Why Railway Unions Oppose the Deal Biden Helped Arrange

The Chamber of Commerce today urged Congress to step in and impose a settlement should talks between the rail industry and the its workers’ unions break down. The ironic twist is that the settlement being proposed is the same one that President Biden, a union ally, helped to arrange but that the unions—some of them, at any rate—don’t like. Now the unions are getting a lesson in why government intervention isn’t always a good thing. How did this happen?

The supply chain crisis of 2021 dramatically raised the stakes for contract negotiations between rail cariers industry and their unions. It showed how dramatically a breakdown in interstate commerce, such as through a rail strike, could harm the country as a whole. The union and the industry had already been fighting over things like minimum crew size for trains.

“The supply chain crisis put the ports and the railroads on the radar screen,” Geraldine Knatz, executive director of the Port of Los Angeles from 2006 to 2014, told Axios.

This prompted President Biden to create the Presidential Emergency Board (PEB), a panel of arbitrators to “investigate and report” on these disputes, in July, to propose a final contract that Congress could impose under the Railway Labor Act. The 15 unions representing railway workers applauded the move at the time, saying they were “united in their efforts” to represent their members before the board. The trade group Association of American Railroads had a positive reaction toward the board as well, saying it would help “find a reasonable path forward.”

The eventual proposal the PEB came up with seems on its surface pretty good for the workers: a 24 percent wage increase through 2024, with another 14 percent wage increase effective immediately. That would put the average pay for a rail worker at $110,000 per year by the end of the agreement, not counting benefits.

About 10 of the 15 unions have taken the deal, but two of the large ones Sheet Metal Air Rail Transportation and the Teamsters Brotherhood of Locomotive Engineers and Trainmen have balked. They represent an estimated 66,000 workers and are demanding better sick leave and attendance policies.

Biden’s PEB rejected the union’s request, calling it a “very costly proposal that would create 15 paid days a year that … would effectively be personal days that could not be denied.”

The unions are now threatening to strike over this. The rail industry meanwhile has warned it will have to take special precautions with hazardous materials if the talks drag on much longer and that a strike could cost the nation $2 billion a day. The unions are accusing the industry of using scare tactics to prod Congress into forcing a settlement.

Most contract negotiations involve this kind of brinksmanship. No smart negotiator reveals his or her bottom line offer at the start of talks. Deals, when they are reached, often come at the 11th hour. Congress should bear that in mind before it intervenes.

Congress may nevertheless step in and impose the PEB’s recommendations. If the unions truly believe that they could have gotten a better deal by holding out longer, then the intervention will be a good lesson to them on why government interference isn’t always a good thing.