Effect of Inflation on Railroad Working Conditions versus Wages

[Euclid]

In my opinion, it is misguided to focus on improving working conditions when the elephant in the room is wages that are actually falling every minute.  It is hard enough to adjust to the falling wages, let alone raise them back up once they have suffered a large accumulative drop over time. The effect of this current inflation should sound alarm bells among railroaders and their unions.   

 

This current labor shortage is directly related to the current dropping of wages due to inflation.  As wages drop, fewer people want the job.  In that sense, the labor shortage illustrates how inflation quietly erodes wages.  But I am not so sure that many people realize their wages are falling.  They don’t appear to be falling.  They seem to be remaining the same.  The fall can only be seen in the paycheck being unable to buy the same amount of goods and services that it could buy the day before. 

 

The rising cost of inflation is only a secondary effect, but not the actual primary cause, which is the drop in the value of money due to monetary policies inflating the money supply.  The actual money supply acts just like a commodity, in that when there is abundance of a commodity, demand falls, and so its price/value falls.

 

With inflation, the effect that the falling value of money has on labor cost means that the employer cost of wages is falling even though the wages have not changed at all.  This happens without the employer actually cutting wages as an intentional act.   It happens because inflation reduces the value of money and thus reduces the buying power of money.  So with this falling value of money, it means that the employer is reaping the benefit of the falling value of money as it applies to wages.  It would be just like if your boss cut your wages every few days while requiring the same amount of work.

 

During inflation, a company will raise the cost of its goods and services according to the loss of value of money.  All companies will do this with their production and also in conjunction with all of their supply chains, so prices will rise like a tide.  The only impediment will be when this collective price increase is passed on to the end user/consumer.  That group will then decide whether they need the goods and services at the new inflated price.  They are likely to cut their consumption of goods and services as their prices rise.  That is just simply supply and demand. 

 

But there is no inflation-related force at work to raise the price of labor engaged in the production of goods and services.  Certainly the employer is not going to raise wages to offset inflation, unless the falling wages caused by inflation make it too hard to hire new people to sustain the labor pool.  Other than that need for new employees, employers will ignore the employees’ need for higher wages to offset inflation; yet they gladly exercise their prerogative to raise prices on their transportation product in their own self-interests.  There again, the only force opposing them will be the end users of their transportation product deciding whether the inflated price is too high.   

 

[jeffhergert]

I say the only reason they DO get some to hire out is the current wages.  They are above almost all other blue collar jobs.

Yes, the inflationary pressure is felt by all wage earners, the lower the wage level, the more it is felt.  About the only thing one can do it is find a way to raise your wages.  For many, the only way to do that is to take a different job.

The railroad TE&Y crafts have always been demanding of a person's quality of life, i.e. time away from work.  With the current PSR environment those pressures have intensified.  Couple that for a new-hire that as soon as there is a dip in traffic the railroad will cut them off for who knows how long someone might think twice about even trying.  If that's not enough, add the fact that all the class ones are saying they need to eliminate a large part of their work force.  That is trainmen, conductors.  The jobs that new hires are going to hold for quite a while.

Jeff

 

 

  

[tree68]

Perhaps a bit of the Hawthorne Effect comes into play here.

A study done quite a few years ago sought to determine the effect the lighting in a factory had on production.  The plan was to gradually lower the light level and see what happened.

Unfortunately, the workers were made aware of the study.  The darker the factory got, the more production rose...

People will do a job they enjoy for starvation wages.

You can't pay people enough to do a job they don't enjoy.

Every personnel management course I've ever taken has placed pay pretty far down the scale of what's important to people.

By most accounts, the pay at the Class 1's is reasonable.  Of course, few will turn down an increase in wages, but that's not the issue.

The issue is the quality of life - many factors of which have been mentioned in various threads here.  

The cure, of course, is to hire more help, and to keep that help on the books.  A couple of bean counters just died of fright - doing so will cost money the railroads don't want to spend (or should I say, the activist investors).  But knowing that I'll be going to work at the same time each day, and will be able to enjoy some semblance of a family life has a value the bean counters cannot compute.

