President Joe Biden told reporters gather at Joint Base Andrews in Maryland on Monday that railway management and workers need to come back to the table as a strike would be “...an unacceptable outcome for our economy.”
Updated Thursday, September 15, 2022 12:25 p.m. EST - A strike has been averted after a 20-hour marathon negotiations between unions and railroads orchestrated by the White House. Unions have agreed not to strike while the contract is being voted on by members.
Updated Tuesday, September 13, 2022 5:05 p.m EST - CNN reports the Biden Administration has been working on a contingency plan in the event of a strike for several weeks now.
“The White House is working with other modes of transportation (including shippers, truckers, air freight) to see how they can step in and keep goods moving, in case of a rail shutdown,” a White House official told CNN on Tuesday.
The official added that the administration “has also been working with relevant agencies to assess what supply chains and commodities are most likely to face severe disruptions, and the emergency authorities available to keep goods moving.”
Strikes happen every day, and they don’t often draw comment from the president. Later, it was reported by the Washington Post that Biden spent time on the phone with both parties, trying to broker a fair deal and avoid a shutdown of 30 percent of the nation’s freight trains and nearly all of its passenger trains.
The railroads that built this country are still a big piece of our nation’s infrastructure and America is staring down a railroad strike the likes of which we haven’t seen in over a century. Such a nationwide shutdown could mean billions in economic damage. The possibility of a strike is already causing some railways, like Union Pacific, to reject hazardous or security-sensitive materials due to the very real possibility that there will be no workers to handle the shipments come Monday, a move labor leaders call an unnecessary act of “corporate extortion,” CNN reports.
So how did we get here? How are we going to survive Supply Chain Armageddon Pt. II?
Friday marks the end of a federally mandated 30-day cooling-off period following the failure of a two-year-long contract negotiation process between railways and two of the major unions representing a large portion of railway workers. If it happens, it’ll be the first railroad strike in 30 years, with more than 90,000 members of 13 different unions walking off the job, reports Poynter. When the 13 unions took a strike vote in July, 99 percent of union members voted in favor of a walkout. These unions are through playing around.
Railways are working with minimal staff. That means that existing staffs have been forced to work longer hours and more days without time off, increasing the likelihood of accidents. And when trains crash, railway workers are often at risk of death or debilitating injury.
Meanwhile, the last few years have been very good for the large railways, partially thanks to cost savings as a result of constantly trimming the workforce. The Surface Transportation Board railroads cut their workforce by 45,000, or 29 percent, over the past six years. The company’s focus on profits has led to worsening service and skeleton crews of overworked employees.
Union Pacific, for instance, reported a net income of $6.3 billion for 2021. The company is on track to do the same this year, having earned $1.8 billion in the first half of 2022, identical to the same period in 2021, even though fuel costs have spiked. It’s not like the big railroads aren’t making money. From Bloomberg:
Large railroads, including Union Pacific Corp. and Warren Buffett’s BNSF Railway Co., have juiced their profits so high by increasing efficiency and paring their workforces over the last several years that they have boxed themselves into a corner with no catalyst to keep attracting investors. Adjusted operating margins for the five largest US railroads were 41% last year, compared with 29% 10 years ago and 15% less than a couple of decades ago. Those margins are off the charts when compared with other transportation companies, including trucking, parcel, air freight, maritime shipping, airlines, you name it.
In pushing those margins over the past five years to a level that analysts most likely would have thought were unobtainable, the railroads have angered their customers with high prices and poor service and have alienated their workers, who complain they’re being overworked after the railroads cut their ranks as much as possible.
That may be why a federal emergency board, put together to mediate between the two parties, recommended a staggering wage increase of 24 percent going back to 2020 and through 2024, including an immediate 14-percent wage increase covering the first three years that workers have gone without a contract.
While some wanted the deal, the two holdouts, the Brotherhood of Locomotive Engineers and Trainmen and the SMART Transportation Division, say workers still wouldn’t be protected from the unacceptable working conditions its members currently face, including compulsory 12-plus hour workdays. From the New York Times:
The Brotherhood of Locomotive Engineers and Trainmen and the SMART Transportation Division which represent engineers and conductors, say workers must often stay on call for several days at a time, working 12-hour shifts with little notice, and are penalized for calling in sick.
“Our unions remain at the bargaining table and have given the rail carriers a proposal that we would be willing to submit to our members for ratification, but it is the rail carriers that refuse to reach an acceptable agreement,” they said in a joint statement. “In fact, it was abundantly clear from our negotiations over the past few days that the railroads show no intentions of reaching an agreement with our unions.”
