Published On: Thu, Sep 15th, 2022

Biden announces tentative deal to avert U.S. rail strike

The White House has struck a tentative deal to avoid a rail strike that threatened major disruptions across the United States, with freight workers securing a key demand under its terms, President Joe Biden said Thursday.

The agreement highlights the labor movement’s growing influence under an administration that has cast itself as a staunch ally of labor, and comes after business groups and political officials warned that a strike would disrupt passenger services and cripple supply chains.

“This agreement is a big win for America,” Biden said at the White House Thursday in remarks thanking representatives for the unions and rail carriers, saying the negotiators had stayed up for 20 hours of marathon talks as a Friday deadline loomed.

For the president and fellow Democrats, the deal offers a measure of political relief after mounting fears that the economic fallout from a strike could further squeeze households hit by stubbornly high inflation.

Cargo containers onboard a freight train in Niland, Calif., on Dec. 15, 2021.
Freight industry officials had warned that a strike could cost the U.S. economy some $2 billion a day.Bing Guan / Bloomberg via Getty Images file

“This is a win for tens of thousands of rail workers and for their dignity and the dignity of their work,” Biden said. “They showed up so every American could keep going” during the pandemic. He also called the tentative pact a victory for railway operators, saying it would boost their ability to hire and retain workers, and hailed the carriers as vital “backbone” of the economy.

The agreement, Biden added, showed that “unions and managers can work together for the benefit of everyone.”

Under the deal — which next goes to a vote among members of the nation’s two largest freight unions — employees will for the first time be able to take unpaid time off work for routine preventive medical care, union leaders said in a statement. There will also be exemptions from attendance policies for hospitalizations and surgical procedures, and workers will gain an additional paid personal day each year without fear of discipline.

The Brotherhood of Locomotive Engineers and Trainmen and SMART Transportation Division — the two unions that threatened to strike — hailed the tentative agreement, which also includes a 24% compound wage increase over its five-year term and an annual lump-sum bonus payment totaling $5,000.

But while rail operators had already agreed to those compensation changes before Wednesday’s talks, a key sticking point remained: attendance policies that workers said made taking planned days off nearly impossible. Rail workers often are on-call 24/7 year-round and are allotted time off only after being called to a number of consecutive on-call shifts. Unplanned issues like doctor’s appointments have sometimes put workers on disciplinary paths, which can lead to dismissal.

A labor union source told NBC News that getting rail carriers to negotiate on attendance policies was a significant breakthrough.

BLET and SMART-TD hailed the tentative deal in a joint statement Thursday. “The solidarity shown by our members, essential workers to this economy who keep America’s freight trains moving, made the difference in our Unions obtaining agreement provisions that exceeded the recommendations” of federal mediators earlier this summer, they said.

If rank-and-file union members vote not to approve the plan, it won’t take effect and they could find themselves back in negotiations. The agreement includes a “cooling off” period of several weeks to ensure that no immediate rail shutdown would occur if a vote fails.

A CSX Transportation Inc. mixed freight train approaches La Grange, Ky., on Jan. 13, 2020.
A CSX-operated freight train near La Grange, Ky., in 2020.Luke Sharrett / Bloomberg via Getty Images file

Joseph Hinrichs, the incoming CEO of rail company CSX, said the employees are “deserving of these raises they’re getting,” speaking on CNBC Thursday. “They’ve been through the pandemic and through all of the work they’ve done for us.” Hinrichs was not directly involved in the negotiations. (CNBC and NBC News are both part of NBCUniversal.)

After canceling long-distance routes ahead of a potential strike, Amtrak said Thursday that it was “reaching out to impacted customers to accommodate on first available departures.” Midwest commuter rail carrier Metra said trains that were set to be canceled by BNSF and Union Pacific would now run as scheduled Thursday evening.

In addition to affecting travel, a rail strike threatened a range of industries, from autos to agriculture and retail, as about 40% of goods that are shipped long-distance rely on the nation’s rail system. A stoppage could also disrupt energy shipments, potentially causing consumers to pay more for gasoline, natural gas and electricity.

BLET and SMART-TD had said that quality-of-life concerns — chiefly carriers’ scheduling practices that leave many workers on call 24/7 every week of the year — were a major obstacle to an agreement and one they were willing to strike over.

Railroads have cut their labor forces in recent years, running trains with even fewer personnel and exacerbating the burden on workers, while company profit margins have risen significantly.

The two biggest freight rail companies saw record profits during 2021: BNSF had a net income of nearly $6 billion, and Union Pacific’s hit $6.5 billionCSX achieved a record low operating ratio — a key industry measure that gauges the share of revenue eaten by expenses, like labor — for the third quarter. Norfolk Southern Railway announced a record low operating ratio for 2021.

Earlier this summer, the Biden administration temporarily averted a strike after convening a three-person board to study the issue and freeze negotiations. The panel recommended last month that workers be given raises amounting to a 24% increase over a five-year period ending in 2024, with a 14% raise backdated to 2020 to be made available immediately.

Workers, however, said increasingly punitive scheduling practices remained an issue in the industry due to a shrunken labor force. In July, more than 10 current and former workers spoke with NBC News about conditions on the rails, with all current workers saying they supported a stoppage.

Biden, who has vowed to be the most pro-labor president in U.S. history, has championed workers’ rights throughout his first two years in the White House. For example, he created a task force to protect employees’ rights and has worked to undo rollbacks of worker protections under the Trump administration. Unions have strongly supported the president, though some felt he was unable to deliver on some promises last year.

Rob Wile, Mike Memoli, Shannon Pettypiece and Rebecca Shabad contributed.

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