To defuse a labor dispute that brought the nation to the brink of a potentially catastrophic railroad strike, negotiators needed to resolve a key issue: schedules that staff say were punishing, upending their personal lives and driving colleagues from the industry.
Staff, industry analysts and customers say the practices emanate from a business model that focuses relentlessly on holding down expenses, including labor costs. They are saying this leaves rail networks with little capability to work around a disruption, whether or not it’s a private issue for an worker or a natural disaster like a hurricane — or, for that matter, a pandemic.
Negotiations by which the Biden administration took an lively role produced a tentative contract deal announced early Thursday. The agreement included a big pay increase for the employees, whose base wages typically start around $50,000 and top out around $100,000, excluding additional time and advantages. But scheduling was the sticking point.
Unions complained that to administer a shortfall of employees, the carriers effectively forced their members to stay on call for days and sometimes weeks at a time, partly through using strict attendance policies that may lead to disciplinary motion and even firing. They said the policies pushed staff to the boundaries of their physical and mental health.
“Every facet of your life is dictated by this job,” said Gabe Christenson, who until this yr worked as a conductor for a big freight rail carrier. “There’s no strategy to get away from it.”
Carriers said employees could take day without work through paid vacation, income alternative for sick staff or removal of themselves from the list of obtainable staff.
“Railroads provide multiple ways for workers to take time to look after themselves and their families,” the Association of American Railroads, an industry group, said in an announcement earlier this week.
By Sunday, leaders of 10 of the 12 unions within the talks had agreed to contract terms. But two unions representing conductors and engineers — about half the 115,000 freight rail staff involved within the dispute — held out for a concession on scheduling, like the flexibility to see a physician or attend to a private matter without risking disciplinary motion.
“It could not harm their operations to treat employees like humans and allow them to handle medical issues,” Dennis Pierce, president of the Brotherhood of Locomotive Engineers and Trainmen, one in every of the 2 unions, said in an interview on Monday. “It’s the first outstanding issue, one we won’t budge on — the request that they stop firing individuals who get sick.”
After the tentative deal was announced, the 2 unions said it included “contract language exempting day without work for certain medical events from carrier attendance policies.” The agreement would require ratification by union members, a process that would take just a few weeks.
In some respects, the freight rail industry is analogous to other swaths of the economy, similar to retail and food service, where employers have imposed increasingly lean staffing in recent many years.
Rick Paterson, a longtime industry analyst with the investment bank Loop Capital, said the staffing trend for railroads became more pronounced within the early 2000s when, after years of consolidation, carriers and their investors began to acknowledge that that they had pricing power.
In consequence, the dominant business model within the industry shifted from one by which the carriers sought larger volumes of traffic to at least one by which they sought to extend profits by raising prices and lowering expenses like labor costs.
“They realized that if growing pricing is sweet for margins, then keeping costs low is even higher,” said Mr. Paterson, who has referred to this considering as “the cult of the operating ratio,” after the ratio of operating expenses to revenue.
The side effect, nonetheless, was to progressively eliminate any cushion in staffing levels.
Unlike many staff, the conductors and engineers who operate trains don’t get weekends or other consistent days off.
Sept. 15, 2022, 7:20 p.m. ET
As an alternative, said Mr. Pierce, the president of the locomotive engineers union, staff go to the underside of a listing of obtainable crews after they return home from a visit that may last days. The less the employees, the shorter the list, and the less time it takes for them to be summoned into motion again.
“It might probably go on indefinitely, till they interrupt the cycle by taking paid day without work, which the businesses routinely reject,” Mr. Pierce said.
Major U.S. freight rail carriers began to speed up the staffing cuts in recent times as they switched to a system referred to as precision scheduled railroading, or P.S.R., which focuses on scaling back excess equipment and employees and streamlining the shipping process.
The industry has said P.S.R. enables carriers to run more efficiently and supply more reliable service, while also improving profits. Freight rail customers and employees say it has resulted in deteriorating working conditions and customer support and little resilience in coping with unexpected circumstances, like weather emergencies. The Surface Transportation Board, a federal regulatory agency, estimates that the carriers have 30 percent fewer employees today than six years ago.
