The Railroad Problem

by Edward Hungerford

According to the public prints, Charlie Chaplin, that amusing young clown of the movies, receives from a quarter to half a million dollars a year—according to the ability of his most recent press agent. I happen to know that a certain missionary bishop down in Oklahoma receives as his compensation $1,200 a year—although he never is quite certain of his salary. With due respect to the comedian of the screen-drama, does anyone imagine that his influence in the upbuilding of the new America is to be compared for a moment to that of the shepherd of the feeble flocks down in the Southwest?

Your economist will tell you, and use excellent arguments in support of the telling, that the wage outgo of the land is fixed, in definite proportion to its wealth. Granting then that this is so—one thinks twice before he runs amuck of trained economists—is it still fair to infer that the track foreman or the car-maintainer or the station agent is amply paid? And is it equally fair to infer that the pay of these three classes of railroad employees, so typical of unorganized transportation labor, could be raised by lowering the pay of organized employees without leaving these organized employees actually underpaid? And what assurance has the average man, the man in the street, that any reduction in the pay of the engineers, the conductors, the firemen, and the trainmen—if such a miracle actually be brought to pass—would result in a corresponding increase in the pay of the other eighty-two per cent of the labor of the railroad?

These are questions that must be answered sooner or later. In the present situation it looks as if they would have to be answered sooner rather than later. With them come others: Assuming still that our economist with his belief that the wage outgo of the entire nation is correct, is it not possible that the railroad as an institution is not getting its fair proportion of the national total? I have just shown you how eighteen per cent of the railroad’s employees receives twenty-eight per cent of their pay-roll. It would be equally interesting to know the percentage of national wage which goes to all the employees of all the railroads.

I cannot but feel when I realize the great annual total of wages which are being paid in the automobile and the war-munitions industries, to make striking instances, that the railroads are by no means receiving their fair share of the national wage account. Even the salaries paid to railroad executives, with the possible exception of a comparatively small group of men at the very top of some of the largest properties, are not generous. There has been much misstatement about these salaries. Because of these misstatements it is unfortunate, to say the least, that the railroads have not followed a policy of publishing their entire pay-rolls—from the president down to office boy.

But the fact remains—a fact that may easily be verified by consulting the records of the Interstate Commerce Commission—that railroad salaries are not high, as compared with other lines of industry in America. That is one reason why the business has so few allurements to the educated young men—the coming engineers of America. They come trooping out of the high schools, the technical schools, the colleges, and the universities of our land and struggle to find their way into the electrical workshops, the mines, the steel-making industry, the automobile shops, the telephone, even to the new, scientific, highly developed forms of agriculture. Few of them find their way to the railroad.

This is one of the most alarming symptoms of the great sick man of American business—his apparent utter inability to draw fresh, red blood to his veins.[6] A few of the roads—a very few indeed—have made distinct efforts to build up a personnel for future years by intelligent educational means. The Southern Pacific and the Union Pacific have made interesting studies and permanent efforts along these lines. But most of the railroads realize that it is the wage question—the long, hard road to a decent pay envelope in their service, as compared with the much shorter pathways in other lines of American industry—that is their chief obstacle in this phase of their railroad problem.

It has been suggested, and with wisdom, that the railroad should begin to make a more careful study and analysis of its entire labor situation than it has ever before attempted. Today it is giving careful, scientific, detailed attention to every other phase of its great problems. One road today has twenty-seven scientific observers—well trained and schooled to their work—making a careful survey of its territory, with a view to developing its largest traffic possibilities. And some day a railroad is to begin making an audit of its labor—to discover for itself in exact fact and figures, the cost of living for a workman in Richmond or South Bend or Butte or San Bernardino. Upon that it will begin to plat its minimum wage-increase.

Suppose the railroad was to begin with this absolute cost of living as a foundation factor. It would quickly add to it the hazard of the particular form of labor in which its employee was engaged expressed in dollars and cents—a factor easily figured out by any insurance actuary. To this again would be added a certain definite sum which might best be expressed, perhaps, as the employee’s profit from his work; a sum which, in ordinary cases at least, would or should represent the railroad’s steady contribution to his savings-bank account. To these three fundamental factors there would probably have to be added a fourth—the bonus which the railroad was compelled to offer in a competitive labor market for either a man or a type of men which it felt that it very much needed in its service. Only upon some such definite basis as this can a railroad’s pay-roll ever be made scientific and economic—and therefore permanent.

An instant ago and I was speaking of bonuses. The very word had, until recently, a strange sound in railroad ears. The best section foreman on a line may receive a cash prize for his well-maintained stretch of track; I should like to hear of a station agent like Blinks who knows that his well-planned and persistent effort to build up the freight and passenger business at his station, is to be rewarded by a definite contribution from the pay-chest of the railroad which employs him. Up to very recently there apparently has not been a single railroad which has taken up this question of bonus payments for extra services given. To the abounding credit of the Atchison, Topeka, and Santa Fé Railway and its president, Edward Payson Ripley, let it be said that they have just agreed to pay the greater proportion of their employees receiving less than $2,000 a year a bonus of ten per cent of the year’s salary for 1916—a payment amounting all told to $2,750,000. The employees so benefited must have been employed by the Santa Fé for at least two years and they must not be what is called “contract labor.” By that the railroad means chiefly the men of the four great brotherhoods whose services are protected by very exact and definite agreements or contracts. The men of the brotherhoods are hardly in a position to expect or to demand a bonus of any sort. And it also is worthy of record that practically every union man, big or little, has placed himself on record against bonus plans of every sort.

I hope that the example of the Santa Fé is to be followed by the other railroads of the country.[7] It is stimulating and encouraging; it shows that the big sick man of American business apparently is not beyond hope of recovery. For, in my own mind, the bonus system is, beyond a doubt, the eventual solution of the whole involved question of pay as it exists today and will continue to exist in the minds of both employer and employee. Our progressive and healthy forms of big industry of the United States have long since come to this bonus plan of paying their employees. The advances made by the steel companies and other forms of manufacturing enterprise, by great merchandising concerns, both wholesale and retail, and by many of the public utility companies, including certain traction systems, are fairly well known. It is a step that, when once taken, is never retraced. The bonus may be paid in various ways—in cash or in the opportunity to subscribe either at par or at a preferred figure, to the company’s stock or bonds. But there is little variation as to the results. And the workmen who benefit directly by these bonus plans become and remain quite as enthusiastic over them as the men who employ them and whose benefit, of necessity, is indirect.