A three-member emergency board President Joe Biden has tasked with helping major freight railroads and unions end a contract stalemate is out with its recommendations.
The Aug. 17 Presidential Emergency Board report started the clock ticking on a mandatory 30-day “cooling off period” between railroad management and unions, at the end of which, 12 rail unions are legally allowed to strike. A rail slowdown would be highly disruptive to the country’s struggling supply chains. That could quickly prove to be a migraine-level political headache for Biden less than two months before the midterm elections.
The railroads quickly signaled a willingness to deal.
“President Biden’s PEB issued recommendations that should set the framework for a negotiated agreement between railroads and unions,” Association of American Railroads President Ian Jefferies said in a statement.
Jeffries said that the board’s recommendations would “provide 24% compounded wage increases by 2024, with 14.1% of those increases effective immediately,” with additional small dollar bonuses on top of that, for the “largest general wage increase in nearly 40 years.”
These terms, Jeffries noted, “markedly exceed the rail carriers’ proposal,” but so be it, so long as they also “provide a useful basis to reach a resolution” in the form of a contract.
“The industry is prepared to propose agreements based on the PEB’s recommendations to provide our employees with long overdue pay increases and avert rail service interruptions,” he said, laying down the railroads’ marker.
The National Carriers Conference Committee, which bargains with the unions on behalf of the railroads, issued a similar statement, adding: “When health care, retirement, and other benefits are considered, the value of rail employees’ total compensation package, which already ranks among the highest in the nation, would average more than $150,000 per year.”
The rail unions, meanwhile, were playing their cards a bit closer to the vest.
“While other sources may rush to respond, your union is committed to sharing factual information regarding the PEB while achieving the best outcome possible for rail labor” was the same-day message on the website of the International Association of Sheet Metal, Air, Rail and Transportation Workers, also known as SMART.
The umbrella union promised its members “additional updates from SMART Transportation Division President Jeremy Ferguson as the situation evolves.”
PEB members Ira Jaffe, Barbara Deinhardt, and David Twomey told the railroads in 124 pages of bureaucratic analysis that if they wanted to make the unions back down from a fight, the railroads would have to open their wallets. And that’s just what the railroads agreed to do.
The railroads agreed to pay up because strikes are expensive and not just in the short term. Biden ran for office based in part on his working-class “Amtrak Joe” persona, which was built on his decades of commuting as a Democratic senator between his home state of Delaware and Washington, D.C. Biden sought the White House in 2020 promising both to be a pro-rail president and a pro-union chief executive. Most of his administration’s dealings with the country’s privately maintained freight rail networks have moved the ball for labor and against rail.
Additionally, there are many Democratic members of Congress who want to give rail unions a stronger hand and who might have the votes to do just that in the event of a strike.
Rep. Peter DeFazio (D-OR), the chairman of the House Committee on Transportation and Infrastructure, has put his weight behind the Freight Rail Shipping Fair Market Act, which would knock the railroads down a peg. The bill would empower the Surface Transportation Board, which governs rail, to prohibit rate hikes on shippers in the event of a strike, for instance.
Given the political incentives, it comes as no surprise that the railroads would signal their willingness to deal. However, it wouldn’t be unthinkable for the rail unions to use the looming threat of strike and political meddling to drive an even harder bargain.
