Rail strike averted after lengthy talks reached agreement in principle

The deal with unions representing more than 50,000 engineers and conductors was announced just after 5 a.m. in a statement from the White House, which it called an “important victory for our economy and the American people.”

A verbal agreement was reached between the two sides at around 2:30 AM ET according to the sources, and the final hours were spent working out the details.

President Joe Biden was personally summoned to speak to negotiators at about 9 p.m. ET Wednesday, according to a person familiar with the negotiations. Biden emphasized that catastrophic damage It can come to families, businesses, and communities if the rail system shuts down. Sources within the unions were giving Biden a call credit to help get the deal done without a strike.

“We are very proud of what has been accomplished,” said Jeremy Ferguson, President of the Leaders Guild and one of the leaders participating in the marathon session. He thanked Biden and Labor Department officials involved in the talks for the deal.

“Everyone has come together to make sure we can get our members what they deserve,” he said.

“This is the quality of life issue we’ve been trying to get for our members since the bargaining started,” said Dennis Pearce, president of the Engineers’ Union and another union official involved in the talks.

The agreement does not mean that the threat of a strike is completely eliminated. The transaction needs to be approved by the union members. But it’s good news for a wide range of companies that rely on freight railroads to keep operating, and for the broader American economy. About 30% of the country’s shipments are transported by rail.

A win for workers, railways and the economy

The deal gives union members an immediate 14% raise with a late pay dating back to 2020, and raises a total of 24% over the five-year contract period, running from 2020 through 2024. It also gives them cash bonuses of $1,000. general.

Few other details of the deal have been announced so far. But the statement from Biden noted that the main sticking point — involving labor rules and scheduling issues — that made the country within a day of the first national rail strike in 30 years had been addressed in favor of unions.

“It is a victory for the tens of thousands of railroad workers who have worked tirelessly through the pandemic to ensure that American families and communities have deliveries that keep us going through these difficult years,” Biden said in a statement. “These railroad workers will have better salaries, improved working conditions, and peace of mind about health care costs: all of this is their hard earned.”

Amtrak cancels all long-distance trains as freight rail strike approaches

The dispute was over staffing and scheduling rules that union leaders said had brought their membership to the breaking point. Unions say the railways are asking their members to be “on call” and to be ready to come to work on short notice, seven days a week. The leadership of the two unions said their members would not accept a contract without changes to those work rules.

Biden described the deal as “a victory also for the railroad companies that will be able to retain and hire more workers in an industry that will continue to be a part of the backbone of the American economy for decades to come.”

It’s an important victory for Biden, who has faced nothing but bad choices if no deal is reached. Support for the Congressional action that the business community sought to impose a contract on workers would have angered his supporters among unions. Letting downtime lead to dire economic consequences ahead of the midterm elections.

How did we get here

Railroad workers are subject to a different labor law than most workers, one that limits their freedom to strike and allows for more government intervention. In July, Biden issued an order hit blocked At that time it set up a committee, known as the Presidential Emergency Council, to try to find a solution to the conflict.

It also imposed a 60-day cooling-off period during which unions could not strike and management could not close workers. The cooling-off period was due to end early Friday.

Biden could not have ordered railroads to continue operating once the cooling-off period ended on Friday. Congress could only act to bring unions back to work if a strike had begun.

With a wide range of business groups calling on Congress to act, Republicans prepared legislation that would give the railroad management the deal they wanted. But Democrats opposed such action.

A union source said Democrats’ refusal to side with the administration was key to the talks.

“The Senate leadership that did not act gave space to these negotiations,” the union source said. He said Walsh “clung to” the union during the negotiations.

“It was work yesterday,” he said, with plenty of back and forth.

“Our people will not give up,” the source said. “Our people would have been struck” if no agreement had been reached by Friday’s deadline.

The American Railroad Association also praised the deal and thanked the Biden administration and the unions themselves for their role in reaching an agreement.

The wage and bonus increases had been recommended by a presidential committee tasked with trying to find a solution to the impasse in negotiations at the time.

Those terms were lucrative enough for most rail unions to agree to tentative deals in recent weeks, and engineers and conductors, faced with working and scheduling rules that didn’t apply to others, refused to sign without easing on the scheduling issue. .

Shares of major shipping lines – Union Pacific (UNP)And the CSX (CSX) And the Southern Norfolk (National Security Council) It was 1% to 3% higher in pre-market trading on the news. shares Berkshire Hathaway (puddles)which owns the fourth national freight railroad, Burlington Northern Santa Fe, was also higher.

Troubles have already begun

The threat of a strike had already begun to disrupt operations. Amtrak, whose 22,000-mile system extends almost exclusively over freight rail lines outside the Northeast Passage, was already All long-distance trains canceled. Amtrak said it is “working to quickly recover canceled trains and is communicating with affected customers to accommodate the first available departures.” She said she would provide an update as soon as the information became available.
The railways were already Stop accepting shipments of dangerous and security-related materials a week ago. And some railways, on Wednesday, stopped accepting shipments of agricultural crops from the industry.

Railroad customers who had braced for major problems expressed relief that the strike had been avoided.

“This is great news for the economy,” Eric Hublin, CEO of the National Association of Wholesale Distributors, said in his New Day appearance on CNN Thursday. “My phone has been ringing nonstop for the past 48 hours, and I’ve been talking to distribution leaders from across the country, who have been talking about some of the disastrous consequences it could have for America’s supply chain and economy.”

Avoid the US economy several Economic hits, including a possible hike in gasoline prices that could have offset the 26% drop in prices at the pump over the past three months. Although refineries get most of their oil through pipelines and ship most of the gasoline they produce in the same way, they still need railroad tankers to deliver other materials for gasoline refining and waste disposal.

Higher food and car prices and shortages of consumer goods would have been more likely in the holiday shopping season if there had been a prolonged strike, according to business leaders and economists.

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