Great Moments in Labor Relations

My previous post joking about potential union opposition to unmanned military aircraft reminded me of one of my favorite labor relations stories.   Until just the last few years, most railroads continued to pay a "fireman" to ride in the cab of their diesel locomotives, despite the fact that the role of the fireman to shovel coal into a steam boiler was totally obviated fifty years ago by diesel technology.  How this came about is an interesting story.

Railroads were the first heavy or large industry in this country.  For years, if you were to talk about "big business", you were really talking about railroads.  So it is not surprising that when the government succumbed to the pressure of interfering legislatively into the relationship between employer and employee, their first target was the railroad industry.  In a sense, the US has two bodies of labor law.  The first body of law is railroad labor law, and the second is the law that applies to every other industry. 

As much as we can complain about the labor law most of us operate under, it is nothing compared to the hash that the government made of railroad labor law.  From an early stage, details about work days and work rules that would normally be part of a private labor contract between a company and their union or employees were actually embodied in the law.  For example, back in the steam-engine era when trains moved fairly slowly, a full "day" for a train crew was defined by statute as 100 miles (about the distance a steam engine could go without taking on more water).  Once a train crew had traveled that distance, they were owed a days pay.  Other portions of the law gave the unions incredible power, such that the bargaining table at every negotiation with management was always tilted, by statute, in their favor.

Beginning in the late 1930's, but really gaining momentum in the late 1940's, railroads began to replace steam locomotives with diesel engines.  Diesel locomotives were more reliable, easier to maintain, easier to operate (no coal to shovel) and could go much longer distances without service (steam engines stopped frequently for more water).  As this transition occurred, railroad companies very reasonably sought to eliminate the position of "fireman" on diesel trains.  After all, without a boiler and coal to shovel, the fireman role was totally redundant on a diesel engine.  Railroad unions were nothing if not gutsy, and in response they argued that not only would they not accept elimination of the fireman position, but they campaigned for an addition of a second fireman on diesel engines.  Railroads found themselves in the position of actually having to fight a nearly successful effort to increase the number of firemen on crews.  As a result, they ended up accepting the fireman role, and generations of railroad men cruised about the country on engines for the next 40 years, doing virtually nothing for their pay.  Railroads were still fighting to eliminate the fireman in the 1990's.  In some cases, railroads were actually forced to pay "lonesome pay" to some engineers when the firemen were removed from their crew.  LOL.

Other labor statutes and work rules prevented full use of the diesel's capabilities.  For example, the 100 mile rule was now absurd - an inter-modal or other long-distance freight train could cover this in less than two hours.  But US law still insisted that railroad workers be paid a full days pay for 100 miles.  By 1990, after four decades of lobbying and negotiation, the 100 miles had been increased all the way to ... 108 miles.

This article from Regulation is a bit dated, but it still gives a good overview of some of the historical insanities in railroad labor.  An excerpt:

The rail unions deserve the labor equivalent of an Oscar for best sustained performance in reducing industrial efficiency. Restrictive work practices are legendary from firemen on diesel locomotives to train-limit laws. During the 1980s the railroads made minor progress against these practices, but they still have a long way to go. Some crews receive an extra day's pay every time they turn a locomotive around (yard and line haul crews have rigid separations of duties despite identical skills). Carriers are forced to employ three- to five-person crews, while nonunion carriers (Florida East Coast Railway and regional and short-line carriers) use two people. Crew members receive a full day's pay after a train moves 108 miles, even if the trip requires only a few hours. (The current three-member board appointed by Congress may impose a 130-mile rule by 1995.) Some union members have guaranteed lifetime incomes and must only work a few days per month. Some engineers receive "lonesome pay" for giving up the full-time company of a fireman. Until 1987, some Burlington Northern crews received "hazardous pay" for traveling through Indian territory in Montana. Management studies show that work forces could be cut in half, and according to some estimates, labor restrictions cost the industry some $4 billion a year. Despite union concessions on work rules, shippers continue to complain about the carriers' inability to achieve efficient and economical labor contracts. Overall, the RLA and its government-backed unions combine to double labor costs and therefore drive up freight rates from 20 to 25 percent, a very serious handicap in the competition with trucks and barges.

One railroad stood up to the union, and eventually won, but had to withstand a violent 11-year strike, all the while the taking continuous grief in the union-friendly press:

The Florida East Coast Railways, a line long known as "America's most efficient railroad," highlights the woeful labor inefficiencies of the major carriers. Its primary operation is transporting freight from Jacksonville to Miami. When Edward Ball took over the operation in 1961, the unions required the use of three five-man crews-each receiving a day's pay for each 100 miles traveled on the 366-mile trip. Ball failed to see the sense of this scheme and decided to try th change it. Union officials could not see the sense in any change and called a strike in 1963. The violence and vandalism that continued for eleven years demonstrated to other carriers the cost of defying the unions. The railway won, however. The company used two-man crews who were "cross-trained" and paid them a day's pay for eight hours' work rather than for 100 miles traveled. During the 1970s, the railroad's labor costs were 40 percent of total costs compared with 64 percent for all class I railroads, and Florida East Coast Railway earned the highest return of any class I railroad. In addition, the railway consistently won safety awards that fended off another pretext for government control and continues to retain customers while other railroads lose out to trucks.

