A strike would stop almost 30% of the country’s freight.
Because those workers are covered by different labor laws than most workers in the nation, Biden had the power to block a strike by appointing a board to try to come up with a compromise labor agreement.
“These disputes threaten to significantly disrupt interstate commerce to an extent that would deprive a portion of the country of essential transportation services,” Biden said in his order late Friday afternoon.
But Biden’s action may only be a short-term solution, setting the clock ticking toward a possible shutdown in 60 days.
The presidential emergency council, which Biden appointed on Friday, has 30 days to try to find a solution that is satisfactory to both sides. If either rejects it, a second 30-day “cooling-off” period will begin in which the two sides try to reach a deal.
Only at the end of this second cooling-off period, which will be in mid-September, could the 12 unions that represent railroad workers strike or the nation’s major railroads could lock out workers and try to persuade Congress to step in and force a labor deal to their liking.
So the recent trends of supply chain problems and labor unrest in the US seem poised to collide in the coming months, with US consumers paying the price of not getting the goods they want and need, or paying significantly more for all available products.
Record profits, record union fury
Unions and their members are angry and eager to strike. They haven’t had a raise in three years, although several railroads, including Union Pacific, ( UNP ) Norfolk Southern ( NSC ) and Berkshire Hathaway ( BRKA )’s Burlington Northern Santa Fe reported record profits.
And even more discontent: staff shortages, which the unions claim create intolerable working conditions. Employment at the nation’s major railroads has fallen by more than 30,000, or about 20 percent of the workforce, since the last contract struck in 2017.
“We’re in the third year of negotiations and we’re not going to get anywhere,” said Dennis Pearce, president of the Brotherhood of Locomotive and Train Engineers. “Members are angry and angry like I’ve never seen them.”
He said many staff were required to be on duty or on call to report to work at short notice seven days a week due to inadequate staffing levels.
“They’re losing employees at an alarming rate because they’re not treating them like they want to keep them,” Pierce said. “It’s really hard for them to hire now. Word got around that these weren’t attractive jobs.’
He added that the typical 3 percent annual increases in previous contracts would not be acceptable this time, especially with some inflation rates of more than 10 percent.
The National Railroad Labor Conference, which negotiates on behalf of management at all major railroads, said it would not comment on bargaining details and expects any agreement to include retroactive wage increases for 2020 and 2021, as well as significant increases for this year. The average pay for railroad union members is $130,000, according to management.
Big business is crazy about railroads, too
It’s not just the unions that are fed up with railroad management.
Suppliers who depend on railroads to move their goods, including many of the nation’s largest companies, have complained about the quality of rail service in testimony and filings with the Surface Transportation Board, one of the federal agencies that oversee railroads. .
Several companies, including food processing giant Archer Daniels Midlan (ADM), have complained about the “inadequate service” now being provided by the railways at current staffing levels.
“ADM is not in a position to tell each railroad how many crew or locomotives it should have, what equipment or other investments it should make, or what operating systems it should use for its business,” the company said. “ADM just needs to know that whatever systems the railroads implement, the railroads will be able to meet our service requirements.”
Experts agree that both labor relations and service levels have hit all-time lows and are a major factor in the nation’s current supply chain woes.
“Staffing issues are probably the main problem for the railroad industry right now,” said Pete Swan, professor of logistics and operations management at Penn State. “It takes many months to train an engineer. They were caught flat-footed. I would tell you that labor relations in the rail industry are the lowest I’ve ever seen, and they’ve been pretty bad before.’
Proposal to have single work trains
Management is seeking permission to remove one of the two employees currently working on every train, a conductor, across most of the country. Although they do not drive the train like engineers, they are skilled engineers who can take over in an emergency and can serve as a second set of eyes while the train is under stress.
Management argues that current safety equipment designed to stop a train if it is moving too fast or out of position makes a second person redundant. It would be more efficient to redeploy these workers to fixed on-site positions to handle many of the same tasks
Unsurprisingly, unions are calling the proposal a non-starter, as well as a major risk to the safety of staff and the communities the trains pass through.
Difficult to find a common language
The difference between labor and management positions suggests that there will be no agreement during the 30 days that the PEB is in place while the two sides try to find a solution, or during the 30-day cooling-off period that follows. At that point, it may be up to Congress to try to reach an agreement on a treaty that can be binding on both sides.
But finding common ground on almost anything in Congress has proven difficult, especially with midterm elections looming.
“We are in an election cycle. No one wants to be blamed for the supply chain shutdown,” Pearce said.
If Congress fails to pass legislation during the 30-day reflection period, there could be a strike or lockout that could stop freight trains across the country.
The railroad’s management group issued a statement saying it was pleased with Biden’s action.
“It remains in the best interests of all parties – and the public – that the railways and rail unions immediately settle the bargaining round on reasonable terms that provide employees with prompt and well-deserved wage increases and prevent disruptions to rail services,” it said .
Unions issued a joint statement saying they were prepared for the president’s actions.
“Our combined case will clearly show that the unions’ proposals are supported by current economic data and are more than justified when compared to the contribution of our members to record rail profits,” they said.
Unions say restrictions on its members’ strikes have made it harder to reach a deal that would be better for employees, shippers, consumers and ultimately even the railroads, which unions say could handle more loads if they had better staff.
“Members want to strike. Nobody should reject that,” Pearce said. “And I think a lot of the shippers would like to see the railroads get poked in the eye if they allow this.” If unions had the right to strike, we would have a deal as early as 2019.”
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