[Convicted One]

Euclid

The only impediment will be when this collective price increase is passed on to the end user/consumer.  That group will then decide whether they need the goods and services at the new inflated price.  They are likely to cut their consumption of goods and services as their prices rise.  That is just simply supply and demand. 

I really believe that the problem is a little more complex than you give credit for.

For the past several decades, the labor market has been a buyer's market.   Now with boomers starting to leave the workforce in significant numbers....that is changing.... expanding opportunities for good paying jobs that do not require as big a sacrifice in "quality of life"  areas.   So, fewer people are finding it necessary to sell out,  just to find a decent paycheck.

Even if the railroads up the ante by $20K/yr,  some prospective employees might be swayed, but not everyone.

 

[charlie hebdo]

Three very elucidating responses to an interesting though overly simplified initial post.Thanks!

[Murphy Siding]

      I'm hesitant to jump into a thread that will probably run off the tracks as being not really about railroading. <There, I put in my effort to make it somewhat railroad oriented. 

      euclid wants to make it all about money. That's too simple-minded. In more realistic terms, it's more like bang for the buck. Your job has to have a balance between what you get paid, how much you like or dislike the job, and whether you can pay the mortgage and have a life. It's a moving target, as so many factors affect it.

      Like it or not, I am middle management. I have about 17-18 guys working for me. On average, most of us have worked there between 10 and 15 years. (33 for me, and I'm about 6th in time companywide). My newest guy has been there a month. I haven't had an overly amount of turnover, but the rate is increasing. In the last 12 monts, I've had 4 people move on. All 4 had worked there less than a year. Two left for personal reasons (their personal lives were a mess and they thought being a mess at a different job would somehow be different?) One left for better pay, but more importantly, better opportunities to advance. The most recent one left to develop his part-time business into his full-time dream job. None of the 4 left simply because the employer down the road is paying more. There's always that balance.

     What works for my operation is to treat employees like humans and not like replaceable cogs in a machine. Treat your employees well and they will treat the company well. Treat them like dirt, and you get what you deserve. Right now, I have 18 guys that work together as a team. We're all rowing in the same direction and we all know where we're going, and why. And, they all get along with each other!

      Seven miles away, our sister company has the exact same operation, with a different outlook and different results. 

     Our upper managment must be similar to that of a railroad, or any other big corporation. It's all about money and money is all about numbers- people be damned, you're getting in the way of additional profits.

      A lot of years back, I worked for a big corporation. When they sent any paperwork to employees, it was always sent to your home address. They didn't put your name on it. Mine were addressed to Big Corporation employee #43-04. I always felt like that was their way of reminding me that I was a replaceable part in a machine.

      This month, we set a new all-time sales record. Next week, I'm ordering pizzas for the crew and telling them thanks for their hard work. I won't hear a peep from upper management about the sales record, but I will hear about why I spent precious company money on pizza. I bet the railroads don't buy pizza for their employees or tell them thank you for their hard work. They probably should.

     Pay is important, but it's not the only thing that keeps people at a specific job.
      

[BaltACD]

Murphy Siding

...

      This month, we set a new all-time sales record. Next week, I'm ordering pizzas for the crew and telling them thanks for their hard work. I won't hear a peep from upper management about the sales record, but I will hear about why I spent precious company money on pizza. I bet the railroads don't buy pizza for their employees or tell them thank you for their hard work. They probably should.

     Pay is important, but it's not the only thing that keeps people at a specific job.

I can't speak to the PSR world of railroading.  That being said, when I was still working local management would 'reward' the employees of my facility when some particular objective had been achieved.  Sometimes it would be a pizza party, sometimes it would be a catered BBQ party.  While I was working, local management, did view us as valued human beings.

Since I have retired, the Dispatching Office was moved back to Jacksonville with a number of people, that came from Jacksonville in 2008 remaining in Baltimore and NOT following their jobs back to Jacksonville.  Shortly after the Dispatching Office was moved the lease for the space occupied by both the Dispatching Office and the Division Offices was canceled after being in effect for in excess of 40 years.  The space was immediately leased by Cowan Trucking.  The Division Offices were moved to some location on the property of the Curtis Bay Coal Pier (which had a coal dust explosion in December 2021).  A garden spot to work. [/sarcasm]

[Lithonia Operator]

The purchasing power of railroad wages is for sure affected by inflation. Of course. But such is the case for every single other job in the economy. So I don't believe Euclid's theory holds water.

