Tentative labor deal averts threat of nationwide rail strike

By JOSH FUNK, JOSH BOAK and ZEKE MILLER

WASHINGTON (AP) — Rail companies and their workers reached a tentative agreement Thursday to avert a nationwide strike that could have shut down the nation’s freight trains and devastated the economy less than two months before the midterm elections.

President Joe Biden announced the deal, which emerged from a marathon 20-hour negotiating session at the Labor Department and came just one day before the threatened walkout.

“This agreement is validation of what I’ve always believed — unions and management can work together … for the benefit of everyone,” Biden said in the White House Rose Garden.

The deal, which includes a 24% pay raise, will go to union members for a vote after a cooling-off period of several weeks.

The threat of a shutdown carried political risks for Biden, a Democrat who believes unions built the middle class. But he also knew a rail worker strike could damage the economy ahead of the midterms, when majorities in both chambers of Congress, key governorships and scores of important state offices will be up for grabs.

Biden made a key phone call Wednesday evening to Labor Secretary Marty Walsh as negotiators were talking and being offered Italian food for dinner, according to White House officials who insisted on anonymity to discuss the conversations.

On speakerphone, the president urged both sides to get a deal done and to consider the harm that a shutdown would inflict on families, farmers and businesses , the officials said.

One union had to wake up its board to move forward on the agreement, which involved 50 calls from White House officials to organized labor officials.

Joined in the Oval Office by business and union leaders, a beaming Biden joked that he was surprised everyone was “still standing” after the late night and that they should be “home in bed.”

A strike would also have disrupted passenger traffic as well as freight, because Amtrak and many commuter railroads operate on tracks owned by the freight railroads. Amtrak canceled all of its long-distance trains ahead of the strike deadline and was working to restore full service.

The five-year deal, retroactive to 2020, also includes $5,000 in bonuses. The railroads agreed to ease their strict attendance policies to address union concerns about working conditions.

Railroad workers will now be able to take unpaid days off for doctor’s appointments without being penalized. Previously, workers would lose points under the attendance systems at BNSF and Union Pacific railways, and they could be disciplined if they lost all their points.

The talks also included Norfolk Southern, CSX, Kansas City Southern and the U.S. operations of Canadian National.

The unions that represent conductors and engineers who drive the trains had pressed hard for changes in the attendance rules, and they said the deal sets a precedent that ensures they will be able to negotiate such rules in the future.

Victor Chen, a sociologist at Virginia Commonwealth University who studies labor, said concerns about working conditions have increasingly become a priority for unions and the workers they represent.

“At a certain point, good wages just aren’t enough to make up for the toll these sorts of working conditions impose on workers,” Chen said. “The companies need to treat workers like human beings, rather than just inputs in a business process.”

The railroad unions pointed to workload and attendance rules after the major railroads cut nearly one-third of their workforce — some 45,000 jobs — over the past six years.

The railroad industry has aggressively cut costs everywhere and shifted its operations to rely more on fewer, longer trains, which use fewer locomotives and fewer employees. The unions said the remaining workers, particularly engineers and conductors, were on call 24-7 because of jobs cuts and could hardly take any time off under strict attendance rules.

Unions had an advantage at the bargaining table because of the tight labor market and ongoing service problems on the railroads, Chen said.

Shippers have complained loudly this year about delays and poor service as railroads struggled to quickly hire enough to handle a surge in demand as the economy emerged from the pandemic. The shipping problems gave rail workers extra leverage.

Newly hired CSX CEO Joe Hinrichs said he hopes the new deal helps the railroad hire and retain more employees to address the service problems.

“Now we can move our conversation into how do we work together to grow the business and better serve our customers,” he said.

Union activism has surged under Biden, as seen in a 56% increase in petitions for union representation with the National Labor Relations Board so far this fiscal year, including prominent organizing efforts at Starbucks, Amazon and other companies. A number of unions have gone on strike over the past two years to get better deals.

Rutgers University professor Todd Vachon, who teaches about labor relations, said working conditions have increasingly been a key part of labor disputes — sometimes rivaling wages and benefits. Railroad workers were particularly attuned to work-life balance and the ability to take time off for health reasons.

That has led to a “real resurgence in the labor movement that goes beyond merely reacting to inflation,” Vachon said.

Before the deal was reached, business groups including the Business Roundtable and the U.S. Chamber of Commerce were predicting that a rail strike would be an “economic disaster.”

The Association of American Railroads trade group estimated that a rail strike would cost the economy more than $2 billion a day and force many businesses to scale back or cease production and consider layoffs.

“We appreciate the Biden administration’s intervention on behalf of the businesses and consumers who would have been impacted at a time when high inflation and economic uncertainty are challenging consumer budgets and putting business resiliency at risk,” said Matthew Shay, chief executive of the National Retail Federation.

The deal also has broad implications for control of Congress and the health of the shipping network that keeps factories running, stocks store shelves and stitches the U.S. together as an economic power.

American Trucking Associations President and CEO Chris Spear said the rail deal “permits our supply chain to continue climbing out of this COVID-induced rut.”

With the economy still recovering from the pandemic’s supply chain disruptions, the president’s goal was to keep all parties talking so a deal could be reached.

Biden also knew a stoppage could worsen the dynamics that have contributed to soaring inflation and created a political headache for the party in power.

Biden confronted the same kind of predicament faced by Theodore Roosevelt in 1902 with coal and Harry Truman in 1952 with steel — how does a president balance the needs of labor and business in doing what’s best for the nation?

Railways were so important during World War I that Woodrow Wilson temporarily nationalized the industry to keep goods flowing and prevent strikes.

So the administration jumped into the middle of the talks with Biden and cabinet officials calling both sides and the labor secretary participating directly in negotiations.

By 5:05 a.m. Thursday, it was clear that the effort had paid off as Biden announced the deal, calling it “an important win for our economy and the American people.”

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Funk reported from Omaha, Nebraska.