News Posts

On the 40th anniversary of the Staggers Act, Congress should consider its collateral damage to the Nation and take proper action to repair the railroad industry.

Over the last several years, railroad industry stakeholders have become increasingly troubled by the effects of the new business model adopted by the Class I railroads. This so-called “precision scheduled railroading” focuses extensively on cost-cutting as a primary objective. Rail shippers complain of a deterioration of service and “de-marketing” of rail service. Rail employment was cut by about 20% in the last few years, which has necessarily impacted both rail safety and the quality of service.

 
Below is a statement endorsed by all of our rail partners from all of the rail unions, which explains how the confluence of dramatic deregulation, followed by government approval of the major merger and control transactions, that left America with a handful of mega-carriers, leading to the problems currently experienced by shippers, rail workers and communities.  

On the 40th anniversary of the Staggers Act, it had substantial adverse effects on rail employees, and has facilitated the new rail business model that has further reduced employment and led to deterioration of service.

The major railroads are celebrating this anniversary. That is not surprising because deregulation of the railroad industry, along with post-Staggers government approval of mergers and control transactions, that have produced a highly concentrated, but lightly regulated, industry, have combined to produce a 20-year run of historic profits for the railroads, and record returns for their shareholders. In the recent past, shippers had no complaints about Staggers because shipping rates declined in real dollars; but they now worry about the quality of service and railroad responsiveness to their needs; as a concentrated, but deregulated industry that has little need to answer to its customers.  

This is a particularly inopportune time to celebrate passage of the Staggers Act because, in recent years, finance interests have led or pressured the railroads to exploit the deregulatory regime formulated when they were in economic distress, to implement so-called “precision scheduled railroading”, and other cost-cutting measures that have eroded service and eliminated tens of thousands of good paying railroad jobs.  

One group of major industry stakeholders never celebrated the Staggers Act: railroad workers. Between the passage of the Act and completion of the major merger and control transactions, rail industry employment was substantially reduced (from about 500,000 in 1980 to about 250,000 in the early 2000s).

Among other things, the Staggers Act facilitated sales of rail lines to smaller railroads that employed fewer workers, paid less and had less beneficial work rules. Those sales were accomplished without traditional employee protections. At first, the Interstate Commerce Commission approved these types of sales after concluding that the lines to be sold were likely to be abandoned. But then it began to approve sales of what it called “marginally profitable” lines (which, by definition, were somewhat profitable). The major rail carriers protected their own interests in these transactions; they placed restrictions on the sales (physical or contractual) so that the purchaser railroads could interchange traffic only with the seller carriers; that way the major carriers divested themselves of less profitable lines which gathered local freight, while ensuring that they retained the long haul movement of the freight generated on those lines. Rail Labor characterized these as sham transactions, but the ICC approved them citing the Staggers Act and the deregulatory spirit of the Act. The ICC also allowed companies that owned existing rail carriers to acquire new lines that often connected with the lines of their existing subsidiaries without employee protections that were required when rail carriers acquired lines from other rail carriers, by using the scheme of creation of new subsidiaries that the ICC treated as non-carriers since they were new corporations, even though they were commonly owned and controlled with existing carriers.

In approving the major merger and control transactions of the 1990s that reduced the number of Class I carriers to a mere handful, the ICC and Surface Transportation Board relied on Staggers Act amendments and the deregulatory mandate of the Staggers Act. Those transactions were approved based on the notion that shippers and the public would benefit from the consolidations. The railroads asserted, and the ICC and STB agreed, that mega-carriers would provide better and faster service through longer-end-to-end runs, reduced interchanges, and greater system velocity; that efficiencies would be achieved that would result in savings that would be passed along to shippers and the public in general; and that the economies of scale available to larger carriers would allow for increased investment in rail infrastructure. 

During the same period that Congress and the ICC and STB deregulated the railroads and facilitated and approved consolidations as in the public interest, the agencies dramatically increased their regulation of Rail Labor by allowing the merging and commonly controlled rail carriers to use agency processes to gain dramatic changes in rates of pay, rules and working conditions outside the procedures of the Railway Labor Act. When the final big control transaction had been completed, railroad industry employment had been effectively halved, and rates of pay, rules and working conditions were forcibly and dramatically changed under the auspices of ICC and STB authorizations.

