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A massive rail strike next week could deal another blow to the US economy

A massive rail strike next week could deal another blow to the US economy
Written by boustamohamed31

“We’re hearing more and more that shippers and rail carriers are starting to worry,” said John Drake, vice president for transportation, infrastructure and supply chain policy at the U.S. Chamber of Commerce. The House is calling on both sides to reach an agreement to avoid the first national rail strike in 30 years.

The unions and the National Railroad Labor Conference, which represents management at the negotiating table, met with federal mediators and U.S. Labor Secretary Martin Walsh on Wednesday to see if they could come to an agreement. Unions said there was no progress.

Freight railroads have generally thrived during the pandemic, so the key dispute is not over pay, but rather the rules controlling workers’ schedules. Many of the engineers and conductors who make up the two-man crews on each train must be “on call” to report to work seven days a week, preventing them from making their own plans, depriving them of time with their families and creating a high turnover rate.

Time is running out

Because railroad workers are subject to labor laws different from those that govern labor relations in most businesses, it is possible for Congress to act to prevent or quickly stop a strike. But that would require a level of bipartisanship rare in Washington just weeks before by-elections.
President Joe Biden prevented a strike two months ago, imposing a cooling-off period during which a group appointed by him, known as the Presidential Emergency Board (PEB), considered the contentious issues in the talks and issued a recommended agreement.

That 60-day cooling-off period is set to expire at 12:01 a.m. ET September. 16, and Biden does not have the power to prevent a strike at that time. Only Congress can act to prevent a shutdown, either by forcing a deal between the two sides or by extending the current cooling-off period.

The PEB recommended multiple annual increases until July 2020, when the previous contract expired.

They will give workers an immediate 14% raise as well as extra pay for the hours they have worked since 2020. There will be more increases going forward, resulting in a 24 percent pay increase over the five-year course of the contract, which would run from 2020 to 2024, as well as annual cash bonuses of $1,000.

The PEB’s wage recommendations are slightly lower than what the unions had asked for and slightly more than what management had previously proposed.

But it was lucrative enough that five of the smaller unions, which represent more than 21,000 rail workers, agreed to preliminary labor agreements based on the panel’s recommendations, although they still need to be ratified by their rank-and-file members, to to enter into force. And the PEB’s recommendations on wages would probably have been enough to win the approval of the other unions, even though they wanted more.

“We’re not going to sit here and argue [wages] or healthcare. We’re beyond that,” said Jeremy Ferguson, president of the union that represents conductors, one of two freight train workers along with engineers.

Anger because of the rules at work

The Conductors Union and six other unions ready to strike, including this one representing engineers, are unhappy with the work rule recommendations and how the on-call requirement will affect the quality of life of their members, depriving them of free time with their families, even when they are off work.

Unions are urging their allies in Congress not to act, arguing that a strike is the only way to reach a deal that could improve what they say are intolerable work rules that are driving employees out of business, causing staff shortages and well documented service issues in freight rail service.

“The fact is that they [the railroads] rely on Congress to act,” said Dennis Pierce, president of the Brotherhood of Locomotive and Train Engineers. “We let them [the union’s allies in Congress] we know we need them to stay away.”

“This is a chance for Democrats to stand up for something they say they stand for, the working class and labor,” Ferguson said.

Will Congress act?

If Congress acts, it would present a difficult political choice for the Biden administration. Biden is as pro-union as any president in history, but he doesn’t want to see any problems for supply chains, prices and the economy ahead of crucial midterm elections.

Asked about the risk of a strike, a White House official downplayed the possibility of congressional action, instead stressing the need for a negotiated settlement to avoid a shutdown he hopes to avoid.

“After the pandemic and the supply chain disruptions of the past two years, now is not the time for more uncertainty and disruption,” the official told CNN’s Betsy Cline.

The official said the White House “stands ready to support the parties as they work toward an agreement or a voluntary extension of the cooling-off period.”

“We don’t take a position on what the elements of an agreement should be,” the official added. “We are confident that the parties will make every effort to negotiate in good faith for a mutually acceptable solution, and we urge both parties to do so immediately.”

Democrats in Congress could push through a more union-friendly contract than recommended by the president’s panel. But that could have trouble getting the necessary Republican support to pass. Republicans could potentially benefit if there is a prolonged rail strike causing problems in the economy right before the election, especially if Democrats can be blamed.

Biden averts freight rail strike - for now

Even some businesses that would like to see the dispute resolved without a strike are nervous about going to Congress.

“Frankly, it’s not a good sign if it ends up going to Congress,” said a business representative closely following the potential for a strike, who spoke on condition that his name not be used.

“You don’t know what you’re going to get. You can have members holding up legislation to demand one thing or another. . . . Once Congress steps in, it becomes a mess.”

This executive believes Congress will stop the tracks by extending the reflection period, perhaps after Election Day, rather than forcing a treaty. But this is still not a solution.

“That’s it, it’s been 30 days since [presidential panel’s] recommendations. Only five of the 12 railway unions have signed the recommendations,” he said.

At this point, the railroads are still pushing for unions to agree to terms recommended by the president’s panel, rather than calling on Congress to act.

“It is in the best interest of all stakeholders and the public that railroads and railroad labor organizations reach timely agreements that provide wage increases for employees and prevent disruptions to rail service,” said the National Railroad Labor Conference “Now is the time to use the PEB’s recommendation as the basis for a swift and voluntary settlement.”

The railroad trade group estimated Thursday that the shutdown of freight rail service would cost the U.S. economy $2 billion a day. He did not specifically call for congressional action, encouraging the parties to settle the dispute through negotiations, though his statement said, “Ultimately, Congress has the power to step in and prevent a shutdown.”

Record earnings for railroads

The strike threat comes as several railroads, including Union Pacific (UNP), South Norfolk (NSK) and Berkshire Hathaway’s (A scramble) Burlington Northern Santa Fe reported record profits.

Unions argue that companies are profiting off the backs of their employees, creating conditions that drive workers to walk off the job. 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 was signed in 2017.

Union leaders say their members are now at breaking point and are eager to strike to win change.

“This is not a personal choice of the union presidents,” said Engineers Union President Pierce. “Our membership has said loud and clear that this is not a deal that the membership would ratify.”

— CNN’s Betsy Cline contributed to this report

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