Rail Strike Averted

The nation's 7,000 daily freight trains will continue to run as a national railroad strike was likely averted early Thursday morning.

While the deal will grant 115,000 rail workers their biggest raises in 40 years, concessions on working conditions were hard-earned by negotiators. 

The unions representing engineers and conductors had pressed for changes in policies that allow more flexibility in taking time off from work, including the right to take unpaid medical days off without being punished. The railroad unions believe the cut of up to 45,000 workers over the last six years - one third of the railroads combined workforces - have led to difficult working conditions of both long hours on duty and long stretches of consecutive days of work. 

Shippers had complained in recent years about bad service from railroads due partially to cutbacks in the number of trains in use. Fewer, longer trains that require fewer staff have helped to increase profits for the industry. The rail industry saw profit margins of over 40 percent in 2020 and 2021, while compensation and benefits as a percentage of revenue fell to 20 percent, the lowest in over 20 years. 

A work stoppage would have made grain shipments difficult in many parts of the country.

Mike Steenhoek, Soy Transportation Coalition: “You know, there's a lot of areas of this country where your option for transportation is rail and it's rail, that's your only option. And maybe some areas of the country where you're close to the inland waterway system. You can move some freight at the margins to the river, but that's only, that's only limited.” 

Economists had estimated a shutdown of the rail system in the U.S. would have cost the economy up to $2 billion per day. Over 40 percent  of U.S. cargo shipments are moved via rail, and a strike could have caused cascading shutdowns throughout the economy. 

The new deal closely follows the recommendations of the Presidential Emergency Board that President Joe Biden created in July. The proposal includes a 24 percent  raise over the five year contract.  

Rail workers have been working without a contract since 2019, when  management and labor negotiators first failed to find common ground.  A timeline for a ratification vote of the new contract by the 12 unions involved has not been announced.

Supply chain experts believe blue collar workers may have leverage in the current economy.

Chris Tang, University of California, Los Angeles: “For many decades, we have neglected the class they do. The basic activities, like farmers, like truck drivers, like railroad workers, because we treat them like commodities is, well, if the cost is too high, you can find someone else to do the job. But things have changed.”

For Market to Market, I’m Peter Tubbs.