Joe Biden is set to embark on a campaign trip through eastern Ohio and western Pennsylvania on Wednesday. The Democratic presidential nominee has the nickname “Amtrak Joe,” so it should come as no surprise that he’s conducting the trip by train.
Earlier this month, Amtrak CEO William J. Flynn told Congress that the railroad needs nearly $5 billion in federal assistance to help make up for losses caused by the coronavirus pandemic. In the meantime, Amtrak is planning to scale back many of its long-distance routes including the Capitol Limited, the California Zephyr and the Texas Eagle from daily departures to three times a week.
At least nominally, Amtrak is a for-profit business.
“But it’s really run more like a public service,” said John Macomber, senior lecturer at Harvard Business School. “It has a material subsidy each year from the federal government of equal to about a third of its operating revenues.”
That material subsidy is about $2 billion.
Before the pandemic, Amtrak’s finances were not all that bad. In fact, last November it announced its smallest-ever operating loss of $29.8 million.
“With COVID-19, ridership is down significantly,” said Baruch Feigenbaum, managing director of transportation policy at the Reason Foundation.
Down 80% from a year ago. That’s one reason Amtrak is planning to furlough nearly 10% of its workforce and cut some of those long-distance services.
“Amtrak’s long-distance service loses a lot of money even in the best of times,” said Feigenbaum. “And so now we’re talking about really significant losses that they just cannot sustain.”
Amtrak has already received $1 billion in COVID-19 relief money, and Feigenbaum said additional federal funding is not a good investment.
But Jim Mathews with the Rail Passengers Association said Amtrak’s service cuts could cost the interior regions of the country billions of dollars.
“When that ridership falls, everything that goes along with that ridership falls with it: the tourism spending, the restaurant spending, anything that benefits from those riders gets cut,” he said.
Matthews believes Congress should step up with additional funding.
COVID-19 Economy FAQs
How many people are flying? Has traveled picked up?
Flying is starting to recover to levels the airline industry hasn’t seen in months. The Transportation Security Administration announced on Oct. 19 that it’s screened more than 1 million passengers on a single day — its highest number since March 17. The TSA also screened more than 6 million passengers last week, its highest weekly volume since the start of the COVID-19 pandemic. While travel is improving, the TSA announcement comes amid warnings that the U.S. is in the third wave of the coronavirus. There are now more than 8 million cases in the country, with more than 219,000 deaths.
How are Americans feeling about their finances?
Nearly half of all Americans would have trouble paying for an unexpected $250 bill and a third of Americans have less income than before the pandemic, according to the latest results of our Marketplace-Edison Poll. Also, 6 in 10 Americans think that race has at least some impact on an individual’s long-term financial situation, but Black respondents are much more likely to think that race has a big impact on a person’s long-term financial situation than white or Hispanic/Latinx respondents.
Find the rest of the poll results here, which cover how Americans have been faring financially about six months into the pandemic, race and equity within the workplace and some of the key issues Trump and Biden supporters are concerned about.
What’s going to happen to retailers, especially with the holiday shopping season approaching?
A report out recently from the accounting consultancy BDO USA said 29 big retailers filed for bankruptcy protection through August. And if bankruptcies continue at that pace, the number could rival the bankruptcies of 2010, after the Great Recession. For retailers, the last three months of this year will be even more critical than usual for their survival as they look for some hope around the holidays.
As a nonprofit news organization, our future depends on listeners like you who believe in the power of public service journalism.
Your investment in Marketplace helps us remain paywall-free and ensures everyone has access to trustworthy, unbiased news and information, regardless of their ability to pay.
Donate today — in any amount — to become a Marketplace Investor. Now more than ever, your commitment makes a difference.