Three railroad unions have now voted to reject a contract negotiated by the Presidential Emergency Board (PEB) that had been accepted by eight other unions. This creates the possibility of a strike early next month and a return to the crippling supply chain problems last year. The White House and lawmakers will feel pressure to step in and head it off. They should wait and see first.
Government intervention in the private sector is never ideal and there is still time for this to be resolved amicably by the railroads and the unions. Further talks are planned with a deadline of December 8 to reach a deal. Negotiations often go to the brink. That’s how the deals are often made.
A statement by the Brotherhood of Maintenance of Way Employees (BMWE), a Teamsters union, said, “Railroads, the clock is ticking! Come to the table now and do the right thing: provide all railroad workers with paid sick leave and we can spare the country a shutdown.” That sounds like a group that’s just trying to get the most it can at the negotiating table. (Note: “Brotherhood of Maintenance of Way Employees” is the union’s official name.)
Reuters reports that a rail shutdown could freeze nearly 30 percent of U.S. cargo shipments, costing the economy $2 billion per day by effectively halting the shipments that fuel the energy, agriculture, manufacturing, health care, and retail sectors.
Eight unions have agreed to the contract, which includes a 24 percent wage increase through 2024, with another 14 percent wage increase effective immediately. That would put the average pay for a rail worker at $110,000 per year by the end of the agreement, not counting benefits.
Other unions besides the BMWE that have balked at the deal are Sheet Metal Air Rail Transportation and the Brotherhood of Railroad Signalmen. They have demanded better sick leave and attendance policies, claiming they’ve had to put in too many long hours since the outbreak of the COVID pandemic. Those policies would likely require the roads to hire more workers. Railroad automation has been a sore point for unions since it reduces the need for workers.
They are facing some tough opposition in the current negotiations. The Biden administration is sensitive about its record on the economy and another supply chain fiasco like last year’s is exactly what it doesn’t want. Biden created the PEB earlier this year precisely to head that off. Republican Senators Richard Burr of North Carolina and Roger Wicker of Mississippi have a bill ready that would prohibit a strike and impose the PEB’s proposed deal. There’s no counterproposal in Congress to rewrite the PEB’s agreement to give the unions what they want. A narrow GOP-led majority will be taking over when the next Congress convenes. Business groups like the Chamber of Commerce are calling for intervention.
The transportation industry’s labor force is regulated under the Railway Labor Act, which gives the government leverage to force unions and businesses to accept contracts. For once, Congress is applying the interstate commerce clause to something primarily involving interstate commerce.
In short, the holdout unions don’t have a strong hand to play this time. They probably know this and are just pushing things as far as they can. If they’re serious about striking over this, they’ll likely get a firsthand lesson in why government invention isn’t always a good thing.
