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Railroad Derailment

Ignoring Employee Mental Health Can Wreck Your Business

May 25, 2022
The nation’s railroads seem to be learning this lesson the hard way.


In our current era, supporting the mental health of employees has become as vital to the success of a business as is assuring their physical health and safety. Employers have become increasingly aware of the costs that can arise from the stress and strain growing out of the societal and personal responses to a worldwide pandemic as well as working conditions they are forced to navigate on a daily basis.

One problem for corporate leaders seeking to economically justify and then create a mental health program for their workplaces is that while it’s relatively easy to define mental illness, it is almost impossible to find agreement on what mental health consists of. On the other hand, business executives have easy access to other measures that can be relied on to support these programs, ones that they have been relying on for years, including cost analyses, productivity measurements and customer service responses.

You cannot find a more stark example of this in today’s America than by casting a quick glance of what has been happening in the freight railroad industry. This was thrown into high relief by recent hearings held by the Surface Transportation Board (STB) exploring the devastating economic effects of a severe cost-cutting operations model called Precision Scheduled Railroading (PSR).

The top leaders and several front-line members of all of the rail unions testified before the board and the picture their testimony painted was not pretty. Slashing thousands of employees from their payrolls, most of the Class 1 railroads also closed railyards and mothballed rolling stock to pare operating costs to the bone in order to squeeze out more dollars for investors and the hedge fund managers who drove adoption of the PSR model.

For those railroad employees who remained to work on the trains and in the yards after thousands lost their jobs, the increased workload has been crushing, overwhelming them with hard physical work and excessive overtime as freight demand has grown during the same time.

The psychological toll has been palpable. Union representatives testified about rail workers routinely missing their children’s birthdays and holidays like Thanksgiving and Christmas. Burnout become so bad that the board heard about workers who would under normal circumstances work for their entire careers at a railroad job choosing to walk away after 20 years with no pension because they could no longer take the stress.

One rail union leader said that while it had not been unusual for him to hear complaints about working conditions previously, for the first time in his experience he has been inundated by phone calls from spouses complaining about the toll the jobs are taking on their families.

The railroads that had embraced PSR admitted to the STB that the staff shortages and inability to recruit and train new workers in a timely fashion were the direct fallout from recent economic recovery from the pandemic, and were largely responsible for widespread service failures their customers have been experiencing, resulting in failure to deliver in a timely fashion such necessities as food, fertilizer, chemicals needed to treat drinking water and produce diesel fuel, and even vital shipments needed to avoid plant and assembly line closings.

The railroads’ excuse that the demand of increased freight demand caught them by surprise didn’t wash with the union leaders, who pointed out that railroad traffic had returned to 97% of its pre-COVID levels by December 2020. Add in the fact that the one Class 1 railroad that did not embrace PSR, Kansas City Southern, had enough staff available throughout this period that it could offer to send crews to help out another railroad caught shorthanded at a major interchange.

Rail service has deteriorated to the point that some have said it is quickly becoming a national security issue. In mid-May, the board told a congressional hearing that it was close to issuing a rule permitting reciprocal switching in hope of introducing more efficiency and cooperation into rail operations. Other actions the board intends to take include requiring railroads to submit more detailed service performance data.

Whatever direction the STB chooses to take in the future, it won’t include labor relations and employment practices. There is really no answer to addressing these issues except for a change in attitude by top rail management—it looks like that may be happening at one railroad. At a rail shippers meeting earlier this month, CSX president Jim Foote called for rethinking how railroads approach managing their workforce, including engaging more seriously in negotiations with the unions.

“People don’t want to work in the railroad business anymore,” he pointed out. “People don’t like to work weekends. People don’t like to work nights. People like to go to their kids’ birthdays. People like to be home for Christmas. We need to fundamentally review and understand the jobs that we offer to our employees.” (Although other railroad management witnesses testified at the STB hearing I covered, Foote was the only CEO to attend and testify).

Foote said this new approach must include taking a less adversarial approach to working with the unions, something he declared CSX is ready to do. “That is the biggest transformative change that CSX can make, and that is the biggest transformative change that the industry can make: Finally, finally, finally building a better rapport with our employees and having a better working relationship with them.”

We will see if Foote can follow through and whether he can succeed in getting the other rail CEOs to follow his example.

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