The railway strike and the economic damage it would cause are approaching


New York
CNN business

A freight rail strike, and the economic upheaval it could cause, is getting closer and closer to reality.

While two other rail unions reached interim agreements with rail management on new contracts on Tuesday, the two largest unions – representing the engineers and conductors who make up the crews of two people on each train – remain at loggerheads in the negotiations. If they don’t resolve their differences, the first national rail strike in 30 years could start early Friday.

Those unions of engineers and conductors account for about half of the more than 100,000 unionized workers on the nation’s major freight railways. Without them at work, those trains won’t work, nor will many commuter and Amtrak trains plying the freight lines. In fact, Amtrak has already suspended some of its routes.

If the two sides do not reach an agreement by the end of Tuesday, the leaders of the two unions and the negotiators of the railroad bargaining team will meet Labor Secretary Martin Walsh in Washington early Wednesday, according to someone familiar with the plans. .

“The parties continue to negotiate and Secretary Walsh pledged again last night to push the parties to reach a resolution that avoids any closure of our rail system,” a Labor Department spokesman said Tuesday. The talks reportedly continued in the late afternoon on Tuesday.

The railways operate under a single labor law that allows the federal government to intervene to keep workers at work, rather than freely allowing a strike or lockout of workers by management.

President Joe Biden blocked a strike through executive action in July, which delayed the possibility of a strike by 60 days. He also appointed a panel, known as the Presidential Emergency Board, which made recommendations for a deal that was accepted by most unions.

But not the engineers and conductors, who claim that the programming rules that keep them “on duty” virtually every day they are not at work, as well as the shortage of staff, make their working life intolerable. These rules were not addressed by the emergency council. Without a change to those rules, engineers and directors say they will go on strike. The 60-day cooling off period will expire at 12:01 am ET on Friday, so the threatened strike is looming.

Unless the two sides reach an agreement, only congressional action can prevent or end a strike. Richard Durbin, the second highest-ranking member of the Democratic Senate leadership, told CNN that the Democrats are not eager to act before the deadline to prevent a strike.

“I don’t think we are likely to intervene,” Durbin said. Avoiding a strike “depends on whether the parties in the negotiations step forward”.

The railroad management and numerous business groups, including the United States Chamber of Commerce and the National Retail Federation, are calling on Congress to take action to prevent a strike.

A strike would be a major blow to the US economy, which is still grappling with supply chain problems. About 30% of the nation’s freight travels by rail. Problems may include:

  • Gasoline: Without the freight railways, oil refineries would have difficulty producing their current volumes of gasoline, which could drive up gas prices, ending a three-month series of pump-down prices.
  • Food: It could disrupt the nation’s food supplies, preventing recently harvested crops from moving to food processors and disrupting the supply of fertilizer needed for upcoming plantations.
  • Consumer Goods: According to the National Retail Federation, any rail strike could have long-lasting negative effects on the import of goods for the holiday shopping season, causing shortages and higher prices.
  • Cars and Trucks: Car prices have already hit record prices this year due to the limited supply of new vehicles caused by the shortage of computer chips and other parts. A rail strike would further stifle supplies, disrupting the delivery of auto parts to auto assembly plants, which could force the temporary closure of some plants. It would also disrupt the flow of completed new cars and trucks, 75% of which travel by rail.

The full economic impact would not be immediate, said Patrick Anderson, of the Anderson Economic Group, which makes estimates of the economic impact for work stoppages, even though it would probably cost the economy tens of millions of dollars a day at first. .

“Costs will rise geometrically the longer the strike lasts,” he said. “After a week, you would see real damage in the US economy.”

He said an estimate of $ 2 billion a day in economic damage from the railroad trading group is “a gross overstatement,” but that the significant costs will spread across the economy. “If we reach a week-long strike, we are in uncharted territory,” she added.

The emergency council recommended an immediate 14% increase for union members, including back payment for part of that increase starting in 2020. Workers would also receive a 24% increase over the five-year duration of the contract and $ 1,000 annual cash bonus.

But the engineers and conductors say the strike is no longer paid; working conditions and scheduling are pushing their members to leave their jobs, leaving the railways with a staff shortage that makes conditions intolerable for the remaining workers. The unions that have accepted the deal do not have the scheduling problems faced by engineers and directors.

The railways say the average pay for their employees is $ 122,000 per year, including wages and benefits. But the railways themselves have also been very profitable, with many of them – Union Pacific (UNP), Norfolk Southern (NSC) and Burlington Northern Santa Fe of Berkshire Hathaway (BRKA) – making record gains.

Some Republicans in Congress say they are preparing legislation that would impose a contract on the unions of engineers and conductors to force them to stay at work.

“A railroad strike would be catastrophic for the American transportation system and our already stressed supply chain,” said Senator Richard Burr, a Republican from North Carolina and one of two senators intending to introduce the legislation. (The other is Republican Roger Wicker of Mississippi.)

Burr said the PEB’s recommendations, which form the basis of the contract that its legislation would impose, “are a fair and appropriate solution to a years-long negotiation process, but unions continue to hold the nation’s rail system hostage. because they ask for more. ”

Through their trade group, the Association of American Railroads, the railroads say the demands of engineering and conductor unions to change programming rules “should be handled locally” and not through national bargaining. He stressed that the unions’ request to have the change as part of the national contract was “expressly rejected” by the PEB.

For their part, the leadership of the engineers ‘and conductors’ unions have said that their members will not ratify any agreement that does not include changes to the labor rules. The two unions say they have already reduced what they ask for in an attempt to carry out the deal.

The unions also say that a strike is the best way to get a deal that will gain the support of their members and improve the quality of rail service nationwide. They argue that the railways are counting on Congressional intervention, which would eliminate for now the hiring of additional staff that the union leadership deems necessary.

– CNN’s Ali Zaslav and Maegan Vazquez contributed to this report

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