Is Class 1 rail employment growing?

Class 1 rail employment may be growing over the next several months.

Norfolk Southern

For the most part, the employment story at U.S. railroads during the past couple of years has been dismal. The words fear, layoff, furlough, cut, and fire have peppered nearly all news stories on the subject. PSR "adjustments" and Covid have mostly driven the reduction in the workforce.

During the significant reduction in Covid during the past several months, traffic volumes have risen, but employment levels haven’t changed much.

Freightways reports that the number of employees at U.S. Class 1s reported to the Surface Transportation Board in June 2021 was 115,931. This an increase of 0.8% compared to May 2021, but a 0.17% drop compared to June 2020. This is all against a background of 21% growth in U.S. rail traffic from May 2021 to June 2021.

Most readers know that when traffic volumes rise or fall, train-and-engine (T&E) employees rise and fall more quickly than other rail employment categories. The traffic volume rise in June 2021 translated into an 0.85% increase in T&E employment over May 2021, and an increase of 11.5% compared to June 2020.

Freightways also reports that the maintenance of equipment and stores employment category suffered the largest decline of Class 1 employment, dropping 11.6% in June 2021 compared to June 2020, and dropping 0.42% from May 2021 to June 2021.

We will see what happens over the next few months. A key metric to watch is the extent to which Covid cases increase, given the recent spike in cases and hospitalizations among those who have not been vaccinated. A recent report showed that only 49% of the nation’s population has been fully vaccinated against the virus. If this continues to grow, a new round of sheltering-in-place could slow the industrial economy on which railroads depend for traffic. Another factor to watch is to see how aggressively railroads will begin to hire if traffic volume continues to grow.

Read more articles on Class 1s.