Despite headcount gains over the first six months of 2022 for train and engine employees working for the U.S. operations of the Class I railroads, the six-month average accounting for all categories of employees has barely moved from the first six months of 2021, according to data submitted by the Class I railroads to the Surface Transportation Board.
The year-over-year changes come as rail stakeholders are wondering if and when the Class I railroads’ efforts to ramp up hiring to match network capacity needs will pay off. The railroads have been aggressively hiring new employees to improve rail service, which deteriorated in the first half of 2022 and put the railroads under regulatory scrutiny.
The changes also come as the freight railroads and the unions have been in negotiations for a new labor agreement for over two years.
Train and engine employees, the employment category that is most sensitive to market demand for rail and rail volumes, has been increasing for the past six consecutive months. June’s total was 48,080 workers, up 1.3% from June 2021.
Indeed, the six-month headcount average for train and engine employees is 47,454 for 2022, up 2% from a six-month average of 46,526 workers for the first half of 2021.
But the six-month average for all U.S. Class I railroad employees is 114,845 workers, compared with a six-month average of 114,909 employees in 2021, with headcount declines in four of the six categories reported to STB. However, the total number of employees working for the U.S. operations of the Class I railroads has grown sequentially for the past six months, starting in January.
| All Employees | Train and Engine | Professional and Administrative | Executives, Officials and Staff Assistants | Maintenance of Way and Structures | Maintenance of Equipment and Stores | Transportation (other than train and engine) | |
| January-June 2021 average | 114,909 | 46,526 | 10,142 | 7,287 | 28,298 | 17,918 | 4,738 |
| January-June 2022 average | 114,845 | 47,454 | 9,746 | 7,619 | 28,061 | 17,269 | 4,696 |
| Difference | -0.06% | 1.99% | -3.90% | 4.55% | -0.84% | -3.62% | -0.89% |
During earnings calls in July, Class I executives fielded questions from investors about when the hiring initiatives will pay off.
“We are expecting updates to hiring initiatives on upcoming 2Q earnings calls (starting later today with CSX) as we look to 3Q as a proving ground on whether recent consistent labor additions at the rails can materially alleviate highly scrutinized service issues to deliver volume growth as the window of opportunity narrows under a demand backdrop with downside risks,” said Bascome Majors, transportation analyst for Susquehanna Financial Group, in a July 21 research note.
Those efforts are ongoing: Norfolk Southern (NYSE: NSC) recently announced it has increased conductor trainee pay to $25 per hour, on top of a potential on-the-job training incentive of $300 per biweekly pay period. Conductor trainees may also earn up to a $2,500 starting bonus, with that bonus rising up to $5,000 at 12 priority locations.
| REPORT OF RAILROAD EMPLOYMENT – CLASS 1 LINE HAUL RAILROADS | |||
| NUMBER OF EMPLOYEES MID-MONTH | % OF CHANGE FROM | % OF CHANGE FROM | |
| June 2022 | June 2021 | May 2022 | |
| Total — All Employees | 116,251 | 0.28% | 0.41% |
| Executives, Officials and Staff Assistants | 7,763 | 5.73% | 0.99% |
| Professional and Administrative | 9,859 | -2.29% | 3.31% |
| Maintenance of Way and Structures | 28,492 | -0.53% | 0.45% |
| Maintenance of Equipment and Stores | 17,382 | -1.57% | -0.14% |
| Transportation (other than train and engine) | 4,675 | -1.60% | -0.38% |
| Transportation (train and engine) | 48,080 | 1.34% | 0.01% |
June’s rail employment data from the U.S. operations of the Class I railroads. (Chart: Surface Transportation Board)
While the railroads have said their hiring efforts are working and more recruits are in the pipeline, the training involved in preparing to take on some of the roles, such as train conductor or train engineer, takes several months, according to Todd Tranausky, vice president of rail and intermodal for consulting group FTR Associates.
That means that although new hires are coming on board, the service improvements will likely be gradual as recruits get settled and accustomed to the workplace.
“If you look at railroad employment, it’s a flat line. It takes several months to get a new employee in and get them qualified and trained to productively move freight … [and so] I don’t expect to see material change [in intermodal service improvements] until at least second-quarter 2023,” Tranausky said during last week’s FTR webinar on the state of North American freight.
Is rail employment at a crossroads?
The industry has faced heat from federal regulators who have questioned whether the drop in headcount levels at the Class I railroads contributed to deteriorating rail service in 2022.
