Marathon negotiations avoid rail strike, The unions and the management of the freight railroads came to an agreement early Thursday morning, averting a strike that might have hampered the flow of products across the United States and driven up the cost of numerous consumer goods.
The agreement with the unions representing more than 50,000 engineers and conductors was announced at around 5 a.m. The White House released a statement at 2:00 a.m. ET, describing the victory as “a significant achievement for our economy and the American people.”
According to our sources, the two parties finally came to a verbal agreement at 2:30 a.m. ET and the remaining hours were spent ironing out the kinks.
It was the culmination of Labor Secretary Marty Walsh’s almost 20 hours of negotiations with union leaders and railroad companies. With time running out before a strike was scheduled to begin at 12:01 am ET on Friday, they convened on a Wednesday morning.
On Wednesday night, at about 9 o’clock Eastern Time, Vice President Joe Biden reportedly called in to speak with negotiators directly. Vice President Biden warned that a devastating loss to families, businesses, and communities would result from a breakdown in the rail system. Union insiders say that Biden’s phone call was a key factor in avoiding a strike and allowing an agreement to be reached.
Jeremy Ferguson, head of the conductors union and one of the leaders involved in the lengthy session, stated, “We’re really proud of what was accomplished.” For the agreement, he expressed appreciation to Vice President Biden and the Labor Department personnel who had been participating in the negotiations.
Ultimately, “everyone came together to make sure that we could get our members what they earned,” he said.
The president of the engineers’ union and the other union official who participated in the discussions, Dennis Pierce, characterized this as a “quality of life issue” for union members since bargaining began.
Later on Thursday morning, Biden met with Pierce and Ferguson at the White House. Biden congratulated the negotiating railroads and administration officials in a Rose Garden address.
Biden praised the arrangement, saying, “You’ve struck an agreement that will keep our key train system functioning and avert disruptions to our economy.” I’m thankful because it proves that my long-held belief that unions and management can collaborate to everyone’s benefit is correct.
Union members must approve the agreement for it to become effective and put an end to further strike threats. Nonetheless, this is great news for the overall health of the US economy and the thousands of industries that rely on America’s freight railroads. Only about 30 percent of the country’s freight is transported by rail.
The workers, the railroads, and the economy all win.
The union members will receive a 14% boost right away, plus back pay from 2020, and a total of 24% in raises throughout the course of the contract’s five years (2020-2024). As an added perk, they receive $1,000 in annual cash bonuses. After the agreement is confirmed, union members will get an average of $11,000 each from back pay and incentives.
Very little else has been revealed about the transaction. The primary sticking point, including work regulations and scheduling concerns, that brought the country within a day of its first national rail strike in 30 years had been addressed favorably for the unions, according to Biden’s statement.
“It is a win for the tens of thousands of rail workers who worked diligently during the pandemic to guarantee that America’s families and communities got delivery of what has kept us going during these terrible years,” Biden said in a statement. These rail workers have achieved a raise in wages, safer working conditions, and financial security regarding their health care.
Union organizers claimed that members had reached breaking point due to staffing shortages and scheduling limitations. The railroads, according to the unions, have been pressuring workers to be “on call” and available to report to work at a moment’s notice, often seven days a week. Both unions’ leadership had previously stated that their members would not agree to a deal until the aforementioned policies were modified.
According to the union, the agreement grants its members an extra paid day off annually, as well as protections against discipline in the event that they need time off to attend to routine and preventative medical care, and exemptions from attendance policies for hospitalizations and surgical procedures. In response to railroad treatment of personnel unable to remain on call or report to work due to medical difficulties, union members became increasingly agitated.
Biden said the agreement was “also a success for railway firms” because it will help them keep and attract more people to an industry that “will continue to be part of the backbone of the American economy for decades.”
It’s a huge win for Biden, who had no good options if a compromise hadn’t been made. He could not afford to lose the support of the unions by backing the corporate community’s push for congressional action to force a contract on workers. Allowing the work stoppage to continue would have had disastrous economic effects right before the midterms.
