Rail labor groups today released a report calling for public ownership of Class I freight railroads in the U.S., arguing that the current system is broken because it’s beholden to Wall Street.
The 98-page report contends that the Class I railroads’ relentless focus on cost-cutting has hurt safety, service, employees, infrastructure investment, and passenger service.
“Why has this happened? Simply put: instead of investing in their workers, in safe infrastructure, and in quality services, the Class Is prefer to cut costs to the bone in pursuit of short-term profits to lavish on their shareholders in the form of stock buybacks and dividend payments,” wrote the report’s author, Brown University undergraduate and Stone Fellow Maddock Thomas. “Railroad executives hold the operating ratio — derived from expenses as a percent of revenue — to be supreme. As a result, railroads will refuse even profitable traffic if it means their ratio of expenses to revenue might rise by 0.5%. This short-term profit-focused management system is no way to steward our nation’s critical rail infrastructure.”
A publicly owned system, Thomas argues, would fund infrastructure improvements and electrification, improve and expand service, involve workers in decision-making, create jobs and maintain adequate staffing levels, and shift freight to rail.
As precedent, the report leans on the nationalization of railroads during World War I, when the U.S. Railroad Administration oversaw the industry from 1917 through 1920 and helped relieve bottlenecks that constrained the movement of freight to East Coast ports. After the war ended, rail labor lobbied unsuccessfully to keep railroads in the USRA’s hands.
The paper also notes how Conrail was able to rescue freight railroading in the Northeast after the bankruptcy of seven railroads, including Penn Central.
The report – Putting America Back on Track: The Case for a 21st Century Public Rail System – examines alternative ownership models found in Europe, including open access, franchising, and fully integrated public operation.
“This paper is intended to rekindle a national conversation about our rail network. It is time for railroad workers, communities, shippers, climate activists, and rail passengers to support the Public Rail Now campaign for a publicly owned rail system – a rail system that works for all of us,” Thomas wrote.
The report was funded by Railroad Workers United, through the Railroad Workers Education & Legal Defense Foundation, as well as the John L Hammond Fund.
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