Railroads raked in record profits over the past few years, largely by cutting their workforces. Now there's little left to cut if the economy goes through a major slowdown.
These kinds of workforce problems are playing out throughout the entire economy, and may help explain why unemployment and layoffs are at record lows — despite some economic skittishness.
Employers fought hard to get workers back, and letting them go again doesn't seem quite as appealing.Traditionally railroad companies were quick to furlough employees when the economy slowed down, said Christian Wetherbee, senior transportation analyst at Citi. That strategy failed them during COVID when many of those workers just didn't come back.
Industry hauling volumes over the same period were down — but profitability surged, "largely on the back of reduced workforce," Wetherbee said.Rail operators are struggling to hire and retain workers. "We've seen a significantly higher attrition rate than what we had ever normally experienced," CSX CEO James Foote told investors on a second-quarter earnings call.
In a statement to Axios, the company said it's making "significant progress" in getting its workforce back to pre-pandemic levels.
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