Together, the two unions represent nearly half the 115,000 freight rail workers covered by the negotiations. While the unions have not committed to striking on Friday, a walkout remains an option, a spokesman said, noting that more than 99 percent of participating members of the locomotive engineers union voted in July to authorize a strike.
This summer, millions of chickens nearly starved to death because there weren’t enough trains to deliver grain to feedlots. The federal government had to get involved to prevent a potential widespread disruption to one of the most basic grocery-store staples. Thousands of Amazon packages were looted from Union Pacific trains in LA., possibly due to understaffing. And that was all before any threat of railway workers walking off the job.
Trains move just about everything you can buy in the U.S. About half of all products sold in our country travel by railway at some point, according to Marketplace. But nothing can move without engineers and conductors. The predictions of what could happen are pretty dire. From the Times:
The Association of American Railroads, a freight rail industry group, said a disruption to service would cost more than $2 billion per day in economic output, idle thousands of trains and result in widespread product shortages and job losses. Rail accounts for about 28 percent of U.S. freight movement, second only to trucking’s nearly 40 percent, according to federal data.
More than 460,000 additional trucks would be needed each day to carry the goods otherwise delivered by rail, the American Trucking Associations, another industry group, said in a letter last week asking lawmakers to be prepared to intervene. The trucking industry faces a shortage of 80,000 drivers, so a rail disruption would “create havoc in the supply chain and fuel inflationary pressures across the board,” it said.
Union Pacific, for example, is happy to transport almost anything except personal property, passengers, or living animals. Everything from cars to military equipment to food and animal feed are transported on trains. While trucks still reign supreme in hauling America’s freight cross-country, trains are responsible for a massive $80 billion in trade every year.
A strike would shut down 30 percent of that trade almost instantly. Commuter and passenger trains would also be affected, snarling the travel plans of more than 85,000 Amtrak customers every day. Amtrak is already preparing for disruptions, shutting down three long-distance routes and warning customers of impending delays.
Right now, President Biden is personally pushing for the unions and railways to make a deal, but so far, emergency meetings at the White House and phone calls from the politically powerful have proved fruitless.
There really is no way of knowing how a rail strike would affect each of us individually. But considering how vital the freight train industry is to the U.S. economy, we can likely expect the federal government to step in and force folks back to work, like it did during a 1992 railway strike. Congress swiftly amended the Railway Labor Act to allow Congress to end a strike or lockdown if it hurts the U.S. economy (which is kind of the whole point of a strike). Then-president George H.W. Bush signed the bill into law the very day it hit his desk. The strike was over in only two days.
Congress would likely act quickly again to subvert a shutdown of America’s railways. In fact, a joint resolution to do just that was proposed in the Senate on Monday. It will be up to Biden to sign any resolution ending a strike, which puts the president in a politically tough spot. Biden has fervently supported and celebrated unions, both on the campaign trail and while in office, but a lengthy rail strike could destroy all the momentum Democrats built up with several major political victories this summer. Biden also certainly doesn’t need another bad transportation headache, after dealing with a crippled supply chain and a summer of canceled flights and concerns over fuel prices.
In my opinion, it’s highly likely Biden would act swiftly to end a railroad strike. But if he doesn’t, consider this: Trains often take large quantities of cargo directly from ports to distribution hubs. Some can carry as many as 240 shipping containers, at a quarter of the cost of over-the-road transit (i.e. trucking). We’re already suffering a truck driver shortage, so finding enough rigs and licensed drivers to cover for a nationwide rail strike is going to be a tall order. And even if enough trucks and drivers can be found, the increased shipping costs on everything stocking store shelves will push up inflation even higher than the current 8 percent.
If the trains stop running, cargo backups at shipping ports will cause the same headaches, snarls and even shortages we saw at the height of COVID-19 lockdowns. Even a strike of just a few days could have massive ripple effects in our fragile, rebounding economy. We could see a return to the bad old days of panic-buying, grocery store shelves empty of toilet paper and dry pasta — even though an extended rail shutdown is highly unlikely.
Railway labor helped build this country. Trains created astounding profits for the large railway operators, but the working folks who keep our trains running have a proud tradition of fighting for their rights and wages. After two years of record profits, cast against staffing cuts and no working contract, it seems railway workers are done talking. Who could blame them?
It will be fascinating to see whether a compromise can be reached — or whether America’s pro-labor president decides to fight the railroad workers in favor of keeping our economy running. We will update this post as events unfold.