I tend to believe Jeff. With inflation high, people will gravitate more to high-paying jobs, despite the working conditions. So railroads may actually be doing better with hiring than many other industries.

This is railroad forum, so we are more aware of the RR labor shortage, but all sectors are greatly affected. This is more than anything a result of Covid.

Could railroads attract more labor if working conditions were better. Sure. Same as other industries.

 

[Convicted One]

Qualifier: this is just the way I would look at it.   If I could earn $50-60 grand a year bending conduit or servicing peoples furnaces AND HAVE a semi-normal home life vs earning $70 grand per year as a locomotive engineer, but having to endure the unusually demanding schedule plus the hostile management style we hear so often about........the choice to me.... is simple,.. sayonara foamers!!

 

IF for some reason the railroads decided to sweeten that  to $90K.....I might think about it as far as the lop sided schedule goes....but still having to deal with an employer that believes harrassing it's employees is key to it's survival, is still a deal killer.

Plus, where is the railroad gonna get the extra $20K?   If they try to get it from their customers,  I suspect that all the business that the railroads have managed to claw back from trucking, will go back to the trucks, volume goes down, and demand for labor follows.

They aren't gonna get it from  the stockholders, they've grown accustomed to their loot.

And I don't see the executive wing cutting back their compensation packages, in order to share.

So, I believe a big part of the reason that things currently are the way they are, is because the rank and file is the "low hanging fruit" as far as who management can squeeze and get away with it.  Good luck trying to change that.

[diningcar]

Are we all forgetting that WE, with our pension funds, are the stockholders?

You and I, with our meager investments, are hardly recognizable.

[Murphy Siding]

Convicted One

Plus, where is the railroad gonna get the extra $20K?   If they try to get it from their customers,  I suspect that all the business that the railroads have managed to claw back from trucking, will go back to the trucks, volume goes down, and demand for labor follows.

They aren't gonna get it from  the stockholders, they've grown accustomed to their loot.

And I don't see the executive wing cutting back their compensation packages, in order to share.

 

Something I feel the Scrooge McDucks of the world don't understand is investing in employees. Let's say that investing in a new machine or new technology made a company more efficient and more profitable, but it cost $20,000 per year. Even though the gains were more than $20,000, would a company buy into it? It works the other way as well.  I'll guarantee you, that any company that cuts wages or benefits suddenly has employees that aren't as efficient as they used to be. The Scrooge McDucks just don't get it.

[BaltACD]

Murphy Siding

 

Convicted One

Plus, where is the railroad gonna get the extra $20K?   If they try to get it from their customers,  I suspect that all the business that the railroads have managed to claw back from trucking, will go back to the trucks, volume goes down, and demand for labor follows.

They aren't gonna get it from  the stockholders, they've grown accustomed to their loot.

And I don't see the executive wing cutting back their compensation packages, in order to share. 

Something I feel the Scrooge McDucks of the world don't understand is investing in employees. Let's say that investing in a new machine or new technology made a company more efficient and more profitable, but it cost $20,000 per year. Even though the gains were more than $20,000, would a company buy into it? It works the other way as well.  I'll guarantee you, that any company that cuts wages or benefits suddenly has employees that aren't as efficient as they used to be. The Scrooge McDucks just don't get it.

Remember that the PEB report stated that employees weren't responsible for profits.

[Convicted One]

Murphy Siding

Let's say that investing in a new machine or new technology made a company more efficient and more profitable, but it cost $20,000 per year. Even though the gains were more than $20,000, would a company buy into it?

I used to have to "sell" improvement projects to a results-oriented entrepreneur all the time.  And I found that his expectations were.....dynamic.   

If ithe idea was something he wanted to do anyway, a payback in 7-10 years was more than acceptable.   Projects he was less enthusiastic over, that bar was raised considerably.

 

Maybe I should have capitalized Loot? 

