The Spark

“The emancipation of the working class will only be achieved by the working class itself.” — Karl Marx

Railroads Slash Workers for Wall Street

Feb 3, 2020

Railroad companies fired more than 20,000 rail workers just in the past year, the biggest layoffs in rail since the Great Recession and a nearly 10% decline in rail employment, according to the Department of Labor. The main reason for these large-scale layoffs is to increase profits through automation and cost cutting, by having longer and faster trains and using fewer workers.

The seven major freight railroads have idled nearly 30% of locomotives in the past year, as they aim to run fewer, but longer, trains. The average train length has increased 25% since 2008 to about 1.4 miles, according to the Government Accountability Office. These companies can run 3-miles-long trains, each with 220 cars.

The freight railroad companies also adopt new technologies and more efficient techniques of directing rail traffic for on-time delivery of goods. Now, the goal is to minimize stoppage time at their terminal stations and use the same locomotive and crew as much as possible, like the airplane shuttles. These new train systems are aided by new technology such as drones and artificial intelligence to monitor tracks and send customers alerts about train locations. Fully automated freight trains, which already began running in Australia a year ago, will be the next target.

As a result of these changes, and adoption of new technologies and operating schemes, the freight railroad companies started to increase productivity and cut the workforce. For example, although railroad company Norfolk Southern’s freight volume declined by 6%, the company reduced crew costs through firings by 13%. The company called these layoffs “good productivity,” and said the company was “accelerating” this strategy heading into 2020. That is, they are going to lay off more people.

Wall Street applauded these changes and railroad stocks soared in 2019. Norfolk Southern and Union Pacific stocks were up 30% last year, and Kansas City Southern’s shares were up more than 60%. The gains were better than the overall market.

So, only the rich benefitted from these changes.