In the post-Staggers minimal regulation environment, after the big merger and control transactions were consummated, the profits of the new mega-carriers soared. And for a while, the railroads followed-through on their representations that service would improve, and infrastructure investments would increase. But several years ago, hedge funds and private equity interests took note of railroad profitability and the very light nature of the regulatory regime for such a concentrated industry. There were attempted hostile takeovers of major railroads, and so-called activist investors increased their stakes in railroads; these financial interests promised to institute practices to reduce operating ratios (costs relative to expenses) and increase profits by dramatically cutting costs and service, by focusing on easier to serve/high profit ratio customers, eliminating flexibility in pick-ups and deliveries of rail cars, requiring customers to conform to rigid schedules and lengthening trains (with some as long as 3 miles). This was accomplished through the so-called Precision Scheduled Railroading operating method. At the same time, capital infrastructure work was reduced to further improve operating ratios. As rail carriers that pursued this path saw their operating ratios decline, and their stock prices increased, other railroads adopted similar business models. Shipper complaints escalated. The STB held hearings and tinkered with complaint programs, but it generally was of the view that there was little it could do under the post-Staggers de-regulatory regime. In the meantime, rail employment again took a precipitous decline, from about 245,000 in 2015 to under 200,000 in January of 2020. The profits of the major railroads have skyrocketed over this several year period.

As the 40th anniversary of the Staggers Act approaches, Members of Congress, the STB and industry stakeholders should consider whether the current regulatory regime, that was developed when the railroads were in financial turmoil, and well before agency approval of the big merger and control transactions, makes sense today. Consolidation of the industry was approved because the transactions were deemed to be in the public interest. And with those approvals and the exclusivity that flows from holding an operating certificate comes the responsibility to provide adequate and responsive service. But the financial interests that are currently driving the industry have ignored those aspects of the approvals and the certificates. While a return to the heavy regulatory scheme developed before railroads had competition from aviation and trucking on the federal interstate highway system would not be appropriate, a regulatory approach recalibrated to recognize the reality of the industry as it is today is warranted. This recalibration is necessary to ensure that rail customers receive adequate and responsive service, and that the industry continues to provide good jobs for railroad workers.  

American Train Dispatchers Association  

Brotherhood of Locomotive Engineers and Trainmen/IBT 

Brotherhood of Maintenance of Way Employees Division/IBT  

Brotherhood of Railroad Signalmen 

International Association of Machinists and Aerospace Workers District 19 

International Association of Sheet Metal Air Rail and Transportation Workers- 

Mechanical Division 

International Brotherhood of Boilermakers 

International Brotherhood of Electrical Workers 

International Association of Sheet Metal Air Rail and Transportation Workers- 

Transportation Division 

National Conference of Firemen and Oilers 32BJ/SEIU 

Transportation Communications Union (TCU/IAM)

Transport Workers Union of America

Amtrak Layoffs Unacceptable and Avoidable

Washington, DC — Larry Willis, president of the Transportation Trades Department, AFL-CIO (TTD), issues this statement following Amtrak’s announcement of furloughs beginning October 1:

“For more than 40 years, Amtrak — powered by a dedicated and skilled workforce — has provided reliable, efficient passenger rail service to communities across this country. Now, facing a crisis unlike any other in its history, Amtrak has announced plans to lay off nearly 2,000 employees in the midst of a global pandemic — a move that will have devastating consequences for workers, riders, and our economy.

“While catastrophic, these imminent job losses, as well as damaging reductions in long-distance service, are completely avoidable. Congress must immediately provide this carrier with the funding it needs to preserve its operations and keep its employees on payroll. If lawmakers fail to do so, Amtrak won’t stop at 2,000 jobs. The carrier could ultimately lay off nearly 50 percent of its staff, leaving communities in both urban and rural areas without a vital transportation lifeline, and sending 10,000 workers to the unemployment line. “On behalf of Amtrak’s hardworking, dedicated employees and the communities they serve, we call on Congress to save our national passenger railroad, preserve good union jobs at a time when they are needed most, and ensure Amtrak is able to fulfill its mission now and well into the future.”

Chairs DeFazio and Lipinski Statements on Amtrak Announcing Furloughs of Over 2,000 Workers Due to COVID-19 Crisis

Washington, DC – Chair of the House Committee on Transportation and Infrastructure Peter DeFazio (D-OR) and Chair of the Subcommittee on Railroads, Pipelines and Hazardous Materials Daniel Lipinski (D-IL) issued the following statements in response to the news that Amtrak will furlough over 2,000 workers due to the impact of the COVID-19 pandemic as part of its Fiscal Year 2021 Workforce Plan:

“This week, another 2,000 workers learned that they will be losing their jobs due to the effects of the coronavirus pandemic. This time it is largely Amtrak employees who operate trains, provide onboard services, and support passengers who will bear the brunt of this administration’s failure to lead the country during this pandemic. The jobs at the center of today’s announcement are good paying, union jobs that sustain middle class families and will be difficult to replace, especially in a time of sky-high unemployment,” said Chair DeFazio. “In July, I led the House in passing the Moving Forward Act, which tripled funding for Amtrak to nearly $29 billion. Later that month, the House also approved transportation appropriations legislation that provided $10 billion for Amtrak, including emergency appropriations that contained protections to prevent the furloughing of workers. In fact, our Committee will soon be hearing from workers who are impacted by these furloughs. It’s time for Republicans in the Senate to stop sitting on these important bills and do their job to protect Amtrak employees and so many others currently in need.”