[Euclid]

Yes of course I understand that working conditions are important.  Bad working conditions are part of the burden of the work.  My point was not that working conditions should not be considered, but only that this may not be the best time for that. 

 

Do railroaders have an automatic provision right now that raises their wages to keep up with inflation?  Many companies do have that, or they have regular employee reviews that will address that and raise compensation to cover the rising costs of inflation.  Social Security also has that with an automatic system that raises benefit payouts. 

 

If ever it was a good time to fight for higher wages, it is now with this seriously rising inflation; and also with the issue of railroad worker shortage.  When you conclude that I am looking at this negotiation phase in too simple of terms, I would say yes, that is actually the point because taking this off into the weeds of demanding a solution to all of the working condition problems is likely to fail precisely because of its complexity. 

 

A demand for higher wages is simple.  Everyone understands money as being the main reason why people work.  A demand for more money only has to be clarified as to the amount of money demanded.  Negotiations are most effective if the demands are simple.  You lose negotiating power if your demand is complex, controversial, and highly intricate with details.  It may seem that the more issues you include in your demand, the stronger it will be overall.  But the demand is usually diluted as its complexity rises.  Not having a wage increase for several years-- plus the actual reduction of wages caused by a year’s worth of inflation is a powerful basis for a demand for higher wages. 

 

But the issue of better working conditions will come with endless distractions and variations leading it deep into the weeds.  Here is how the railroads will look at this issue:   The purpose for the relatively higher pay that already exists is to compensate for the adversity of tough working conditions. 

 

Even if an agreement is reached, it will be hard to know if the company will live up to it.  The complexity leaves lots of wiggle room to dodge the requirements of the agreement.  In any case, many elements of the agreement will have to include things that the railroads will say simply cannot be done with their 24 hours per day operations and complex operating conditions. 

 

Can someone post a few links to specific demands by the unions for improvements in working conditions?  I have read many articles about how the employees all want better working conditions.  I have yet to see a list of what those better working conditions would specifically be.   Everybody knows about the hardships of being on call with uncertainty about when a call will come, or working nights with irregular days off, fatigue and sleep disorders caused by irregular shifts,  working too many hours per week, disruption of the circadian rhythms, etc.  It is common for people to tell you that railroading would be a great job if not for these harsh conditions. 

 

I would not conclude that it would be impossible to fix these problems, but they did not just come about because indifference to human comfort, or a malicious means of torture inflicted by management.  They have been considered a necessary part of the job for at least 150 years.  Nevertheless, it is always possible to improve conditions around the margin.  But I think it would help to just come up with a detailed plan for what labor wants for better working conditions, and how it could be implemented.  Then make that an official proposal as part of the negotiations. 

[Murphy Siding]

     Euclid-

     On a thread a little while back, you mentioned that you did contract excavating work, or something similar (?) How are you compensating your employees so that their real wages are keeping up with inflation?

[Backshop]

Murphy Siding

     Euclid-

     On a thread a little while back, you mentioned that you did contract excavating work, or something similar (?) How are you compensating your employees so that their real wages are keeping up with inflation?

 

I believe that he's his only employee.

As far as him being focused on wages, I don't think he's ever had a job that made "enough money".  Once you've made enough, then you want the time to enjoy it.  If the railroads offered higher wages now, they would want more onerous work rules in return.  Can you say "one man crews"?

[tree68]

Backshop

Once you've made enough, then you want the time to enjoy it. 

I'm pretty sure I've related this story before, but in the current context, it bears repeating.  I've forgotten the source.

A company produced a product that was not terribly difficult on the personnel.  It was mutually decided that said company would go to 12 hour days, and work only three days per week.  Everyone was on board with this.

After a while, the employees asked to return to a more normal schedule.  It seems that they could not afford all the time off.

Think about it - if you like to go camping, f'rinstance, and every weekend is a four day weekend, wouldn't you be tempted to head out virtually every weekend?

 

[Flintlock76]

Backshop

Once you've made enough, then you want the time to enjoy it

I'm reminded of  story the late radio personality Don Imus told about himself.  After being discharged from the Marines he got a job as a brakeman on the Southern Pacific.  He quit after a year.  As he put it "I was making good money on the railroad, DAMN good money, and I liked the job, but I never got a day off!  What's the good of the money if you can't spend it and enjoy it?"

