President Biden encouraged lawmakers to pass legislation that would end a negotiation between freight companies and railroad workers in fear of a rail strike. More than 115,000 railroad workers negotiated for better working conditions, raises, more paid time off/sick pay, and increased crew sizes. Under the Railway Labor Act, Congress can force both parties to accept an agreement to prevent a disruption to the economy. On November 30, the House approved the proposed intervention and backed a proposal to impose seven days of paid sick leave. The next day, the Senate voted to pass the bill and rejected the proposal for expanded sick leave. The president says he will sign the bill as soon as it gets to his desk.
The proposed legislation would enact a contract that has been negotiated for over two years and rejected by four unions. The five-year agreement would offer railroad workers a 24% increase in wages from 2020-2024 and one additional paid day off. Lawmakers from both parties said they were unhappy with the benefits being offered to railroad workers and were hesitant to force them into a contract. Currently, workers who maintain tracks get one additional hour of paid sick time off after 30 hours worked. Rep. Rick Larsen believes the tentative agreements fall short, “Benefits do not replace paid sick leave. Going to work sick to earn your wage increase– who does that? Who requires that? Only the rail industry.” The last time Congress passed legislation ordering railroad workers back to their jobs was in 1992.
The threat a rail strike presents to the U.S. economy would be devastating; with an estimated cost of $2 billion a day. Even a short strike could push back ongoing supply chain recovery from the pandemic. Freight railroads move about 40% of long-distance cargo, 95% of the ethanol used in gasoline, and a quarter of all grains. A strike would guarantee higher gas prices and could cause shortages as early as spring 2023. Ken Roberts, founder & president of WorldCity says, “A rail strike would be that one, maybe two giant steps backward as the U.S. tries to find the path to avoiding a recession and combating inflation.”