Railroads and associated unions have reached a tentative labor agreement, likely averting a massive rail strike that would have been devastating for the economy.
The clock was racing as a Friday deadline for when strikes could begin quickly approached, with the tentative deal finally being inked early Thursday morning. A verbal agreement was reached at about 2:30 a.m., and the final details were worked out in the following few hours.
“The tentative agreement reached tonight is an important win for our economy and the American people,” said President Joe Biden in a statement shortly after 5 a.m. “I thank the unions and rail companies for negotiating in good faith and reaching a tentative agreement that will keep our critical rail system working and avoid disruption of our economy.”
Labor Secretary Marty Walsh, known for his pro-union bona fides, hosted the discussions between the unions and railroads, with talks lasting 20 hours this week.
‘IT FEELS GOOD’: BIDEN HERALDS RAILWAY WORKERS DEAL AVERTING STRIKE
What’s in it: The agreement would provide several concessions to rail workers who have complained of understaffing, especially given that during the past six years alone, some 45,000 employees have been laid off. Many workers feel as though they are overworked and don’t get enough time off to spend with their families.
While several details of the proposal are unclear, if ratified, it would provide workers with an immediate 14% pay bump and back pay for the past two years. The workers would also get $1,000 cash bonuses each year. The salary increases would total 24% through the five-year contract.
What’s next: It is crucial to note that the agreement is “tentative,” meaning that it has not been officially approved, so there is a chance of rail workers striking later this year. The agreement now heads to the tens of thousands of union members themselves who must vote to ratify the plan before it becomes binding.
The voting process will take a while, so the cooling-off period that was set to lapse on Friday has now been extended — meaning that, at least in the interim, a massive rail strike is no longer imminent.
Why it’s important: A rail strike would have hit the economy hard, especially given the country has already been dealing with supply chain problems stemming from labor shortages and the coronavirus lockdowns in China affecting imported goods.
The nationwide rail service disruption brought on by a strike would “dramatically impact economic output” and could cost more than $2 billion per day, according to a report by the Association of American Railroads. Failure to reach an agreement could have idled more than 7,000 trains daily and triggered retail product shortages, among other troubles.
“Many Americans don’t realize the impact that the railroad strike could have had on our already crippled supply chain issues,” says Eric Rodriguez, the CEO of Innerbody Research. “The railroad system is responsible for way more than just human transportation. This past week alone, the railroads were responsible for transporting 242,431 cars, the most they’ve transported this year.”
The shutdown wouldn’t have just affected freight rail either. In advance of the agreement and in anticipation of a strike, Amtrak on Wednesday announced that it was suspending all long-distance trains beginning on Thursday.
Amtrak canceled the routes, even though its workers are not part of the labor dispute, because many of its long routes use railroad tracks that are owned by railroads involved in the discussions.
Following the early morning news, Amtrak said it was “working to quickly restore canceled trains and reaching out to impacted customers to accommodate on first available departures.”
How the agreement was brokered: The tentative agreement was a long time coming.
In July, given the severity of the situation, the White House approved the formation of an emergency board to help alleviate the dispute after contract negotiations came up short. The negotiations had occurred for more than two years, with thousands of rail workers voting in internal union elections to go on strike.
The White House’s involvement in the deal speaks to just how precarious the situation is, not just for the country’s economy and supply chains, but also politically. Democrats are hoping to cling to majorities in the House and Senate in the midterm elections. The party and Biden have been dinged for how the economy is performing, particularly the matter of too-high inflation.
A rail strike resulting in product delays would have been terrible optics for Biden, especially given that long-term strikes might have exacerbated inflation by cutting into supply.
On the flip side, Biden has touted himself as the “most pro-union president,” and Democrats intervening in the process and overriding the unions could have turned off some blue-collar voters.
And Congress could have intervened if a tentative agreement wasn’t reached. Rail strikes differ from other strikes because labor relations are governed by the Railway Labor Act of 1926 rather than the National Labor Relations Act.
That law means that Congress can step in during airline or railway strikes and force the Presidential Emergency Board’s recommendations or pause the strike and appoint arbitrators to draw up a new contract.
“If the country’s supply chain gets shut down any worse or gets shut down, that’s going to look very bad for the president and for the party because it will make the economy a lot worse,” Dan Bowling, a senior lecturing fellow at Duke University School of Law, told the Washington Examiner.
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While union members must ratify the tentative agreement, the deal, at least for the time being, is a win for an administration that worked hard to insert itself into the negotiation process and support both sides in coming to an amenable outcome.
“It is in all of our best interest for America’s freight rail system to continue to run without disruption. Freight rail delivers the items that our families, communities, farms, and businesses rely on,” a White House official told the Washington Examiner ahead of the deal being reached.