[Euclid]

So what is it that labor is specifically requesting in order to improve working conditions?  Is it just little gestures of friendship, or is it revising work to be like the normal work routine that most people enjoy?  If it is the latter, why would you expect the railroads to grant it?  What would this extensive change cost?  How are the unions defining this transformation of the working conditions? 

[Shadow the Cats owner]

I am in mangement at my company also.  Kind of in the middle where I am where I walk the line between HR safety and Operations.  I am basically the driver's voice for their concerns here.  You would be amazed how many people literally go she does NOTHING to help the bottom line in this place.  But when the CEO goes she alone keeps our turnover rate at a third of the industry rate or lower they go well what does that mean in dollars HR asked him in a meeting recently.  The CEO of the company goes it costs us about 15K to bring in a driver and start them out correct they said around there.  She alone last year before the merger was fully done even after we started changing things at her old company saved us close to 2 million dollars in replacement driver costs.  That was 2 million dollars we used to improve benefits and pay for our drivers company wide which is now used to keep drivers happy.  HR shut up after hearing that one.  After the merger went thru and my workload basically doubled but not to badly as most drivers know that all it takes is a couple words to get me in action and most of my other jobs I did before the merger like log audits and some of the load planning got removed as we have dedicated personal now on that.  Just taking care of over 450 drivers is enough if the old *** hits the spinning disk so to speak.  But the new carrier side has seen turnover drop 60% even in this economy.  So like my new boss says my work is worth the pay.  

[Convicted One]

tree68

Think about it - if you like to go camping, f'rinstance, and every weekend is a four day weekend, wouldn't you be tempted to head out virtually every weekend?  

I worked four 12s per week with Tuesday-Thursday my days off, ....for close to 5 years, and they were the best years of my career. Having that regular 3 days off made the oddball schedule liveable.  Ocassionally I'd get sucked into a 7 day routine for a few weeks (I was salaried), but knowing that it wasn't permanent gave me a "light at the end of the tunnel"  that I could depend upon

 Due to seniority, I was entitled to 4 weeks vacation per year, and  what I found was that due to all the long weekends...vacation time off was not as crucial.  So typically I'd sell 2-3 weeks back to the company each year.

[n012944]

Backshop

 If the railroads offered higher wages now, they would want more onerous work rules in return.   

Railroads are currently pushing the unions to accept the PEB's 24% raise without any work rules changes.

[Backshop]

Euclid

So what is it that labor is specifically requesting in order to improve working conditions?  Is it just little gestures of friendship, or is it revising work to be like the normal work routine that most people enjoy?  If it is the latter, why would you expect the railroads to grant it?  What would this extensive change cost?  How are the unions defining this transformation of the working conditions? 

 

You obviously haven't read any of the replies that people have written in your myriad of threads about working for the railroad, so why should anyone bother answering you.

EXTINCTION!!!

[zugmann]

Euclid

So what is it that labor is specifically requesting in order to improve working conditions?  Is it just little gestures of friendship, or is it revising work to be like the normal work routine that most people enjoy?  If it is the latter, why would you expect the railroads to grant it?  What would this extensive change cost?  How are the unions defining this transformation of the working conditions? 

You've asked this like 3x already, then I give links to the section 6 notices, then you ask it again.  So there's no point in bothering - you'll jsut keep re-asking the question and bringing up the topic until you get an answer you like. 

[PJS1]

tree68

 Every personnel management course I've ever taken has placed pay pretty far down the scale of what's important to people. 

I worked in HR for the first ten years of my business career.  Four of those years were in compensation and benefits.

 

Pay is pretty far down the scale of job values when it meets most employees needs.  However, if they believe they are not being compensated fairly, it shoots to the top of the need’s hierarchy. 

[Cotton Belt MP104]

Zug: As backshop said, Extinction endmrw0901222034

[jeffhergert]

I'm on vacation, so I haven't been watching the forums as close.

1st. The PEB didn't say labor didn't  contribute to profits. The railroads in their testimony to the PEB said that.