Some observers have said precision scheduled railroading — a method that seeks to streamline railroad operations and reduce costs — drove the decline. But the railroads have said the COVID-19 pandemic and challenges in the labor market have contributed to the decline and a more challenging environment to hire workers, not just for the railroads but for other industries as well.
Observers have also said that in past cycles, the railroads historically would furlough employees on a seasonal basis, with employees returning to work when the railroads needed them. However, after workers were furloughed during the COVID-19 pandemic, many workers didn’t return.
Underpinning these potential root causes for the decline in rail employment is a big question that’s being addressed somewhat in the ongoing negotiations for a new labor contract: Should operations transition to where one of the members of a freight train crew is on the ground while the other train crew member drives the train? AAR and freight rail companies have contended that this option should be considered as a way to attract people to work for the freight rail industry.
“It’s really more of a lifestyle challenge in a very unique market where everybody is looking for talent. So, you have to compete against everybody simultaneously. So, labor has their choice of what they want to do,” NS CFO Mark George told investors during NS’ second-quarter 2022 earnings call Wednesday. “And in many cases, despite the very rich and attractive pay structure that the railroads offer, sometimes they’d rather work in a more predictable schedule in warehousing or in home construction where they can be nearby where they live and not stay in hotels, and also, just not be on call or work third shift.”
The recently proposed rule from the Federal Railroad Administration on establishing a minimum train crew size of two members for most freight trains addresses this question to a degree because it calls for operations to continue as they have been historically run.
However, FRA’s proposed rule does allow railroads to apply for one-person crews on a case-by-case basis.
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Dawn
The railroad doesn’t pay their employees enough for the constant inconvenience of being on call 24/7/365. Their “attractive pay schedule” is great for a M-F 9 to 5 job with weekends off. A hiring bonus of $100,000. is not enough to off set the toll railroad schedule takes on a body and every relationship in your life and everything else that working for the railroad takes from us. I get it, these clueless people that have never done anything but sit in an air conditioned office and never had a moment of their personal time imposed upon, cannot fix this, they do not have the capacity to understand what it is to live like their Trainmen employees or their families. Get some with a clue about what we are going through to help you get it. Treat your employees like they are the ones that are making you your record billions because it sure is not all of those people that you pay so well to sit on their butt and talk out their face hole and getting you zero results.
Arthur
This article is ridiculous. Carriers: “we swear we are trying hard to hire.” Employees: “I cant live a life on call 24/7/365 98% of the time with max 1 day off a month to see family or get mental rest. I quit!” Carriers: “wow, i dont understand. Maybe $25/hour will fix it. Or sign on bonuses! Yes sign on bonuses.” Employees: “are you kidding me? I quit too. You guys are blind.” Carriers: “why isnt this working?!” Employees: “because you’re new attendance policies make people feel like they zero autonomy over their lives, if an couple emergencies happen or we get sick we’re screwed and fired so we may as well quit now and save ourselves the stress. It’s not worth it.” Carriers: *intentionally ignoring employees* “wow, well we know the attendance policy is solid, our employees are happy, maybe more money? Increase the hiring bonuses! And tell our current employees they’re worthless and need to live with a 10% pay cut when accounting for CPI and increase health plan costs at the presidential emergency board meeting! That’ll do it!” Employees: “are you f$&&ing high? You know why people are quitting. The attendance policies were the last straw.” Carriers: “hmm did you hear something? Ok we need to call the news outlets and make sure the public knows we are trying, and blame covid.” Employees: “people are quitting during training to go to jobs that dont treat them so poorly. Its not covid! Its not people choosing to leave the workforce. Its you’re work policies.” Carriers: “we need to promote one man crew not as a money saving scheme ignoring safety logic, how do we spin this? Oh i know! Appealing job description! Perfect!” Employees: “seriously? No one half awake, on call 24/7/365 wants to drive a train alone for 12 hours, be gone 60 hours traveling away from home ALONE, then get 10 hours at home and repeat with max 1 day off. Are you mad? You want to fire conductors so why would they apply, for a job description you clearly miscalculated as far as job satisfaction? And engineers dont want to work that way. So why would they stay?” Carriers: “we need to keep pushing this, because not only can we reduce workforce and save money but we isolate employees so they can stop getting these bright ideas and stop leaning on each other for support. 2 birds one stone.” Katie Farmer: “i WILL have one man….” FRA: “two man crew rule proposed!” Katie Farmer: *head pops off*