A labor dispute years in the making threatens to halt freight and passenger railroads across the country, potentially grinding the supply chain to a standstill and dealing the U.S. economy a major blow – to the tune of $2 billion a day – if not resolved by Friday.
President Joe Biden, at least three of his Cabinet secretaries and members of Congress are attempting to avert a strike in an all-hands-on-deck effort to finalize negotiations between union officials and railroad companies. If an agreement is not reached, the impasse could mark the first railroad strike in nearly three decades and would likely deal a blow to Democrats ahead of the midterm elections.
Most of the 13 unions involved in negotiations have reached an agreement with the National Carriers’ Conference Committee, which represents BNSF, CSX, Kansas City Southern, Norfolk Southern and Union Pacific railways. Two union holdouts – the Brotherhood of Locomotive Engineers and Trainmen and the SMART Transportation Division, which represent engineers and conductors – recently rejected a compromised deal brokered by a presidentially appointed board of arbitrators over sick leave and attendance policies.
Even though the engineers and conductors represent about one-fourth of the 60,000 total union members who work for the railroad, their absence should they not reach an agreement would freeze the freight rail system, which carries roughly 30% of all U.S. goods, according to the Bureau of Transportation Statistics.
As the deadline grows near, more than 30 major U.S. industries that stand to be significantly affected are calling on Congress to intervene.
“The U.S. rail network moves critical agricultural inputs and significant quantities of agricultural products,” which included crop, dairy, food and livestock organizations, among others, the groups wrote in a Sept. 8 letter to the Senate Commerce and House Transportation and Infrastructure committees.
“These essential items are transported by rail to domestic facilities and to ports for export abroad,” they wrote. “A complete stoppage of the rail system would lead to shutdowns or slowdowns of rail-dependent facilities resulting in devastating consequences to our national and global food security.”
The consequences are already being felt in some parts of the country.
Amtrak announced Monday that it is preemptively suspending service on long-distance routes from Chicago to Los Angeles, Chicago to Seattle, Chicago to San Francisco and a portion of its routes that run from Los Angeles to San Antonio.
“Amtrak is closely monitoring the ongoing freight rail – rail labor contract negotiations,” it said in a statement. “The negotiations do not involve Amtrak or the Amtrak workforce. While we are hopeful that parties will reach a resolution, Amtrak has now begun phased adjustments to our service in preparation for a possible freight rail service interruption later this week.”
Virtually all of Amtrak’s 21,000-mile railroad system outside of the Northeast Corridor is operated on tracks owned and maintained by freight railroads, according to the Association of American Railroads. It cautioned that its initial suspensions “could be followed by impacts to all Long Distance and most State-Supported routes,” and that a strike would “significantly impact” routes outside of the Northeast.
The threat of a strike comes as Biden, the self-proclaimed “most pro-union president” ever and one who has spent much of his political career traveling Amtrak’s Northeast Corridor line from his home state of Delaware to the nation’s capital, leans into his organized labor roots ahead of a midterm election that will depend on the get-out-the-vote energy that unions are known for and on which Democrats often depend.
“The fact is you guys own me,” he told a pro-union crowd last week in Pittsburgh, where he participated in one of the country’s largest and oldest Labor Day parades. “You’ve been with me from the beginning.”
His administration’s early tenure has overlapped with a new wave of worker mobilization and unionization efforts, including at major companies like Kellogg’s, Starbucks and Amazon, among employees of major news conglomerates and even among congressional staffers.
Roughly 14 million Americans belong to a union, according to the Bureau of Labor Statistics, and the average union membership rate across the U.S. was 10.3% in 2021 – slightly lower than the 10.8% membership rate in 2020 but unchanged from 2019. Membership has trended down since 1983, the first year for which union data is available.
The timing ahead of the midterms couldn’t be worse for Democrats, who have notched a string of significant legislative wins in the run-up to Election Day and look poised to maintain control of the Senate in an election year that was once assumed to be a blockbuster take-back for the GOP.
Instead, Democrats have been gaining momentum in the homestretch to Nov. 6: Gas prices are down, more than 20 million student loan borrowers are set to have their debts canceled and K-12 schools are underway in the most normal back-to-school since the onset of the pandemic. Moreover, Democrats are reaping the upside of the primal rage released in the wake of the Supreme Court decision overturning Roe v. Wade, and former President Donald Trump is embroiled in multiple investigations, most notably over his role in the insurrection at the U.S. Capitol on Jan. 6, 2021, and whether he mishandled classified documents.
But a railroad strike stands to upend much of that.
“A national rail strike would be an economic disaster – freezing the flow of goods, emptying shelves, shuttering workplaces, and raising prices for families and businesses alike, but that is exactly what is likely to happen in less than four days,” U.S. Chamber of Commerce President and CEO Suzanne Clark said in a statement. “If action is not taken, the nation’s rail service will come to a halt, the negative impacts of which cannot be understated.”
Notably, the threat of a strike comes as consumer prices rose 0.1% in August, after being unchanged in July, as rising food and shelter costs offset the improvement in energy prices, the Bureau of Labor Statistics reported on Tuesday. The new figures, which Republicans pounced on, included some worrisome indications that price increases were taking hold across the board, despite some improvement in gas, used vehicles and air fares – though analysts underscored that the number is backward-looking and that other signs point to some slowdown in the rate of inflation.
Biden, seeking to do some damage control on the narrative, put out a statement saying the new data represents progress in batting down global inflation, noting the $1.30 decrease in a gallon of gas since the start of the summer, the slowing in the price of food at grocery stores last month and the increase in real wages over the last two months.
“Overall, prices have been essentially flat in our country these last two months,” he said. “That is welcome news for American families, with more work still to do.”
“It will take more time and resolve to bring inflation down,” he said.
In a letter to Congress, Neil Bradley, the executive vice president and chief policy officer at the chamber said that if an agreement cannot be reached Congress must intervene and impose the recommendations of the Biden administration’s Presidential Emergency Board, which Congress did in 1982 and again in 1986.
Biden signed an executive order over the summer that established a three-member emergency board after union officials and railroad companies failed to reach an agreement during the mediation process. At the time, the National Mediation Board, which provides mediation services for contract disputes for the railroad and aviation industries, cautioned that the standoff could “threaten substantially to interrupt interstate commerce to a degree that would deprive a section of the country of essential transportation service.”
The emergency board’s deal would put in place a 24% wage increase spread across several years, annual bonuses of $1,000 and an additional paid day off. Workers would also receive modest improvements to health benefits.
“While not perfect, these recommendations represent the best framework for an agreement that addresses the most significant concerns for all sides,” Bradley wrote. “Otherwise, allowing the negotiations to continue will bring further economic uncertainty to the American business community and consumers.”
Congress returned from recess this week for the last work period ahead of the midterms. A pair of Senate Republicans introduced a joint resolution on Tuesday that would require unions and freight railroads to accept the recommendations of a presidential emergency board to avert a strike or lockout, but it’s unclear whether Senate Majority Leader Chuck Schumer of New York and House Speaker Nancy Pelosi of California plan to intervene in the issue. Two House subcommittees are also slated to meet Thursday to assess the freight rail system.
“A rail strike would be counterproductive for everyone involved and would have devastating impacts on our entire economy,” Sen. Roger Wicker of Mississippi, who introduced the measure along with Sen. Richard Burr of North Carolina, said in a statement on Monday. “While there is still time for the remaining parties to reach voluntary agreements to end this dispute, it is time to bring this matter to a close.”
