February 27, 2020 at 5:00 am ET
Policymakers often overlook a critical component of the nation’s infrastructure: railroads. Indeed, the Bureau of Transportation Statistics estimates 25.5 billion tons of freight will be moved by 2045, a 37 percent increase compared to 2018.
But states are now trying to legislate a labor mandate best left to negotiations between workers and the rail industry. By our count, 23 states introduced bills during the 2019 legislative session requiring two crew members to be on freight trains at all times, with proposals now moving in the 2020 legislative session. The effect of the bills is a double whammy — getting legislators in the business of micromanaging labor allocation and freezing innovation in its tracks.
The bills stem from labor’s fear of automation. The Rail Safety Improvement Act of 2008 mandated the nationwide adoption of Positive Train Control (PTC), a technologically advanced system of hardware and sensors designed to automatically stop a train before accidents related to human error occur. PTC’s implementation came at a hefty price to the railroads, estimated to cost more than $10 billion by completion. While expensive, it’s a small price to pay considering there were 881 rail-related casualties in 2019.
The shift to the heavily automated safety system would allow railroads to reduce the number of crew assigned to each train without compromising safety. As a result, rail crew members fear layoffs, with unions pressuring state policymakers to pass legislation preserving the status quo.
This patchwork of state crew size proposals threatens to stop the gains from PTC in its tracks. Despite a May order from the Federal Railroad Administration withdrawing its proposed rule requiring two crew members for freight rail and preempting state laws, Nevada, Washington, and California have asked the courts to vacate the decision. Following the FRA order, Illinois passed a crew size law in August. In the 2020 legislative session, a freight crew size proposal has already passed the full House in Virginia, and bills have been introduced in New York and Oklahoma.
State crew size laws will slow productivity growth and deny consumers lower prices with a patchwork of burdensome, costly and impractical requirements. Indeed, if state crew size laws are in place in the future, railroads would need to keep track of requirements on a state-by-state basis, hire and train more crew, and alter how it moves goods across state lines.
In the case of Illinois, Indiana Rail Road Company (INRD) has already filed a complaint against the state, arguing INRD would have to “take significant steps to prepare to comply with the Law, including hiring and training additional crew members, and altering shift assignments and schedules.” What’s more, INRD recognizes that “the lack of any minimum-crew-size regulations in neighboring states — including Indiana, where INRD operates — mean(s) that INRD must adopt different approaches for operations on either side of the Illinois state line.”
This time-consuming and expensive process will result in higher prices for shippers. These higher prices will undoubtedly be passed on to consumers, where the cost of distribution already accounts for roughly half of the price of most consumer goods.
State crew size proposals are the latest of age-old examples of the disruption that innovation and automation can cause. But the solution isn’t to freeze innovation. Rather, it is for lawmakers to allow the benefits of technological advancement to be reaped while providing assistance such as retraining and placement to affected workers.
Crew size has historically been negotiated as part of collective bargaining between rail management and labor. Earlier this month, a federal judge ordered SMART TD, the nation’s largest rail union in the United States, to engage in collective bargaining with rail carriers. Minimum crew size should be resolved as it has been for decades — allowing railroads and labor to negotiate the best operating model for safety and service.
Elliott Long is a senior economic policy analyst for the Progressive Policy Institute. Before coming to PPI, Elliott served as Small Business Majority’s policy and development associate.
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