Reported by Taylor Nicole Rogers for Financial Times.
Joe Biden’s pledge to be the most “pro-union” president is being put to the test as some 112,000 employees of the largest US freight rail carriers threaten to go on strike as early as next week, a move that could cripple the country’s already strained supply chains.
The US’s largest railroads and the unions that represent their employees have tried to renegotiate their expired labour contract for more than two years. But the two groups are at an impasse over pay and benefits, and the federal board that oversees their mediation process abruptly ended talks earlier this month.
Retailers, manufacturers and food producers are pressing Biden to intercede in hopes of avoiding the industry’s first work stoppage in 30 years.
Freight rail accounted for an estimated 28 per cent of US freight movements in 2020, according to an analysis of transportation department data by carrier Union Pacific. Companies have been increasingly reliant on rail carriers to transport freight amid cargo ship backlogs in ports and a shortage of truck drivers.
Both sides are in a 30-day “cooling off” period after the end of mediation before any labour activity can begin, as mandated by the Railway Labor Act, a law first passed in 1926. That law, which governs labour relations for rail workers, allows the US president to delay any work stoppage for 60 days by appointing an emergency board to investigate the stalemate.
If Biden does so before the cooling-off period ends on Monday, unions would be forbidden to strike until after the board adjourns and the parties wait out a second cooling-off period ending in September.
Labour leaders are eagerly awaiting Biden’s decision, which will be seen as a major test of the president’s campaign promise to be “the most pro-union president” in American history ahead of a midterm election where his party will need their support. At the same time, Biden has also pledged to tamp down on inflation and supply chain woes, both of which would be exacerbated by a large-scale strike.
Thousands have already voted to strike in internal union elections if Biden does not act by the Monday deadline. Workers say that chronic understaffing and erratic shift scheduling have made their jobs unbearable even as rail carriers made substantial profits.
“When workers say they are trying to resolve problems that have been happening over the last couple of decades, I do think it is a part of a much larger cycle,” said Erica Smiley, the executive director of non-profit Jobs with Justice.
She noted that the tight labour market has emboldened workers across the country to push their employers for a better deal, leading to unprecedented union victories at Starbucks and Amazon. About 22,000 dockworkers and various port workers along the west coast are also embroiled in their own labour dispute after their contract expired earlier this month.
“It’s not unprecedented, but it is uncommon,” Smiley said. “The last time we saw this level of crisis in the supply chain was in the early part of the 1900s.”
Any strike would be costly for both the rail carriers and their customers. The most recent US rail strike, which lasted for two days in 1992, was estimated to have cost $50mn daily, according to the American Association of Railroads.
Retailers and manufacturers were taken by surprise when the unions first threatened a work stoppage earlier this month, according to Jonathan Gold, who oversees supply chain and customs policy for the National Retail Federation, a trade group. Gold said he first learned that negotiations were breaking down only a few weeks ago.
Another trade group representing American manufacturers said in a letter to Biden that its members rely on railroads to move 40 per cent of their freight and that any service disruption “threatens to undermine our industry’s competitiveness”. The US Chamber of Commerce also wrote to the White House to urge Biden to prevent a strike.
“Anything else that impacts the supply chain that would shut down the supply chain essentially,” said Gold. “This is something that would be a self-inflicted wound [on the economy].”
For retailers, the next few months are the busiest shipping period of the year as they begin preparing for the holiday season. Virtually none have contingency plans for how they will keep shelves stocked without the railroads, Gold said.
Dennis Pierce, president of the Brotherhood of Locomotive Engineers and Trainmen, said that while workers have considered the broader economic implications of shutting down rail service, conditions on the railroads are “toxic.”
The Surface Transportation Board, the federal agency that regulates the railroad industry, said that the largest railroads laid off so many workers in the past six years that the industry’s overall workforce dropped 29 per cent. Unions say the lay-offs left trains dangerously understaffed and forced remaining crew members to work 12-hour shifts and spend as many as 14 consecutive days on call.
“They’ve been working nonstop trying to keep our country and our economy moving,” said Greg Regan, the president of the AFL-CIO department that represents the workers’ unions. “They haven’t received a raise, and, frankly, the railroads have been offering insulting offers at the negotiating table, so at the worker level they’re really fed up at this point.”
The National Railway Labor Conference, which represents the railroads in bargaining, said in a statement it is disappointed its members could not reach an agreement with workers, and that it is willing to continue negotiations because a deal is in “the best interests of all parties and the public”. The group has previously said it offered workers “significant increases” in pay that would be retroactive to 2020 and “benefits among the best in the nation.”
The railroads and the unions say that they expect Biden to appoint a board before Monday, and any appointments will be closely scrutinised by each side. A White House official told the Financial Times that the administration “has been going through the standard process that has been used in the past” when considering the appointment of the so-called presidential emergency board to mediate the dispute.
Regardless, union leaders say workers will not back down. “Covid put into stark contrast what their labour was worth,” Regan said.