United States: a railway strike would have consequences for the economy

OMAHA, Nab. – US consumers could face higher gas prices and shortages of some of their favorite food products this holiday season if the railroads and their unions fail to come to terms with an agreement on new labor contracts before the start of December.

The likelihood of a strike that could cripple U.S. rail traffic rose on Monday when the largest of 12 rail unions, which mainly represents conductors, rejected the employer’s latest offer that included 24% pay hikes. With four of the 12 unions waiting for a better deal, it could be up to the US Congress to force one to protect the country’s economy.

The Retail Industry Leaders Association said a train strike would “cause huge disruptions to the flow of goods nationwide” despite retail stores being well stocked for the holiday season. It’s unclear what a package strike would mean, as FedEx and UPS, both of which depend on rail to some extent, didn’t comment in detail.

“Fortunately, this year’s holiday gifts are already on store shelves. But a rail disruption presents a significant challenge to the timely delivery of items like perishable groceries and online shopping, and will no doubt add to the inflationary pressures already plaguing the U.S. economy,” explained Jess. Dankert, vice president of the group representing more than 200 major retailers.

Even getting closer to the deadline could cause problems, as railroads freeze shipments of chemicals and perishables in advance. And travelers could be stranded in the event of a strike, as several passenger train companies operate on tracks owned by freight companies.

Almost all sectors could be affected, as many of them rely on the railways to deliver raw materials and finished products. And there aren’t enough trucks to take over.

There is no threat of an immediate strike even as four unions rejected deals the Biden administration helped broker before the original strike expired last September. These unions have agreed to return to the negotiating table to try to reach a new agreement before the new strike deadline of 5 December. But those talks have stalled as management refuses to consider adding paid sick leave to the proposed five-year collective agreements, which include 24 percent hikes and $5,000 bonuses.

The railway engineers voted on Monday to join seven smaller unions in approving the proposed contract, but the largest union representing conductors rejected the offer, joining three other unions that had previously voted ‘no’.

It seems increasingly likely that Congress will have to settle the dispute. Lawmakers have the power to impose contract terms if the two sides cannot reach an agreement, and hundreds of business groups have urged Congress and President Joe Biden to be ready to intervene.

Workers frustrated with demanding schedules and significant job cuts in the sector have rejected these contracts because they would not do enough to address concerns about workers’ quality of life. The agreements for engineers and train drivers included a promise to try to improve the scheduling of regular days off and to further negotiate the details of these times at each railway.

These two unions also received three days of unpaid leave a year to meet medical needs, as long as they were scheduled at least 30 days in advance, and managements said they would not penalize hospitalized workers under the their strict support policies.

The railroads also lost their offer to reduce crew sizes to one person as part of the negotiations. But drivers from the transportation division of the International Association of Sheet Metal, Air, Railway and Transport (SMART) Workers still rejected the deal by about 51%. A smaller division of the SMART-TD union representing approximately 1,300 yardmasters approved the deal.

“The ball is now in the rail court. Let’s see what they do. They can work it out at the negotiating table, SMART-TD president Jeremy Ferguson said. However, railroad executives who constantly complain about interference from government, regulators and Congress now want Congress to negotiate for them.”

The railroads say the deals with the unions should closely follow recommendations made this summer by a special panel of arbitrators appointed by President Biden. This is one reason why they don’t want to offer paid sick leave. Additionally, the railroads says unions have agreed over the years to forego paid sick leave in favor of higher pay and hefty short-term disability benefits.

Unions for their part argue that it is time for the railways to offer paid sick leave and that the pandemic has highlighted the need for it.

The group negotiating on behalf of the railroads said on Monday that unions that rejected their deals shouldn’t expect to receive more than recommended by presidential emergency council umpires.