http://www.amtrak.com/ccurl/137/692/Audited-Consolidated-Financial-Statements-2012.pdf Under wages, salaries, and benefits it seems to make a very large expense. 2.0 billion or so seems to be going there. If that could be reduced with everybody taking a haircut and labor automated wherever then losses could be possibly ended. That seems to be where most Amtrak’s subsidy is going.
How would the union react to a pay cut? Or job cut?
I think greater efficiency in used of people and equipment is a more productive answer.
Short of blatant union-busting tactics, reducing labor expenses can be difficult at best. Unilateral wage reductions are out of the question and I’m not sure as to how many positions can be eliminated by automation and/or further mechanization.
That is exactly what Tom Downs attempted in 1997. Didn’t work out too well for him.
Unilateral (read: forced) renegotiation of contracts is a non-starter. However, if the wage scales are out of line with comparable situations, there could be some savings in the next contracts. Attrition as retirements occur is another possibility. But as others have pointed out, one reason Amtrak has such a high payroll is the labor-intensive nature of the LD trains, compared to the corridor routes.
I honestly don’t see there being an issue with labor being so much higher than all other expenses on the balance sheet. Compared to other passenger operations in this country, Amtrak’s 50% labor to all other expenses is reasonable. Here is some quick research in to the labor expense ratios for some other passenger railroads in the US: New Jersey Transit 52%, SEPTA 59%.
All Amtrak and commuter trains have multiple conductors compared to freight trains which typically have 1 conductor. Amtrak long distance trains have additional crew members for handling food service and sleeping / coach car attendants. Unlike the airline and bus industries, Amtrak’s payroll includes right-of-way (track/signal/structures) maintainers, engineering, police, dispatching, etc. For airlines, dispatching/air traffic control is covered by the FAA, airports are maintained and staffed by local governmental authorities, security is provided by the Feds (TSA).
So based on the above explanation, it makes sense labor would be such a big expense. If you really think about it, moving people is very labor intensive process. Think of how many people are involved in transporting people on an airplane or a ship (cruise or ferry) let alone a train (Amtrak or commuter). It a lot of people.
Amtrak has a fair number of service personnel on its trains. We have discussed eliminating them but the elimination does not come from automation; it comes form eliminating the services they perform. For example, if Amtrak eliminates sleeping cars it can eliminate service attendants for sleeping cars. That would be a change of policy. So far Amtrak has declined to make that change of policy.
To simply reduce wages would not doubt injure morale. It would also do nothing to reduce the costs of operating crew dorms and of housing crew members between trains that run 3 days a week. Working on a train makes its own demands on people. Providing direct service to the public not only makes its own demands but also requires high moral. Crew members with low morale will not necessarily be rude or obnoxious; however they can generally drag their feet, be hard to find when they are needed and do a lot to erode the standard of service Amtrak needs to provide. Reducing wages could cause Amtrak some real problems.
Also, some here have pointed out that Amtrak is structured as a for profit corporation. In for profit corporations employees have a right to collective bargaining over wages. Any wage cut would have to be negotiated with unions who most likely would oppose it. Had Amtrak been structured as a part of government rather than a for profit corporation then there would be no right to collectively bargain over wages. Federal employees today are represented by unions but those unions cannot bargain over wages; wages are set by law. In recent times there have been years
“Cost walks on two legs”
That´s a known fact for just about any type of industry you can think of, including AMTRAK. If you want to cut down on cost, you have to cut services, which will in return cut down ridership.
Most of the European state-owned railroads went down that route in the 1950´s up until the late 1960´s, which really did not solve the issue at all, as revenues declined faster that costs could come down. It was as late as the mid 80´s when they found out that improved services would take people back to riding trains. Improved services means improved comfort, on-board services and speed…
But why do Amtrak workers have to be paid 2.3 times that of European counterparts. Europe is just as well developed as us. Also Amtrak indirectly funds pensions “Today, the burden of nascent railroad worker pensions, including those of freight railroad workers, are financed by Amtrak, regardless of whether such workers were ever employed by Amtrak or worked in passenger railroad service. In effect, Amtrak subsidizes the pensions of thousands of railroad workers who would otherwise not receive any pension.” Amtrak also has high regulatory costs yet they have high costs imposed upon them yet people criticize them for not making money when they are prevented from doing so.
