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The agreement with unions representing more than 50,000 engineers and conductors was announced just after 1 p.m. 5 ET in a statement from the White House, which called it “an important victory for our economy and the American people.”
It came after 20 hours of talks between union leadership and rail labor negotiators hosted by Labor secretary Marty Walsh. They began their meeting Wednesday morning with the clock ticking down to a strike that was set to start at 12:01 a.m. ET Friday.
President Joe Biden personally called in to speak with negotiators around 9 p.m. ET Wednesday, according to a person familiar with negotiations. Biden emphasized that there could be catastrophic damage to families, businesses and communities if the rail system shuts down.
The agreement does not mean that the threat of a strike has disappeared completely. The agreement must be ratified by union members. But it’s good news for a host of businesses that rely on the freight railroads to continue operating, and for the broader U.S. economy. About 30% of the country’s goods are moved by rail.
A victory for workers, railroads and the economy
The deal gives union members an immediate 14% raise with back pay dating back to 2020 and a total raise of 24% over the five-year life of the contract, which runs from 2020 to 2024. It also gives them cash bonuses of $1,000 per year.
Few other details of the deal have been released so far. But the statement by Biden indicated that the major issue that had brought the country within a day of its first national rail strike in 30 years had been dealt with in the unions’ favor.
“It’s a victory for the tens of thousands of railroad workers who worked tirelessly through the pandemic to ensure that America’s families and communities received supplies of what has kept us going through these difficult years,” Biden said in a statement. “These rail workers will get better pay, improved working conditions and peace of mind about their health care costs: all hard earned.”
The dispute was over staffing shortages and scheduling rules that union leaders said had brought their membership to breaking point. The unions say the railroads have required their members to be “on call” and ready to report to work at short notice as often as seven days a week. The management of the two unions had said that their members would not accept a contract without changes to these work rules.
Biden described the deal as “also a victory for railroad companies that will be able to retain and recruit more workers to an industry that will continue to be part of the backbone of the American economy for decades to come.”
It’s an important win for Biden, who faced nothing but bad choices if a deal hadn’t been made. Supporting the congressional action sought by business to force a contract on workers would have angered his union supporters. Letting the work stoppage play out risked massive economic consequences just ahead of the midterm elections.
How we got here
Railroad workers are subject to a different labor law than most workers, one that limits their freedom to strike and allows for more government intervention. In July, Biden issued an order preventing a strike at that time and created a panel, known as a Presidential Emergency Relief Council, to try to resolve the dispute.
It also imposed a 60-day cooling-off period during which unions could not strike and management could not lock out workers. This cooling period should end early Friday.
Biden could not have ordered the railroads to continue operating when the cooling-off period ended Friday. Only Congress could have acted to get the unions back to work if a strike had begun.
With a wide range of business groups urging Congress to act, Republicans had prepared legislation that would have given railroad management the deal they wanted. But Democrats opposed taking such action.
A union source said Democrats’ refusal to side with management had been key to the negotiations.
“Senate leadership without action allowed for these negotiations,” the union source said. He said Walsh had “hung in” with the union during negotiations.
“it was a blast yesterday,” he said with lots of back and forth.
“Our people would not give up,” the source said. “Our people would have gone on strike” if a deal was not reached by Friday’s deadline.
The Association of American Railroads also praised the agreement, thanking the Biden administration, as well as the unions themselves, for their role in reaching an agreement.
The pay raises and bonuses had been recommended by a presidential panel tasked with trying to resolve the impasse in negotiations at the time.
Those terms were lucrative enough for most of the railroad unions to agree to tentative agreements in recent weeks, engineers and conductors, facing work and scheduling rules that did not apply to others, refused to sign without relief in the planning issue. .
Shares of the major freight railways — Union Pacific (UNP), CSX (CSX) and Norfolk Southern (NSC) — was between 1% and 3% higher in pre-market trading on the news. Shares of Berkshire Hathaway (BRKA)which owns the fourth national freight railroad, Burlington Northern Santa Fe, was also narrowly higher.
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