(WASHINGTON) — President Joe Biden on Monday asked Congress to intervene and avert a potential strike of the nation’s railway workers — which could upend huge parts of the economy that depend on freight to move goods — by forcing the workers’ unions to accept a deal negotiated earlier this year.
In a statement, Biden described himself as a “proud pro-labor” president and said his decision was a difficult one.
But he said the larger economic considerations outweighed those concerns.
“I am reluctant to override the ratification procedures and the views of those who voted against the agreement. But in this case — where the economic impact of a shutdown would hurt millions of other working people and families — I believe Congress must use its powers to adopt this deal,” he said.
He asked Congress to quickly pass legislation to adopt the tentative deal between the rail companies and employees that was reached in September and brokered by the White House.
If a deal is not reached — or forced by Congress — then a strike could begin after the Dec. 9 deadline. Outgoing Speaker Nancy Pelosi said in a statement Monday night that the House will soon take up such legislation and won’t modify the agreed-upon terms from September.
Like Biden, she said, “We are reluctant to bypass the standard ratification process for the Tentative Agreement — but we must act to prevent a catastrophic nationwide rail strike, which would grind our economy to a halt.”
The tentative contract included a 24% compounded wage increase and $5,000 total in lump-sum payments.
Pelosi praised certain elements of that deal but said, “Democrats are continuing to fight for more of railroad workers’ priorities, including paid sick leave.”
Sen. Bernie Sanders, I-Vt., a member of the Democratic caucus, has said his colleagues should do more for workers.
The two largest unions had initially highlighted how the tentative agreement included “wage increases, bonuses, with no increases to insurance copays and deductibles” and improved time-off policies, which had become a sticking point.
While eight of the 12 rail unions then went on to formally ratify the agreement, four rejected it — including the largest in the nation, with 50.8% of its workers voting against the deal.
Some of the workers’ groups who rejected the agreement cited frustration with compensation and working conditions, particularly a lack of paid sick days.
Because all of the rail workers have vowed not to cross the picket line in the event of a stoppage, the objections of four of the 12 unions ensures a strike unless there is a last-minute change in negotiations or congressional intervention.
Biden said Monday he was calling for Congress to act on advice of his secretaries of labor, agriculture transportation, who “believe that there is no path to resolve the dispute at the bargaining table and have recommended that we seek Congressional action,” according to his statement.
In urging Congress to ratify the deal between the rail companies and workers, however, Biden also warned lawmakers not to try and change the terms on their own.
“Some in Congress want to modify the deal to either improve it for labor or for management. However well-intentioned, any changes would risk delay and a debilitating shutdown. The agreement was reached in good faith by both sides,” he said.
A strike would “devastate our economy,” he said, noting that “the holiday season” was no time for that outcome.
What a railroad strike could mean for the economy
A potential strike could lead to $2 billion a day in lost economic output, according to the Association of American Railroads, which lobbies on behalf of railway companies.
“No one benefits from a rail work stoppage — not our customers, not rail employees and not the American economy,” AAR President and CEO Ian Jefferies said in a statement Monday night. “Now is the appropriate time for Congress to pass legislation to implement the agreements already ratified by eight of the twelve unions. A clear pattern of ratified agreements has been established and Congressional action to prevent a work stoppage in this manner is appropriate.”
“A national rail strike would severely impact the economy and the public,” the National Carriers’ Conference Committee, or NCCC, the group representing the freight railroad companies, said last week.
Rail is critical to the entire goods side of the economy, including agriculture, manufacturing, retail and warehousing. Freight railroads are responsible for transporting 40% of the nation’s long-haul freight and a work stoppage could endanger those shipments.
Moody’s Analytics chief economist, Mark Zandi, said that a railroad strike would be “economically costly,” and that a freight shutdown would roil supply chains and put upward pressure on U.S. goods inflation, making price problems temporarily worse.
The main channel for a strike to boost inflation is through the higher cost of transportation, particularly for agriculture, Zandi said. Corn, wheat and soybeans are the primary agriculture commodities that use rail.
A strike would also affect shipments of ethanol, potentially leading to higher gas prices, according to Zandi.
Trucking freight rates, which are still elevated above pre-pandemic levels, could also be pushed higher. Zandi said that the American Trucking Association estimates that a rail work stoppage would require 500,000 more trucks and 80,000 more drivers to fill the gap — an untenable number.
More immediately, however, Zandi said a strike would not have a material impact on holiday sales. Inventories of Christmas goods are ample and the major shipping of goods from ports to warehouses for the season is long over.
“Getting goods from warehouses to homes is done by truck,” Zandi said. “Perhaps some trucks would be diverted to help move goods typically done by rail, but this should not be a significant factor for Christmas.”
Local rails, though, could see disruptions should a rail strike occur — leaving commuters in a lurch. Freight companies own and operate many of the tracks across the country and in the event of a strike, local trains that run on those tracks would be forced to cancel trips.
But some Amtrak trains and commuter rails that run along the Northeast Corridor wouldn’t be affected by this. Amtrak owns some of its tracks, and they are not involved in the ongoing negotiations. In addition, local rail that own and operate their own tracks would not be affected — such as Trinity Railway Express in Dallas and Bay Area Rapid Transit in San Francisco.
Why Congress is involved in potential rail strike
All labor disputes in the railway and airline industries — which are seen as critical to the U.S. economy, stretching across major industries from energy to agriculture — are governed by a 1920s-era federal law known as the Railway Labor Act, or RLA.
Congress enacted that law after decades of sometimes violent worker strikes and when Americans had grown dependent on many industries, particularly farming and manufacturing.
Under the RLA, if the parties in the rail labor dispute do not reach agreement on a new contract, the railroads can either impose their own work rules or employees can strike — or both.
At that point, the RLA would no longer set the terms of behavior.
Congress, acting with authority from the Constitution’s commerce clause, has not voted to end a railroad strike since April 1991 — less than 24 hours after a walkout. At the time, lawmakers approved a joint resolution — with President George H. W. Bush being roused from his bed in the middle of the night to sign the bill — that forced the parties in the dispute into a 65-day binding arbitration process.
Had those workers not approved of the terms in arbitration, Congress mandated that less generous solutions from the Presidential Emergency Board, acting as a third party, be accepted.
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