Unions and management reached an attempted deal Thursday, averting a freight rail strike that had threatened to cripple U.S. supply chains and push higher prices for many goods.
The deal with unions representing more than 50,000 engineers and conductors was announced shortly after 5am ET in a statement from the White House, which called it “a major victory for our economy and the people. American”.
It came after 20 hours of talks between union leadership and railway labor negotiators hosted by Labor Secretary Marty Walsh. They began their meeting Wednesday morning with the ticking time until a strike was to begin at 12:01 am ET on Friday.
President Joe Biden personally called to speak with negotiators around 9 p.m. ET on Wednesday, according to a person familiar with the negotiations. Biden pointed out that catastrophic damage could come to families, businesses and communities if the rail system closes.
The deal does not mean that the strike threat has completely disappeared. The agreement must be ratified by the union members. But that’s good news for a wide range of companies that depend on freight railways to continue operating and for the US economy in general. About 30% of the nation’s freight travels by rail.
The deal offers union members an immediate 14% increase with arrears dating back to 2020 and increases by a total of 24% over the five-year life of the contract, which runs from 2020 to 2024. It also gives them cash bonuses. of $ 1,000 per year.
Few other details of the deal have been made public so far. But Biden’s statement indicated that the main issue that had brought the country within a day of its first national rail strike in 30 years was being addressed in favor of the unions.
“It is a victory for tens of thousands of rail workers who worked tirelessly during the pandemic to ensure that American families and communities receive deliveries of what has kept us going through these difficult years,” Biden said in a statement. . “These railroad workers will receive better pay, better working conditions and peace of mind on health care costs – all hard earned.”
The controversy was over staff shortages and scheduling rules that union leaders claimed brought their members to a breaking point. Unions say the railways have required their members to be “on call” and ready to show up for work on short notice even seven days a week. The leadership of the two unions had said that their members would not accept a contract without changes to those working rules.
Biden described the deal as “also a win for railroad companies that will be able to retain and recruit more workers for an industry that will continue to be part of the backbone of the US economy for decades to come.”
It is a major victory for Biden, who only faced bad choices if an agreement was not reached. Supporting congressional action demanded by the business community to impose a contract on workers would have angered its supporters among the unions. Letting the breakdown take place risked enormous economic consequences just before the mid-term elections.
Railway workers are governed by a different labor law than most workers, which limits their freedom to strike and allows for more government intervention. In July, Biden issued an order that prevented a strike at that time and created a panel, known as the Presidential Emergency Board, to try to find a solution to the dispute.
It also imposed a 60-day cooling-off period during which unions could not strike and management could not block workers. That period of reflection was supposed to end early Friday.
Biden could not have ordered the railways to continue operating once the cooling-off period ended on Friday. Only Congress could have acted to get the unions back to work if a strike started.
With a wide range of business groups calling on Congress to act, the Republicans had prepared legislation that would give railroad management the deal they wanted. But the Democrats were against taking such action.
A union source said the Democrats’ refusal to side with management was a key to the talks.
“The Senate leadership not acting has given way to these negotiations,” the union source said. You said Walsh had “held out” with the union during the negotiations.
“Yesterday was a grind,” he said, with a lot of back and forth.
“Our people would not have given up,” the source said. “Our people would have gone on strike” if an agreement had not been reached by Friday’s deadline.
The Association of American Railroads also praised the deal and thanked the Biden administration, as well as the unions themselves, for their role in reaching an agreement.
The salary increases and bonuses had been recommended by a presidential panel tasked with trying to find a solution to the impasse in negotiations at the time.
Those terms were profitable enough for most rail unions to accept interim deals in recent weeks, engineers and conductors, who had to deal with work rules and schedules that didn’t apply to others, refused to sign without relief. on the issue of planning.
Shares of major freight railways – Union Pacific (UNP), CSX (CSX) and Norfolk Southern (NSC) – were between 1% and 3% higher in pre-market trading on the news. Shares of Berkshire Hathaway (BRKA), which owns the fourth national freight railway, Burlington Northern Santa Fe, were also slightly higher.