Consumers Could Pay Price if Railroads, Unions Can’t Agree

OMAHA, Neb. (AP) — Consumers could see higher gas prices and shortages of some of their favorite groceries during the winter holiday season if railroads and all of their unions can’t agree on new contracts by an early-December deadline that had already been pushed back.

The likelihood of a strike that could paralyze the nation’s rail traffic grew on Monday when the largest of the 12 rail unions, which represents mostly conductors, rejected management’s latest offering that included 24% raises. With four of the 12 unions holding out for a better deal, it might fall to Congress to impose one to protect the U.S. economy.

The Retail Industry Leaders Association said a rail strike “would cause enormous disruption to the flow of goods nationwide,” although retail stores are well stocked for the crucial holiday shopping season. It’s not clear what a strike would mean for packages because FedEx and UPS, which both rely on rail to some degree, haven’t commented in detail.

“Fortunately, this year’s holiday gifts have already landed on store shelves. But an interruption to rail transportation does pose a significant challenge to getting items like perishable food products and e-commerce shipments delivered on time, and it will undoubtedly add to the inflationary pressures already hitting the U.S. economy,” said Jess Dankert with the group that represents more than 200 major retailers.

Even getting close to the deadline could cause problems because railroads will freeze shipments of chemicals and perishable goods ahead of time. And commuters could be stranded if there is a strike because so many passenger railroads operate on tracks owned by the freight railroads.

Just about every industry could be affected because so many businesses need railroads to deliver their raw materials and completed products. And there aren’t enough trucks to pick up the slack.

There’s no immediate threat of a strike even though four unions have rejected the deals that the Biden administration helped broker before the original strike deadline in September. Those unions agreed to return to the bargaining table to try to hash out a new agreement before a new Dec. 5 strike deadline. But those talks have deadlocked because the railroads refuse to consider adding paid sick time to the five-year deals they’ve offered, which feature 24% raises and $5,000 in bonuses.

Railroad engineers voted Monday to join seven smaller unions in approving their deal, but the biggest union that represents conductors rejected its contract, joining the three unions that previously voted no.

It appears increasingly likely that Congress will have to settle the dispute. Lawmakers have the power to impose contract terms if both sides can’t reach an agreement, and hundreds of business groups have urged Congress and President Joe Biden to be ready to intervene.

Workers frustrated with the demanding schedules and deep job cuts in the industry pushed to reject these contracts because they wouldn’t do enough to resolve workers’ key quality-of-life concerns. The deals for the engineers and conductors did include a promise to try to improve the scheduling of regular days off and negotiate the details of those schedules further at each railroad. Those two unions also received three unpaid days off a year to tend to medical needs as long they were scheduled at least 30 days in advance and the railroads said they wouldn’t penalize workers who were hospitalized under their strict attendance policies.

The railroads also lost out on their bid to cut crew sizes down to one person as part of the negotiations. But the conductors in the Transportation Division of the International Association of Sheet Metal, Air, Rail and Transportation Workers union still narrowly rejected the deal with roughly 51% voting against it. A smaller division of the SMART-TD union that represents about 1,300 yardmasters did approve the deal.

“The ball is now in the railroads’ court. Let’s see what they do. They can settle this at the bargaining table,” SMART-TD President Jeremy Ferguson said. “But, the railroad executives who constantly complain about government interference and regularly bad-mouth regulators and Congress now want Congress to do the bargaining for them.”

The railroads maintain that the deals with the unions should closely follow the recommendations made this summer by a special panel of arbitrators Biden appointed. That’s part of the reason why they don’t want to offer paid sick time. Plus, the railroads say the unions have agreed over the years to forgo paid sick time in favor of higher pay and strong short-term disability benefits.

The unions say it is long overdue for the railroads to offer paid sick time and that the pandemic highlighted the need for it.

The group that negotiates on behalf of the railroads said Monday that the unions that rejected their deals shouldn’t expect to receive more than the Presidential Emergency Board of arbitrators recommended. The National Carriers Conference Committee said businesses could start to be affected by the threat of a strike even before the deadline because railroads will start curtailing shipments of dangerous chemicals and perishable cargo days ahead of the deadline.

“A national rail strike would severely impact the economy and the public. Now, the continued, near-term threat of one will require that freight railroads and passenger carriers soon begin to take responsible steps to safely secure the network in advance of any deadline,” the railroads said.

It’s unclear what Congress might do given the deep political divisions in Washington D.C. and a single lawmaker could hold up a resolution. But the head of the Association of American Railroads trade group, Ian Jefferies, said “if the remaining unions do not accept an agreement, Congress should be prepared to act and avoid a disastrous $2 billion a day hit to our economy.”

Republicans might try to impose a deal that includes only what the Presidential Emergency Board recommended, while Democrats who still narrowly control the House and Senate during this lame-duck period might try to force the railroads to make additional concessions.

The unions that announced their votes Monday represent more than half of the roughly 115,000 rail workers involved in the contract dispute with Union Pacific, Norfolk Southern, BNSF, Kansas City Southern, CSX and other railroads.