Washington, D.C. — As labor negotiations were reaching an inflection point in August, we brought you an explainer piece breaking down what was happening and the stakes of a nationwide rail shutdown. The good news is that railroads and rail unions, with the assistance of the White House, were able to reach an agreement in September. But while this deal avoided network disruptions at the time, a strike is still possible in early December because the deals must be ratified by all 12 unions.
Learn why a rail shutdown is still possible and where negotiations stand.
Historic labor agreement: After a long negotiation that came down to the wire in mid-September, railroads and labor union leaders arrived at a tentative agreement, averting a destructive nationwide rail shutdown. Central pillars of the deal were produced by arbitrators appointed by the President and include: a 24% raise, including an immediate payout of over $11k on average, $5k in bonuses, no significant changes to healthcare costs, and an additional day off.
Context: There are nearly 160,000 rail employees across the nation, earning an average annual compensation of over $126k including wages and benefits. About 115,000 workers are involved in this round of bargaining. Importantly, unionized rail workers already rank within the top 10% of all workers and would reach about $160,000 per year in total compensation by the end of the tentative agreement. They also currently receive three weeks paid vacation and up to 14 days for personal leave on average.
Reactions: In a joint statement, the two largest labor unions pointed to historic gains in quality of life as well as the highest general wage increases for workers “in over 45 years.” President Biden, whose administration played a key role in shepherding the negotiations, celebrated the outcome, noting that workers “will get better pay, improved working conditions, and peace of mind around their healthcare costs.”
Current situation: The tentative agreements now require approval from rank-and-file workers. So far, seven of the 12 rail unions have approved of the agreement and three have rejected it, with the remaining two groups voting November 21. A strike is possible as soon as early December, when the “status quo” period ends for the initial union that did not ratify. You can find the current voting status and a more detailed FAQ here.
Shutdown would be costly: If even just one union cannot reach an agreement, all may join a strike. Analysis suggests that the cost of a nationwide rail stoppage would be over $2 billion daily. The Federal Railroad Administration estimated in 1992 that a two-week strike at the time would have resulted in 570,000 layoffs in rail-served industries. And the American Chemistry Council says a shutdown of consequence would cause the Producer Price Index to rise by 4 points. Not to mention the impact on consumers: higher prices, empty shelves, and worsened inflation.
The work continues: Workers deserve these hard-earned compensation and benefits gains and it is critical that the White House continues to work with leaders at both railroads and unions to achieve this outcome. Over 320 business groups recently sent a letter to the Biden Administration urging its continued engagement toward ensuring these agreements are ratified.
Bottom line: If a deal cannot be reached, it would be incumbent on Congress to step in to avert a shutdown by implementing either the framework set forth by the Presidential Emergency Board or the tentative agreement based on that framework. Labor Secretary Marty Walsh, who was instrumental in negotiating the agreement, underscored this point recently, saying that “If the unions don’t ratify, Congress is the last stop that would have to take action.”