2nd. The unions have a request in for a change in attendance policies. To have them negotiated instead of unilaterally imposed. (Current language allows "reasonable" time off, but that is a vague yerm.) They have also requested rest days.  Those items the PEB kicked down the road. Saying they should be negotiated or go to binding arbitration. 

One conductor once told me a buddy of his could offered to get him on the street department where he lived, small town Iowa.  5 day week with lots of overtime weekdays, some weekend emergency, too.  He thought about it, but the pay, good for Iowa,  was about a 3rd of what he was making as a conductor.  He's still with us.

We have a lot of guys with college degrees.  They went railroading because they make more than they would've in their field of study.

While we have lost some people, anecdotally BNSF seems to have lost a lot more. That may be due to the drastic change in what had been, from what I've read, was a very liberal attendance policy.

Jeff

[jeffhergert]

n012944

 

 

Backshop

 If the railroads offered higher wages now, they would want more onerous work rules in return.   

 

 

 

Railroads are currently pushing the unions to accept the PEB's 24% raise without any work rules changes.

 

I've heard the negotiations with SMART-TD and BLE&T are not looking good. The railroads still are wanting less than the PEB recommended.  I've not heard details, but I'm guessing it's over the Healthcare portion. Labor came out ahead compared to what the railroads wanted.

Jeff

[Backshop]

diningcar

Are we all forgetting that WE, with our pension funds, are the stockholders?

You and I, with our meager investments, are hardly recognizable.

 

The difference is that most of us own them through mutual funds from companies like Vanguard and Fidelity.  They aren't the activist investors who cause the problems.

[Ulrich]

Murphy Siding

      I'm hesitant to jump into a thread that will probably run off the tracks as being not really about railroading. <There, I put in my effort to make it somewhat railroad oriented. 

      euclid wants to make it all about money. That's too simple-minded. In more realistic terms, it's more like bang for the buck. Your job has to have a balance between what you get paid, how much you like or dislike the job, and whether you can pay the mortgage and have a life. It's a moving target, as so many factors affect it.

      Like it or not, I am middle management. I have about 17-18 guys working for me. On average, most of us have worked there between 10 and 15 years. (33 for me, and I'm about 6th in time companywide). My newest guy has been there a month. I haven't had an overly amount of turnover, but the rate is increasing. In the last 12 monts, I've had 4 people move on. All 4 had worked there less than a year. Two left for personal reasons (their personal lives were a mess and they thought being a mess at a different job would somehow be different?) One left for better pay, but more importantly, better opportunities to advance. The most recent one left to develop his part-time business into his full-time dream job. None of the 4 left simply because the employer down the road is paying more. There's always that balance.

     What works for my operation is to treat employees like humans and not like replaceable cogs in a machine. Treat your employees well and they will treat the company well. Treat them like dirt, and you get what you deserve. Right now, I have 18 guys that work together as a team. We're all rowing in the same direction and we all know where we're going, and why. And, they all get along with each other!

      Seven miles away, our sister company has the exact same operation, with a different outlook and different results. 

     Our upper managment must be similar to that of a railroad, or any other big corporation. It's all about money and money is all about numbers- people be damned, you're getting in the way of additional profits.

      A lot of years back, I worked for a big corporation. When they sent any paperwork to employees, it was always sent to your home address. They didn't put your name on it. Mine were addressed to Big Corporation employee #43-04. I always felt like that was their way of reminding me that I was a replaceable part in a machine.

      This month, we set a new all-time sales record. Next week, I'm ordering pizzas for the crew and telling them thanks for their hard work. I won't hear a peep from upper management about the sales record, but I will hear about why I spent precious company money on pizza. I bet the railroads don't buy pizza for their employees or tell them thank you for their hard work. They probably should.

     Pay is important, but it's not the only thing that keeps people at a specific job.
      

 

I guess a thank you and a pizza works for some. In my days working for various carriers large and small we had "appreciation days" and other "feel good" events, but they came across as contrived and insincere. But if it works for some people then I suppose they have some value. Personally I never needed thank you gestures, sincere or otherwise, pizzas or fake appreciation events. I did my job..they paid me..The End.