> Are railroad profit margins so small that paying for excess labor will bankrupt them?

No. Railroads have the largest profit margins in American business.

> For the nation as a whole, profit margins generally sit at about 9% (8.89% to be precise), however, in transport, specifically railroads, this stands at 50.93%, the highest in the US.

https://ajot.com/news/railroads-are-usas-most-profitable-ind...

> US freight railroads are in a bit of a predicament, and it&#x2019;s not just because they are going down to the wire on labor contract negotiations with their 115,000 workers.

> Large railroads, including Union Pacific Corp. and Warren Buffett's BNSF Railway Co., have juiced their profits so high by increasing efficiency and paring their workforces over the last several years that they have boxed themselves into a corner with no catalyst to keep attracting investors. Adjusted operating margins for the five largest US railroads were 41% last year, compared with 29% 10 years ago and 15% less than a couple of decades ago. Those margins are off the charts when compared with other transportation companies, including trucking, parcel, air freight, maritime shipping, airlines, you name it.

> In pushing those margins over the past five years to a level that analysts most likely would have thought were unobtainable, the railroads have angered their customers with high prices and poor service and have alienated their workers, who complain they’re being overworked after the railroads cut their ranks as much as possible.

> But far from looking to improve those relationships with customers and workers, the railroads still seem fixated on operating margins. Even as negotiations with the labor unions have dragged on for more than two years and have frozen rail workers’ salaries at 2019 levels, the railroads are asking union members to pay more out of pocket for health care.

> And no one can argue the railroads can’t afford their workers. In one example, Union Pacific, the largest publicly traded US railroad, paid investors more than $41 billion in dividends and share buybacks over five years through 2021. In the first six months of this year, the Omaha, Nebraska-based company heaped an additional $5 billion on shareholders.

> Instead of looking at the labor contract as an opportunity to win over their employees and work together to improve service — again, the key to any strategy to take truck traffic — the railroads seem to be more concerned about protecting their profit margin gains.

https://www.washingtonpost.com/business/energy/railroads-get...

https://www.bloomberg.com/opinion/articles/2022-08-03/railro...

The requirement for always increasing profits has resulted in mismanagers squeezing the railroad system until there is no further slack in the system. Because railroad workers form an "equal but separate" employment system to what the rest of the public sees, the public ends up staying terribly misinformed about just how different that railroad employment system is.

Since the executive classes get bonuses based on the wrong sort of incentives, the only way they can get bonuses is to abuse their workers to the point that even the public starts to notice.

> Railroad pensions are the only private pensions that I know of that are specifically called out in IRS tax forms. That has always seemed odd to me, and is probably some indication of how tightly regulated labor in the railroad business is.

Railroad workers have been kept out of the Social Security system from the very beginning. They can only get retirement benefits from the Railroad Retirement Board. Until recently (most of the changes were in 2006), many state & local government workers were also kept out of Social Security and were forced to rely on underfunded public pensions. No such changes have been made for railroad workers.

https://www.ssa.gov/benefits/retirement/planner/railroad.htm...

https://www.rrb.gov/