Update: Dec 1, 2022
On the evening of Nov. 30, the House of Representatives voted 290-137 in favor of intervening in labor negotiations to avert the possibility of a strike. The House also voted 221-207 in support of guaranteed paid sick leave of up to seven days for all rail employees.
This would be the first time Congress has exerted its power in a rail labor dispute in over 30 years. If the legislation passes, rail workers will not be able to strike. Legally, their employers can replace them or file an injunction to force them back to work.
For over 150 years, railroads have been a staple of the American transportation industry. Technology and other modes of transportation may have diminished rail’s former dominance over the industry. However, it is still a major contributor to the economy. Railroads account for 33% of all U.S. exports and employ over 100,000 Americans.
84% of those employees are unionized. For almost three years, those unions have been in a bargaining standoff with the railroads over a new labor contract. Those negotiations have failed to progress much since beginning in January 2020. Now there is a chance that rail workers could go on strike until they reach a satisfactory deal.
A nationwide rail strike would cripple the U.S. economy. It would also create a host of supply chain issues and delays. The U.S. government has already stepped in once to assist. They may have to do it again to avoid disaster. So, how did we get here, and what happens next?
How We Got Here
Contract negotiations began in January of 2020 for all 12 unions. Those talks were interrupted by the COVID-19 pandemic and began to heat up again in the summer of 2022. The rails and unions were clearly not close to an agreement. Workers threatened a strike if a deal was not reached by mid-September.
President Biden and U.S. Congress intervened in those talks to help avert a nationwide strike. They were successful in establishing a tentative agreement. This allowed the rail system to continue operating until a permanent deal could be reached. Government interference was not enough to satisfy all parties. Multiple unions expressed their distaste for the seemingly rushed negotiations.
A new deadline for a permanent agreement was originally scheduled for November. Four of the 12 unions rejected the deal entirely. Those unions include the Brotherhood of Maintenance Way-Employees Division (BMWED), the Brotherhood of Railroad Signalmen (BRS), the International Brotherhood of Boilermakers (IBB), and the Transportation Division of the International Association of Sheet Metal, Air, Rail, and Transportation Workers (SMART-TD).
The deadline was then pushed back to December 9 to allow for further negotiations. Until that date, all parties must adhere to the “cooling-off” period. That means no strikes, protests, or lockouts of any kind until December 9.
Why Has a Deal Not Been Reached Yet?
The main sticking point in labor negotiations appears to be the matter of sick leave. Rail unions claim that the current sick policy is inadequate. Additionally, it does not allow employees to properly react to family or personal needs. Employees say they are strongly discouraged from missing work due to illness. Restrictive policies and a lack of comprehensive sick leave benefits are the crux of the strike.
Railroads argue that employees have ample opportunities for sick leave and can receive sick leave. These benefits after a few days can last up to 52 weeks.
The National Carriers Conference Committee (NCCC) website stated, “The structure of these benefits is a function of decades of bargaining where unions have repeatedly agreed that short-term absences would be unpaid in favor of higher compensation for days worked and more generous sickness benefits for longer absences.”
The tentative agreement reached back in September includes the largest wage increases in 50 years and also maintains rail employees’ health coverage. Despite those inclusions, unions remain steadfast in their mission for more paid sick leave. If this is not addressed before the new deadline, it is likely that all 12 unions will participate in a strike until their demands are met.
The Government Wants to Avoid a Rail Strike
The U.S. economy would suffer greatly for every day that a nationwide rail strike persists. A shutdown of this magnitude would freeze nearly 30% of all domestic cargo shipments. It would also cost the American economy a staggering $2 billion per day of work stoppage.
Over 300 industry trade groups plead with the U.S. government to get involved as they did back in September to assist with negotiations. These industry groups rely on rail shipments, so a total rail stoppage would be devastating to their business. Chemical shippers claim that a month-long strike would remove over $160 billion from the national economy. Agricultural shippers are already dealing with problems caused by the Mississippi River drought, so they need railroads open as a secondary option to keep their products moving.
Even President Biden has expressed his concerns. He called on Congress to exert its power in negotiations to avert a strike before the deadline. Members of Congress are attempting to pass legislation that would give incentive to both parties to accept the tentative agreement proposed in September.
“As a proud pro-labor President, I am reluctant to override the ratification procedures and the views of those who voted against the agreement,” said Biden in a released statement.
“But in this case — where the economic impact of a shutdown would hurt millions of other working people and families — I believe Congress must use its powers to adopt this deal.”
Several lawmakers and union members are unhappy with the President’s statement, however, claiming that he failed to address the chief issue of sick leave. Some members of the Senate said that they will not support the legislation unless it includes provisions for sick leave. Even with government interference, it is clear that the issue still persists.
How Will This End?
Now that Congress has thrown its hat into the ring, there are three main options they can pursue to put an end to the negotiations and the possibility of a strike.
- They can enact a longer cooling-off period. This is essentially what happened back in September, and it could take place again in order to give both parties more time at the bargaining table.
- If a strike occurs after December 9, Congress can attempt to pass a bill that ends the strike. This could be in the form of an agreement that both parties accept, or enacting a temporary deal while a permanent contract is discussed further,
- They could pass a bill that not only ends the strike (if it occurs) but also establishes a legislated bargaining agreement for both parties
Finding a solution that is palatable to all parties will be difficult for a number of reasons, but an agreement must be reached soon. The U.S. economy would significantly suffer every day a strike continues. With an uncertain future for the rails, it is important to know about other options and be proactive. KCH Transportation can help you navigate this unpredictable situation by providing direct drayage solutions and transloading options.