with their infrastructure,” Browning said. “They’re not investing in their employees. Or safety.”

To increase profit with PSR, the railroads cut crews from an average five to one and increased the length of trains from an average of 50 cars to 100 cars today. To save on repair, railroads took a lot of locomotives out of use.

“With precision, rail companies decided they had too many locomotives, so they stored them so they don’t have to fix a wrecked train,” said Mansker. “Instead, they pull one out of storage. That not only affects our crafts but machinists, pipefitters—all of the railroad.”

There are no more hubs in PSR. “They want to run in direct straight routes,” Browning said.  “If there’s a failure, they have a surplus of trains; and if they need one, they jerk one out of storage.”

Track degradation due to doubling train length and weight, the decrease in routine maintenance and laying off up to half its workforce, have created a perfect storm.

“People are leaving. Infrastructure is wearing down,” Browning said, noting that while railroads are calling back workers, most moved on and found other work.

Even those recently hired are leaving.

“They’re begging for people,” Browning said. “Rail owners keep wanting to rely on wages and benefits. For so many years they did. People used to line up around the block trying to get a job in the 90s.”

PSR hasn’t only decimated the workforce, it’s harming the public as well, as reported in a recent ProPublica article. They noted that while rail profits soar, kids are having to crawl under long trains to get to school. That’s because under PSR, 100-car trains are the norm. And they block crossings while waiting to get into the rail yard.

Because of this, ambulances can’t reach those in need, fire trucks can’t get through and pedestrians get maimed crawling through trains that could move at any moment.

Students can’t simply walk a few blocks around the train to get to school because the train is miles long. The Erie-Times News reported in 2009 that a teen lost her leg hopping between rail cars as she walked home to prepare for prom.

All the while, the railroads demonstrate that their main concern is profit not people.

End stock buybacks

When railroads buy back shares of their own stocks, they enrich CEOs and shareholders.  Because when a company buys back its stock, it’s using money that should be invested back into the business.

That’s why the AFL-CIO’s Transportation Trades Department has recently launched a campaign to end railroad stock buybacks and force rail companies to invest in maintenance, safety and their union workforce.

After the stock market crash of 1929, the Security and Exchange Commission introduced regulations to rein in Wall Street greed. Those regulations included disclosure requirements (e.g. the financial health of a company), anti-fraud requirements (e.g. ending insider trading) and market manipulation prevention, (e.g. ending the practice of artificially inflating stock price through stock buybacks). Stock buybacks were illegal until 1982, when the Reagan Administration once again allowed them in a move to benefit corporations and the wealthy.

“The railroads are making record profits while giving more to shareholders,” said Alex Beckman, TTD’s legislative representative. “They’ve even cut their capital budgets. They’re not investing in safety; instead, they’re buying back stocks. It’s all in the name of greed.”

The TTD launched a similar campaign in the past to support airline pilots and mechanics.

“When Congress said the airlines couldn’t do stock buybacks until the [COVID-19] program expired last August, that led to the airlines investing in workers and hiring more workers,” Beckman said. “Our campaign highlighted and raised the profile of the issue.”

They hope to do the same for the railroads. Ending stock buybacks would free money to invest in the rail workforce, safety and infrastructure.

Time for change

During 2022 contract negotiations, rail unions sounded the alarm at the unsafe conditions in the railroads, such as a one-man crew for a 100-car train and 60-seconds to service a train before it rolls down the tracks. But owners didn’t listen. They wouldn’t give union workers even one sick day.

In final negotiations, the government upheld the wishes of rail owners at the expense of union rail workers and public safety. Due to restrictions of rail unions to strike, unions had to accept what the Presidential Emergency Board decided or risk breaking the law.

But Senator Bernie Sanders never stopped pushing rail bosses to grant seven days sick leave for their workers. CSX was the first rail union to acquiesce—but only for 61% of its workforce and only for four days. Other rail companies are also reluctantly offering sick leave as well. Some are not.

“We asked for that in negotiations and they were adamant we were not going to get it,” Mansker said. “But the media actually helped us this time. They pressed and pressed and that made the CEOs give us sick days. Anybody who works in a shop is getting sick days.”

Time off, safety, and infrastructure improvements are three of the many reasons the TTD and rail unions are alerting the public about the campaign to end stock buybacks. If rail owners began investing in their workers and infrastructure, the railways would be safer for both workers and the public.

More about Precision Scheduled Railroading

When railroads widely enacted precision railroading, they shuttered their hubs to run trains straight through on a scheduled timetable. Maintenance that would have been performed at a hub is now deferred, causing repair issues including an increase in train wrecks. Along with that, they made the trains longer, heavier and staff fewer crew members.

Understanding stock buybacks

Stock buybacks are where a company buys back its own stock, temporarily increasing company profit and enriching shareholders. CEOs and shareholders benefit from this practice, which was made illegal (because it was viewed as market manipulation) after the 1929 stock market crash. The Reagan Administration reversed that in 1982.

What you can do to help

Sign the petition urging rail owners to end the practice of buying back their own stock. www.nostockbuybacks.org