Industry News

An Analysis of the Recently Averted U.S. Rail Strike: Past, Present, and Future

 

Last week, Congress and President Biden passed a labor agreement between railroad companies and their workers, which as a result, averted a strike that could have had serious economic consequences. The major dispute was due to sick days however, others argue that this issue was just the tipping point of a much larger problem.

From the beginning of the 19th century, many of the railroads were run by financiers who operated them as financial assets. Railroads are certainly a business though keeping costs down and profits up does have its consequences. Like any other business, COVID-19 and the supply chain stress brought by this impacted the industry like never before. Railroad companies laid off workers all while U.S. consumers demanded more goods putting pressure on a system that provides delivery to 40% of freight in the country. On top of that, the industry is facing a worker shortage and an inexperienced workforce. One rail worker stated the following:

“Over the last 11 months the railroads have used the pandemic to further reduce manpower at the expense of safety. Carmen are fatigued yet expected to maintain the standard of unrealistic inspection policies as if fully staffed.”

Enter paid sick leave. Railroads refused to add sick time during labor negotiations because they said unions had agreed over the decades to forgo paid leave in favor of short-term disability benefits and higher wages. A recent article in Fortune indicated:

The railroads also say employees can take personal leave days or vacation days for illnesses, although workers say those have to be approved far ahead of time so they aren’t very useful for illnesses. Workers are also allowed to take unpaid time off for illnesses but they may be penalized under a railroad’s attendance policy if they miss too many days.

Getting paid sick leave wasn’t supported by every rail worker, however. Many knew that the government would intervene and prevent a strike from happening—in other words, this deal was the best they were going to come out with. Congress doesn’t usually have such a say in labor disputes, so how and why did they intervene this time? The Railway Labor Act gives congress this power and goes back to rail strikes that took place in 1877. Because rail was so prominent at that time, the government found that a strike could be used as a threat to literally halt the U.S. economy. Many argue that with various modes of transportation today, this act is outdated.

The government certainly prevented turmoil during the holiday season, especially with other economic issues such as inflation and a looming recession on the horizon. The bill forced workers to accept the agreements union leaders made in September and must wait for negotiations on the next contract beginning in 2025. Rail workers have now seen the biggest raises in more than four decades but union leaders have indicated that they will not stop fighting for sick leave and other issues facing the rail industry.

No matter where one stands on the outcome of the last week, transport and the demand for goods are changing rapidly. Finding ways to cope with this and ensuring the U.S. supply chain runs efficiently for the years ahead will take cooperation and meaningful change. This doesn’t just impact the rail industry but the entire U.S. economy as a whole. We will continue to monitor the situation post-strike and let you know of any updates.

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