Read the whole article.  If you have ever read Atlas Shrugged, you will find that a lot of the outrageous legislation in that story that seemed too stupid to be true actually have a basis in the history of US railroad law.  Even the "railroad unification act" that seems totally over-the-top toward the end of the book is based on actual railroad law after WWI:

The Transportation Act of 1920 gave the Interstate Commerce Commission complete control over pricing, issuance of securities, expenditure of proceeds, consolidations, and the construction, use, and abandonment of facilities. The act set up a Railway Labor Board to mediate disputes. Its "recapture" provision required a portion of a company's earnings in excess of an allowable "fair return" to be diverted to railroads with relatively low earnings. Except for the most routine administration, almost everything owners might do was subject to federal regulation or dictation.

More on the transition of steam to diesel here.  I am not very well versed on the subject, but apparently this specialized railroad labor law was later applied to airline pilots, with predictable results.  It is interesting that the two industries covered by the RLA (railroads and airlines) have both seen every major carrier in their industry bankrupted over the last 50 years.

Update:  I have been a fan of railroads for years.  One of my frustrations with my current house is a don't have room for a model railroad layout.  I had one back in St. Louis, where I had a basement, but there are not very many basements in Phoenix.  Here are some photos of that old layout, which was still under construction when I had to tear it down and move.

  • http://unrepentantindividual.com/ Brad Warbiany

    Hmm... I wonder if this might have something to do with why the government can't run Amtrak successfully? Are their own insane regulations forcing them out of profitability?

    One would wonder, as well, and I don't know if you intend to look this far into it, just how much the transportation cost of goods might be reduced if we could repeal this arcane nonsense?

  • Matt Walters

    I think the illegal BA strike that happened yesterday is a good example of rediculous union laws. If an employee deliberately, without excuse, refuses to show up to work, causing tens of thousands of people to be stranded, you would probably fire them. However, these people can mess up the lives of people on a whim and not get disciplined at all, despite the fact that this isn't even a legitimate strike. Maybe one day, people will wake up to the inherent unfairness of labor laws and let the labor market work efficiently.

  • http://selfaudit.blogspot.com/2005/08/carnival-of-capitalists-is-up.html Audit Trails Of Self

    Carnival Of The Capitalists is up

    Some notable posts: Andre Agassi's implementation of his No Child Left Behind policy, the best post on a plumbing diagram of the US Treasury, my own post on Oil Dependence, a discussion of why Oracle's move into Core Banking is a strategic decision, ...

  • http://ashish.typepad.com/ashishs_niti/2005/08/outrageous_labo.html Ashish's Niti

    Outrageous Labor Regulations in Railroad

    I don't understand why people continue to support (at least don't oppose actively) government regulations when similar stupid regulations have brought untold misery historically. See this post on the Coyote Blog on Great Moments in Labor Relations for ...

  • Earl Hathaway

    Brad,

    Amtrak only exists because of the riders. Which special class of citizens are heavy commuters in the NE corridor again ;)

    Anyway, in the defense of the railroad and airline industries, along with every other industry with very high fixed costs and low/zero marginal costs (long distance companies are another perfect example), the first company to declare bankrupty forces all the others to follow its lead -- the first actor lowers his cost structure and the others are forced to follow to remain competitive. So serial bankruptcies will be common to these industries.

    Earl

  • http://voidwhereprohibited.typepad.com David

    I remember the FEC strike while growing up in South Florida (I lived about 1 mile from the tracks). There were several incidents of tracks being dynamited and as I remember they used spotters at the front of the trains to watch for sabotage. This was one of the early things that started turning me against unions.

  • http://www.linesinthesand.net Doug

    As kid, I had a close up view of the strike, too, living about a mile from the other end of the line in Jacksonville. What fascinated me was the cars the spotters sometime used, outfitted to run on the tracks ahead of the trains, looking for explosives. It really sounded dangerous.

    Over the next couple of decades, I got to know more about Ed Ball. On my first job after college, I spoke with him a few times, often lunching at a table near his in the Robert Meyer Hotel, and my wife even worked for him briefly. He still walked in to office in his nineties, usually for a full day's work. If you look up 'no-nonsense' in the dictionary, you should find his picture.

    Did I mention he didn't like unions much?

  • http://iowageek.blogspot.com/2005/08/this-one-is-for-jody.html Iowa Geek

    This one is for Jody

    Jody and I like mass transit. If we lived in a place; oh, let's take London as an example; that had a decent system, we would sell the car and ride the tube.