Rail Union Rejects Labor Deal As White House Scrambles To Avoid Nationwide Railroad Strike

Rail Union Rejects Labor Deal As White House Scrambles To Avoid Nationwide Railroad Strike

The International Association of Machinists and Aerospace Workers (IAM) said on Wednesday that its members rejected a tentative deal by its leaders intended to avoid a nationwide railroad strike.

BNSF, CSX, Norfolk Southern, and Union Pacific — four of the nation’s largest rail lines — announced embargoes on certain shipments earlier this week as negotiations continued, although 10 of the nation’s 12 largest railroad unions had tentatively endorsed an agreement outlined by the White House. However, IAM — which was originally among the 10 unions — announced its members rejected the deal.

“IAM freight rail members are skilled professionals who have worked in difficult conditions through a pandemic to make sure essential products get to their destinations,” the union said in a statement. “We look forward to continuing that vital work with a fair contract that ensures our members and their families are treated with the respect they deserve for keeping America’s goods and resources moving through the pandemic. The IAM is grateful for the support of those working toward a solution as our members and freight rail workers seek equitable agreements.”

Beyond IAM, the Brotherhood of Locomotive Engineers and Trainmen (BLET) and SMART Transportation Division (SMART-TD) are currently holdouts. The Biden administration created a Presidential Emergency Board via executive order two months ago to aid the negotiations, while Labor Secretary Marty Walsh hosted union leaders and rail executives on Wednesday.

“We have made crystal clear to the interested parties the harm that American families, businesses and farmers, and communities would experience if they were not to reach a resolution,” White House Press Secretary Karine Jean-Pierre told reporters on Tuesday, adding that policymakers are working with shipping, trucking, and air freight companies to “see how they can step in and keep goods moving in case of this rail shutdown.”

Strikes could begin later this week if union leaders and rail companies fail to make a deal. House Majority Leader Steny Hoyer (D-MD) said on Monday that Congress, which has the authority to block strikes, would intervene “if needed.”

Supply chain bottlenecks driven by labor shortages and worldwide government lockdowns have impacted the American economy over the past two years, leading to inflationary pressures as consumer goods fail to reach shelves. The daily cost of a nationwide rail shutdown could amount to $2 billion, according to a report from the Association of American Railroads, which noted that trucking companies and other alternatives do not presently have the capacity to carry freight previously handled by rail lines.

Last month, the White House proposed increasing railroad employee pay by 24% over the next two years — a measure that would lead to an average raise of $11,000 per employee. “An agreement based on these terms would lead to the largest general wage increase in nearly 40 years,” Association of American Railroads CEO Ian Jefferies said in a statement.

The Retail Industry Leaders Association explained in a July letter to the Biden administration that freight rail accounts for 40% of long-distance shipping volume — “more than any other mode of transportation.”

“A strike at this juncture would be devastating to the rail industry and to the millions of American retailers and other businesses that depend on rail who are already dealing with ongoing challenges in every area of supply chain, plus mounting inflationary pressures,” the group warned. “Failure to reach a reasonable agreement could result in significant disruptions to the rail network and by extension the retail industry.”

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