Rail-Strike Deadline Carries Economic and Political Risks for Biden

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(Bloomberg) — Tens of thousands of US railroad workers could be on strike by the end of this week, a potential new shock to supply chains that would pose a pre-midterm political quandary for President Joe Biden and the Democrats.

Negotiators met through the weekend trying to reach a deal with two unions covering some 57,000 enginefdayers and conductors — a tired-and-riled workforce that emerged from the pandemic-rattled economy. Ten other unions involved have reached tentative agreements, though such deals require ratification by members. US Labor Secretary Marty Walsh met with both sides last week.

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Pressure is building from industry groups and Republicans alike for Congress to intervene in the dispute, which the unions have been urging legislators not to do. Lawmakers have the authority to extend the deadline beyond 12:01 a.m. Eastern Time on Sept. 16 or impose a contract on the two sides, preventing workers from striking for a better deal.

Still riding the momentum of recent legislative wins, the Biden administration can ill afford work stoppages that clog major arteries of the nation’s food and energy supplies. But neither does the president want to be seen as obstructing workers trying to win more time for their private lives.

“In this moment where there’s so much public concern about supply chain and inflation, I think there’s going to be a lot of pressure on Congress to step in,” said Sharon Block, who worked in the Obama and Biden administrations and is now executive director of Harvard Law School’s Labor and Worklife Program. “Certainly the best outcome is for there to be some resolution before then.”

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The situation may get worse even before the deadline expires. Railroads warned Friday that they may impose limits on certain shipments starting Monday. The presidents of two holdout labor groups — the SMART Transportation Division and the Brotherhood of Locomotive Engineers and Trainmen — on Sunday called that move “no more than corporate extortion.”

Union leaders Jeremy Ferguson and Dennis Pierce accused the companies of “harming the supply chain in an effort to provoke congressional action.”

Tricky for Biden

For Biden, the rail dispute needs to be resolved without imperiling the economy or undermining support from Democrats’ traditional base among workers. It’s only in recent weeks that inflation — particularly at the gasoline pump — has begun to ease, and a new economic disruption just weeks ahead of midterm elections could undermine Democrats’ recent progress.

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“I know that the administration, the White House, is closely monitoring the negotiations, and we certainly hope that they will be successful in avoiding a damaging supply shock to the economy,” Treasury Secretary Janet Yellen said on CNN’s “State of the Union” on Sunday.

The president has long touted organized labor as a bedrock for the nation’s middle class. On Labor Day, he visited a union hall in Pittsburgh during his third trip to Pennsylvania in a week, supporting Democrat John Fetterman in a US Senate race against heart surgeon Mehmet Oz

With freight railroads serving agricultural, industrial, wholesale, retail and other parts of the US economy, a nationwide shutdown could cost up to $2 billion a day, the Association of American Railroads predicts. At a time of elevated inflation, the stoppage could result in plant shutdowns, lost jobs and higher costs for consumers and businesses.

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Economic Costs

“It’s the volumes, it’s not having the labor in place, not having equipment in place,” said Jon Gold, vice president of supply-chain and customs policy at the National Retail Federation. “Even when they’re able to move the cargo, I’ve heard from some of my members that it still gets jammed up in places like Chicago.”

Railroads and workers have faced years of challenging negotiations, which began in January 2020, shortly after the labor contract froze at 2019 levels. After the National Mediation Board failed to carve out an agreement this summer, the Biden administration’s Presidential Emergency Board recommended a 24% compounded wage hike by 2024 and $5,000 in bonuses, including some retroactive elements. The AAR said such a wage gain would be the biggest in at least 40 years.

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It’s “disappointing” that some of the larger rail unions are upset that Biden’s emergency board’s recommendations didn’t go far enough, the Retail Federation’s Gold said. “I mean, the whole reason for the PEB was to get the parties together to a mutual understanding,” he said.

But it’s not all about the pay. 

“Our members are being terminated for getting sick or for attending routine medical visits as we crawl our way out of worldwide pandemic,” union leaders Ferguson and Pierce wrote Sunday. Current attendance policies “are destroying the lives of our members, who are the backbone of the railroad industry.”

Working Conditions

These workers often engage in long shifts and sometimes spend weeks away from their families, and because of that have doubled down on the safety and time-off parts of the negotiations.

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The rail dispute follows a series of strike authorizations and work stoppages partially motivated by workers’ concerns about their jobs overtaking their lives. 

Last year Deere & Co. workers went on strike citing excessive mandatory overtime; Kellogg Co. employees walked off the job citing the toll of seven-day workweeks; and striking Frito-Lay Inc. staff denounced the policy of being forced back to work just eight hours after clocking out, a practice some called “suicide shifts.”

Grueling schedules also were a major motivation for the film and TV workers who voted to authorize a 60,000-person strike last fall, which was averted by a contract deal that employees only narrowly voted to approve.

“Workers are supposed to be able to stand up for what’s important to them and I would hope that the public would understand that things like scheduling and sick leave are important,” Harvard’s Block said. 

“These are people who have worked really hard in tough circumstances under the past couple of years. They should be the masters of their own fate” through collective bargaining, she said.