The National Railroad Passenger Corp., otherwise known as Amtrak, was established in 1970 and began operations in 1971. In the 44 years since, despite more than $45 billion in taxpayer subsidies and repeated promises and reform efforts, the passenger rail service has not once turned a profit. A recent report from Amtrak’s Office of Inspector General helps to illustrate why.
An OIG report published last month highlighted apparent widespread timesheet abuse by Amtrak employees. “[Calendar Year] 2014 timesheet data revealed trends and patterns that indicate potential fraud, waste and abuse in the reporting of overtime and regular time,” the report concluded.
According to the audit, Amtrak employees racked up $199 million in overtime in 2014, accounting for 19 percent of total wage costs. One locomotive technician claimed 90 overtime hours, in addition to 40 regular hours, in a single week.
Workers submitted 957 weekly timesheets with overtime but no regular hours, including nine employees who received 100 or more hours of overtime, but no regular time. Two sleeper-car attendants, for example, logged about 110 hours of overtime with no regular time in a week.
Daily timesheets exceeded 24 hours of regular time and overtime 1,357 times. Ten employees claimed more than 40 hours in a single day, including a café/lounge serving attendant who logged 48 hours one day.
Part of the blame lies in convoluted and varying union rules among the 14 unions with 23 collective bargaining agreements with Amtrak. This has led the organization to utilize 179 “unique timekeeping absence and attendance codes” and “six timekeeping systems to process timesheets and calculate wage payments,” according to the OIG.
A slew of studies from the OIG, the Government Accountability Office and the Congressional Budget Office have criticized Amtrak for its poor operations, management, cost controls, accounting, strategic planning, financial controls and acquisitions practices. Congress has passed a number of measures intended to fix these problems, including the 1997 Amtrak Reform and Accountability Act, which required that Amtrak’s subsidies be cut off after 2002. Thirteen years later, the reforms have never materialized and the subsidies continue with no end in sight.
In March, the supposedly fiscally conservative, Republican-led House overwhelmingly passed H.R. 749, which would provide another $7 billion in subsidies for the years 2016-20. During floor debate on the measure, Rep. Tom McClintock, R-Granite Bay, decried, among other things, Amtrak’s “food and beverage employees who are paid $106,000 a year to provide a service that lost over $800 million over the past decade just selling snacks on Amtrak trains.”
As Cato Institute senior fellow Randal O’Toole noted in testimony before the House Transportation and Infrastructure Committee in 2012, under Amtrak’s management, average rail fares have gone from one-third less than average airfares per passenger mile in 1970 to 130 percent greater than airfares – and this does not include hefty federal and state subsidies.
In an era of ubiquitous auto, bus and air travel options, intercity passenger rail is simply an inefficient solution. Amtrak makes up just 0.8 percent of trips greater than 50 miles. Its services are eclipsed even by intercity buses, which carry at least 2.5 times as many passenger miles, O’Toole noted.
When Amtrak was established, then-Transportation Secretary John Volpe confidently predicted that it “could be profitable within perhaps three years.” After 44 years, numerous reform attempts and tens of billions of dollars in subsidies, it is time to admit that Amtrak as a whole is little more than transportation welfare and a job-creation program. It would be much better to cut our (rather significant) losses, jettison Amtrak’s money-losing routes and privatize the segments where demand is sufficient to justify operations.