Reducing labor to match this operating model can have been sound in principle, said Mr. Paterson, the industry analyst. But he said the carriers appeared to have reduce an excessive amount of to permit them to handle potential disruptions, of which the pandemic was an epic example.
“Whenever you do P.S.R., you possibly can drop your head count by 30 percent, but why don’t you drop it 28 percent and construct in a crew reserve?” he asked. “That didn’t occur.”
With little margin for error, carriers found themselves with too few staff to operate their rail networks once business began to get better within the second half of 2020, putting an increasing number of stress on their staff, and making it even harder for them to take day without work.
When Mr. Christenson, the longtime conductor, who can also be a co-chair of the industrywide group Railroad Staff United, began feeling run-down last yr, he was reluctant to see a physician. Under his company’s attendance policy, taking an unplanned day without work may lead to disciplinary motion, and “I frightened about triggering an investigation,” he said.
So he waited until he could get an appointment on a scheduled day without work just a few months later, at which point he got bad news: He had an infection that might need been easily resolved with medication but now required surgery.
“That they had to chop infected tissue out in my leg,” Mr. Christenson said.
Railroad staff and their families, a lot of whom asked to stay anonymous for fear of reprisals, said similar attendance policies, that are partly intended to administer the industry’s labor shortfall, had resulted in staff’ missing essential life events.
This yr, for instance, BNSF Railway introduced a latest point system for some employees, in response to a February memo obtained by The Latest York Times. Under the policy, staff were awarded 30 points to start out with and would lose points — from two to 10 — for scheduling a day without work for quite a lot of reasons, including a family emergency, sickness or fatigue. They lose much more points for being unavailable on the last minute.
When staff run out of points, they face escalating penalties, starting with a 10-day suspension, followed by a 20-day suspension and ending with possible firing. Staff can earn back points by being available for 2 weeks straight.
BNSF said on Thursday that the policy was “designed to enhance the consistency of crews being available for his or her shifts” and to present employees more “predictability and transparency” regarding their schedules. It said that this system was achieving those goals but that revisions had been made to present employees more flexibility.
One railroad employee said the fast turnaround time between shifts had forced him to skip doctor’s appointments to deal with his symptoms of long Covid. Railroad staff’ relations said they rarely celebrated birthdays or holidays together even before the pandemic.
Staff say that while they’ve paid vacation and days allotted for private leave, the constraints that employers impose — like requiring vacation to be taken in limited windows which might be far oversubscribed, or just rejecting a proposed personal day — severely limit their options as a practical matter.
Shippers have grown frustrated, too.
Rail cars filled with grain sat at production facilities within the Midwest for weeks at a time earlier this yr, far longer than typical, said Max Fisher, the chief economist and treasurer for the National Grain and Feed Association.
Chemical manufacturers, which depend on freight rail to maneuver their products, have grown increasingly frustrated with the carriers since December, in response to three surveys by the American Chemistry Council, an industry association. The most recent, conducted in July, found that 46 percent of the businesses felt that rail service was getting worse, while only 7 percent said it was improving.
“Freight rail has been a relentless thorn in our side and been a big challenge for our members for quite a while,” said Chris Jahn, the organization’s chief executive.
While the labor agreement announced on Thursday may avert a strike, it’s unlikely to resolve the deeper issues which have put unions and rail carriers on a collision course. Even when carriers desired to turn back the clock on efforts to extend efficiency, they’d have shareholders to reply to.
After Bill Ackman, the activist investor, won a proxy battle over the freight carrier Canadian Pacific a decade ago, the corporate hired Hunter Harrison, who pioneered P.S.R., as its chief executive. Mr. Harrison imposed the system there after which at CSX after joining that company in 2017, prompting investors to pressure other carriers to follow suit to eke out similar efficiencies.
“Lurking within the background is the constant threat of shareholder activism if any of the railroads’ operating ratios turn into outliers on the high side,” Mr. Paterson said in testimony to the Surface Transportation Board this spring.