That´s a figure I cannot verify. It may be true, if you include low-wage countries like Romania, Bulgaria, Estonia, Lithuania, even Portugal, Spain, Czech Republic etc. into that calculation, but then you are not comparing like with like. Just an example:
An engineer´s base salary is to the tune of $ 4,000 a month in Germany - times 13 in a year, as he receives a 1 month´s salary as what we call “Christmas bonus” . Add to that the mandatory employer´s contribution to social security and health insurance and the total labor cost add up to $ 70,000 a year for this person.
I doubt that railway people in the US cost 2.3 times that much.
here is where I got my figures from Amtrak, Office of Inspector General, “Comparison of Amtrak Infrastructure Labor Costs to European Railroad Averages,” Evaluation Report E-09-01, March 24, 2009, p. 2.
http://www.amtrakoig.gov/sites/default/files/reports/LaborCostandEfficiencyReportE-09-01.pdf
On,
Where are you getting your claptrap about pensions? ATK is a railroad so it pays into Railroad Retirement and its employees draw Railroad Retirement when they retire, as do all qualified railroad employees. Like Social Security RR is a transfer program. Those who are working pay those who are not. Once taxes are paid in they loose their identity and get paid out. This is true of all participants and all employers. If ATK goes away, ATK pensions will be paid by freight railroad employees.
Mac McCulloch
The report concerns “infrastructure workers” not operations employees, such as engineers and crew.
Much of the difference is because of the higher costs of Amtrak benefits. When you look at base salary it varies with Amtrak being at times more and at times less than other countries.
The big benefit cost driver is health insurance. American health insurance costs much, much, much more than health insurance in any western nation. For example, Canada pays about 20 per cent as much as we do for a health insurance system that covers all Canadians. We Americans have massive inefficiencies in our system that has nothing to do with Amtrak or railroads; it is the same for all Americans. Finally, when the study looks at health costs it includes the money that Amtrak employees pay themselves for their health insurance. Since the study claims to be about costs to Amtrak for employees when it includes costs the employees themselves pay it is hard to see how the study is valid.
Amtrak’s problem isn’t the pay rate or benefits per employee…it’s how many of them they have and what they produce!
I stayed at a hotel near O’hare last week. Lots of cool early aviation pix all around the place. One shows a smiling crew walking arm and arm away from their DC-6. There were NINE of them. How many now on a 100 seat jet? Four, maybe? Magic?
How many on the Crescent in 1970? How many now? Where would you like me to start?
Or, perhaps more pointedly to the critics, "how many could you cut before the service began to degrade to bus-like do-it-yourself levels?
Yes. There are 158,000+ RR employees at the Class 1s. Amtrak has about >20,000 of them. FIgure at least 1/3 would continue on paying RR retirement for whoever would run the NEC trains (they are not going away - Amtrak or not). Not negligible, but not a deal breaker, either.
How many on Acela?
Re: Railroad Pensions.
A Railroad Pension has two parts called Tier I and Tier II.
Tier I is similar to a Security benefit and includes all earnings whether or not from one or more railroads. However, there are no benefits for disabled children of retired or disabled railroad workers as there are for retired or disabled people who collect social security.
Tier II is a pension over and above Social Security and is based on railroad work.
To get a Railroad Pension a person must have 120 months of work (10 years) for the railroad and be at least 62. If you have 360 months of work (30 years) you need to be 60 years old. If you have fewer than 120 months of work for the railroad your railroad earnings will be included in a Social Security Benefit.
They are separate, but equal. Sort of. Your service time would count toward SSI if you left the railroad and retired from a “regular” job. You would be collecting SSI in that case. The IRS counts Tier I the same way they count SSI for tax purposes.
Tier II is really a “defined benefits plan in drag”, sort of. You and the RR pay money into a fund and pensions are paid out. The IRS counts this like a regular retirement annuity.
If one manages 30 years of service by age 60 AND they are still working for a RR at that time, they can retire at 60 and collect a full share of Tier I and Tier II. If you leave the RR before age 60 and take another job that is covered by SSI, then SSI rules apply.