The path that brought us here
Workers on the railroad are subject to a unique set of regulations that restricts their ability to go on strike and grants the government more authority over their working conditions than is the case for most other industries. For the time being, Biden’s decision in July averted a strike, and he established a Presidential Emergency Board to mediate the conflict.
In addition, it mandated a cooling-off period of sixty days, during which neither the unions nor the management could take any action that might disrupt work. The waiting period was expected to conclude on Friday morning.
Friday marked the end of the “cooling down” period, after which Biden had no authority to order the railways to resume service. If a strike had started, only Congress could have done anything to get the unions back to work.
Republicans had drafted legislation that would have given railroad executives the deal they wanted in response to calls from a wide variety of business groups for Congress to act. However, Democrats fought against this.
According to a union insider, the Democrats’ refusal to stand with management was a major factor in the negotiations’ success.
“Senate leadership not acting allowed space for these negotiations,” the union source said. He praised Walsh for sticking with the union during the talks.
He complained that “yesterday was a slog,” with a lot of arguing.
Despite the odds, “our people were not going to give up,” the insider claimed. If an agreement hadn’t been reached by Friday, “our employees would have gone on strike,” the official said.
Membership approval is still required.
The threat of a strike does not disappear altogether with the deal. Employees at the bargaining unit level must approve the agreement. Recently, members of certain unions have been reluctant to approve deals, even when the union’s leadership has advocated for them.
John Deere (DE) employees in the United Auto Workers union rejected a lucrative tentative agreement last fall and then rejected a new offer, leading to a strike that has lasted for the better part of a year. They were gone for five weeks, but are now back at work.
Kellogg (K) cereal workers rejected a tentative contract in December and stayed on strike for several more weeks before finally agreeing to a compromise. A walkout by 63,000 technicians, craftsmen, and craftspeople might have halted the production of movies, television, and streaming shows, but only 50.3% of film production employees voted in favor of a contract that satisfied practically all bargaining aims of their union.
The Association of American Railroads (AAR) has also applauded the arrangement and expressed gratitude to the Biden administration and the unions involved in the negotiations.
A presidential group established to try to break the impasse in negotiations had recommended the salaries and incentives.
While most rail unions have recently agreed to tentative settlements because of the attractive conditions offered, engineers and conductors have refused to go on without relief on the scheduling issue.
The big freight railroads’ stock prices were all over the map. Shares of Union Pacific (UNP) and CSX (CSX) rose slightly, while those of Norfolk Southern (NSC) declined. Berkshire Hathaway (BRKA) shares were down slightly; the company controls Burlington Northern Santa Fe, the country’s fourth-largest freight railroad.
Upheavals had begun.
Even the prospect of the strike was causing some disruptions. Outside of the Northeast Corridor, practically all of Amtrak’s 22,000-mile network is made up of freight rail lines, so all long-distance trains were canceled. In a statement, Amtrak said it “is trying to rapidly reinstate canceled trains and reaching out to impacted passengers to accommodate on earliest available departures” and promised to offer an update as soon as it becomes available.
It had been a week since the railroads accepted any shipments of dangerous or security-related commodities. Wednesday saw the cessation of supplies from the agriculture sector to a number of railroads.
People who rely on the railroads were relieved when they learned that a strike would not be happening since they had been prepared for huge disruptions.
On Thursday’s episode of CNN’s New Day, Eric Hoplin, CEO of the National Association of Wholesale Distributors, remarked, “This is excellent news for the economy.” “Over the past 48 hours, my phone has been ringing off the line as I speak with distribution professionals from throughout the country who are outlining some of the devastating ramifications that could have been falling America’s supply chain and the economy.”
The United States economy averted many blows, including a surge in gasoline prices that could have reversed the 26% drop in costs at the pump during the last three months. In spite of the fact that pipelines are used to transport the vast majority of oil and gasoline, refineries have always relied on railroad tank cars to bring in and remove various other commodities required for the refining process.
Business leaders and economists predicted that a prolonged strike would lead to higher prices for food and cars and a shortage of consumer items far into the holiday shopping season.