“Amtrak’s announcement that they will furlough over 2,000 employees is disappointing and unacceptable. Amtrak received nearly $1 billion in CARES Act funding with the directive from Congress that they would use the funds to help prevent furloughs. Amtrak has had months to come to Congress and request additional funds if money was needed to help keep workers on the payroll. Amtrak workers provide an essential service to travelers and communities. These workers deserve better from Amtrak leadership. Congress needs to act quickly to prevent furloughs and avoid long distance service cuts. Yesterday’s announcement only heightens the need for action by Congress. As chairman of the Rail Subcommittee I will be holding a hearing next week where I will raise these issues with Amtrak CEO William Flynn.  The subcommittee will also hear from workers and passengers affected by Amtrak’s actions,” Chair Lipinski said.

Additional information: In November 2019, the Subcommittee on Railroads, Pipelines, and Hazardous Materials held a hearing titled “Amtrak Now and Into the Future” where the Committee heard from then-President and CEO of Amtrak Richard Anderson, as well as labor and local stakeholders, on the priorities of Amtrak going forward. To watch the full hearing and read witness testimony, click here

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Coronavirus Relief Act Impacts Railroad Workers

The Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, signed into law by President Trump on March 27, boosts unemployment and sickness benefits for railroad workers impacted by the pandemic.

Under the CARES Act, the 1-week waiting period required before railroad workers can receive unemployment or sickness benefits is temporarily eliminated. This applies to an employee’s first 2-week registration period for a period of continuing sickness or unemployment beginning after the effective date of the law and ending on or before December 31, 2020.

In addition, the amount of the unemployment benefit is increased by $1,200 per 2-week period. This is in addition to the current biweekly maximum of $733.98 received by most claimants. This increased amount applies to any 2-week registration periods beginning on or after April 1, 2020, through July 31, 2020.

The CARES Act includes a separate appropriation of $425 million to pay for this added “recovery benefit,” with an additional $50 million provided to cover the cost of eliminating the waiting period. If these funds are exhausted, the new provisions will no longer apply.

The CARES Act also authorizes payment of extended unemployment benefits to rail workers who received unemployment benefits from July 1, 2019, to June 30, 2020.

Under the legislation, railroad workers with less than 10 years of service may be eligible for up to 65 days of extended benefits within 7 consecutive 2-week registration periods. Workers with 10 or more years of railroad service, who were previously eligible for up to 65 days in extended benefits, may now receive benefits for up to 130 days within 13 consecutive 2-week registration periods.

Since RRB offices are currently closed to the public due to the COVID-19 pandemic, railroad employees are encouraged to file for unemployment benefits online by establishing an account through myRRB at RRB.gov. Otherwise, applications and claims for benefits will need to be submitted by regular mail. Applications for sickness benefits must be submitted to the agency by mail, or by fax at 312-751-7185. Subsequent claims may be completed online by those with myRRB accounts.

The RRB will also pay sickness benefits and, in some cases, unemployment benefits, to rail workers who have tested positive for COVID-19 or been subject to a quarantine order. Further guidance on these types of situations is available at RRB.gov/Benefits/Coronavirus.

32BJ STATEMENT ON PASSING OF PRESIDENT HÉCTOR FIGUEROA

It is with overwhelming sadness and a heavy heart that 32BJ mourns the unexpected passing of union president Héctor Figueroa last night in New York. For those of us who have worked with him to further the well-being of our members and working people everywhere, and felt his personal and principled concern for our members, our staff and others this is a devastating loss. In his many years of service to our union, to the labor movement, and to our communities, he consistently joined together a clear vision about the empowerment of working people with compassion and energy. We extend our deepest condolences to his wife Deidre, his children Eric and Elena, and the rest of his family, as well as to all those in our 32BJ family and beyond who forged strong bonds of camaraderie with Héctor over the years. Details about memorial plans will be forthcoming.

State of Retirement Security

As Gov. Bevin and the Kentucky legislature enter a special legislative session this fall to tackle so-called “pension reform,” here is an informative graphic from the Kentucky Public Pension Coalition with facts about pensions in Kentucky. Follow KPPC on social media for updates on this important issue.

Why You Should Care About Unions

The average person in the United States has essentially zero power in society. That’s why millions have organized into unions over the years. But the slow decline of unionism in the United States should concern you even if you’re not in one.

Unions improve wages, benefits and working conditions for their members. But it’s not just to members’ advantage. Collective bargaining affects pay standards across entire industries, meaning even nonunion workers benefit. Unions also secure legislation that protects all workers, from workplace safety guidelines to a guaranteed weekend. And they reduce gender and racial wage gaps across industries, which contributes to broader equality in society.