The Railroad Workforce Agreement Was An Economics and Politics Masterstroke

Using a combination of economic and political levers - as well as incentives - to push both sides to an agreement that provides long term benefits to the workforce as industry profits rise. JL 

Heather Cox Richardson reports in her newsletter:

Rail carriers and union leaders had reached an agreement to avoid a national rail strike that would have badly tangled the supply chains that are just now starting to move efficiently again. Union leaders and railroad management have been negotiating for more than two and a half years. The deal highlights that Biden is using the power of the presidency to try to be fair to labor and management, a system pioneered by Republican president Theodore Roosevelt and adopted afterward by Democrat Franklin Delano Roosevelt and Republican Dwight Eisenhower. It’s a very different principle than the idea that workers should accept whatever conditions management imposes on them.

This morning we awoke to news that rail carriers and union leaders had reached an agreement to avoid a national rail strike that would have badly tangled the supply chains that are just now starting to move efficiently again. That, in turn, would have affected everything from drinking water—the chlorine to purify urban systems is shipped by train—to consumer goods, costing up to $2 billion a day and likely sparking job losses and contributing to the inflation that has only recently begun to ease.

Like many of the victories President Joe Biden has celebrated during his term, this deal was complicated, requiring the administration to bring together a number of moving pieces. In the 1980s and the 1990s, the U.S. railroad industry consolidated into seven main carriers, which are now making record profits. In 2021, profits for the two largest railroad corporations in the U.S.—the Union Pacific and BNSF—jumped 12% to $21.8 billion and 11.6% to $22.5 billion, respectively.

But those profits have come from cost-cutting measures that included job losses from an industry that had remained stable for the previous 25 years. Between November 2018 and December 2020, the industry lost 40,000 jobs, most of them among the people who actually operated the trains, as the railroads adopted a new system called Precision Schedule Railroading (PSR). This system made the trains far more efficient by keeping workers on very tight schedules that leave little time for anything but work. Any disruption in those schedules—a family emergency, for example—brought disciplinary action and possible job loss. Although workers got an average of 3 weeks’ vacation and holidays, the rest of their time, including weekends, was tightly controlled, while smaller crews meant more dangerous working conditions.

Union leaders and railroad management have been negotiating for more than two and a half years for new contracts, and in July, Biden established a Presidential Emergency Board (PEB) to try to resolve the differences before the September 16 deadline by which the railway workers could legally strike.

The PEB’s August report called for significant wage increases but kicked down the road the problems associated with PSR. The National Carriers Conference Committee, which represents the railroads, called the report “fair and appropriate”; not all of the 13 involved unions did.

Thanks to the 1926 Railway Labor Act, Congress can force railroad workers to stay on the job, and that is precisely what Republicans proposed in this crisis: forcing workers to accept the recommendations of the PEB. This had political fire just two months before the midterms, as Republicans were trying to force Biden and the Democrats either to abandon the workers they claim to champion or to accept responsibility for a devastating strike. The railroads, the U.S. Chamber of Commerce, and business groups all favored this approach.

The administration put its weight behind negotiations, including not only three cabinet secretaries—Labor Secretary Marty Walsh (who is himself a former union official), Transportation Secretary Pete Buttigieg, and Agriculture Secretary Tom Vilsack—as well as Director of the National Economic Council Brian Deese, but also the president, who worked the phones and got mad that management would not loosen scheduling rules. The details of the deal are not yet published, but it appears to have accepted most of the PEB recommendations on pay, given workers a day of paid sick leave—union leaders wanted 15, up from none—and, apparently, removed the penalties for missing time for illness or medical emergencies, one of the workers’ key demands.

The deal is a big deal, but it has not yet been accepted by the union members, who will still be on tight schedules although they can now take unpaid time off for medical emergencies without losing their jobs. (My guess is that higher pay is intended to make this seem like a workable solution to the scheduling issue.) Initial responses to the agreement seemed mixed.

The deal does, though, highlight that Biden is using the power of the presidency to protect the American people while trying to be fair to labor and management, a system pioneered by Republican president Theodore Roosevelt and adopted afterward by Democrat Franklin Delano Roosevelt and Republican Dwight Eisenhower, among others. It’s a very different principle than the idea that workers should accept whatever conditions management imposes on them.

The Wall Street Journal editorial board yesterday wrote: “You’d think some $5 trillion in new spending by this Congress, much of which will fatten union bottom lines, would be enough to buy some labor peace. If not, Democrats on Capitol Hill have the power to impose another cooling off period so the two sides can negotiate without a strike. Let’s see if Democrats side with their Big Labor allies, or with the U.S. economy that needs the trains to run on time.”

“Thanks for your concern,” Biden tweeted today. “To answer your question: yes, the trains are running on time.”

Yesterday, ABC News senior national correspondent Terry Moran pointed out that Biden and his team have “masterfully” handled “the greatest international security crisis since 9/11,” Russia’s invasion of Ukraine. They united NATO against Moscow and held the alliance together, wrecked the Russian economy, helped Europeans find energy from new sources, kept the U.S. and NATO out of the war, helped Ukraine with intelligence and weapons, all despite those at home working against him.

Long term, this will advance U.S. interests not only by strengthening alliances, but also by demonstrating that America can be a force for good and by showing Putin’s brand of authoritarianism “as a con, a cheap costume donned by the thieves and gangsters in the Kremlin.”

Today, the White House held a bipartisan summit against “hate-fueled violence in our country,” promising “that when Americans stand united to renew civic bonds and heal divides, we can help prevent acts of hate and violence.” At the “United We Stand” summit, Biden offered a “whole-of-society response to prevent, respond to, and recover from hate-fueled violence, and to foster national unity.” Attending the summit were survivors of gun violence, religious leaders, community organizers, law enforcement officers, philanthropists, journalists, and local politicians. Susan Bro, whose daughter Heather Heyer was killed by a white supremacist at the August 2017 “Unite the Right” rally in Charlottesville, Virginia, introduced the president.

“[T]here are core values that should bring us together as Americans,” Biden said, “And one of them is standing together against hate, racism, bigotry, and violence that have long haunted and plagued our nation.” “In the last few years, it’s been given much too much oxygen in our politics, in our media, and on the Internet; too much hate—all for power and profit.”

“[T]he vast majority of Americans are overwhelmingly united against such violence,” he said. “The vast majority of us believe in honesty, decency, and respect for others, patriotism, liberty, justice for all, hope, and possibilities.”

Biden announced new investments in community building and called for “a new era of national service” with a $15 hourly wage and for Congress to remove social media’s near immunity for hate speech. He called for individuals to step up as well, speaking out against hate and building bridges.

“We must choose to be a nation of hope, unity, and optimism or a nation of fear and division and hate,” he said.

And I am ending here, on that note, leaving for later the many other things that happened today, because this is the third anniversary of these Letters from an American, and it strikes me what a contrast these stories are to the news of Trump’s phone call asking Ukraine’s president Volodymyr Zelensky to smear Biden that launched this project. I like that the three-year marker reflects that change, and that it, in turn, reflects you all. These letters are really yours, driven by your questions, complaints, tips, ideas, decency, principles, and kindness. I thank you for all of it, and for your faith, both in me and in American democracy.

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