Although six of 12 rail labor unions have ratified amendments to contracts setting wages, benefits and work rules on most Class I railroads and many smaller ones, two unions have rejected the tentative deal.
Creating a likelihood of a nationwide rail work stoppage as early as November 19.
Concern is increasing that the two largest rail unions—the Brotherhood of Locomotive Engineers and Trainmen (BLET, also a Teamsters affiliate) and the Transportation Division of the International Association of Sheet Metal, Air, Rail and Transportation Workers (SMART-TD)—will similarly vote “no.” Their ballots will be counted Nov. 17.
BLET, BMWED, BRS and SMART-TD combined represent 75% of unionized rail employees affected by these contract negotiations. What they have in common is away-from home duties and start-time variability affecting family life and sleep cycles.
The unions so-far voting “no” agreed to maintain the status quo until all 12 have completed the ratification process—the BMWED until at least Nov. 19; the BRS until early December, although the first union to set up picket lines will initiate a nationwide rail shutdown.
Train Wreck Coming?
There is still opportunity for a new accord, but carriers would have to give considerably more than previously offered, with a new risk of rejection.
Alternatively, Congress could step in before the earliest strike deadline and order binding arbitration or legislatively impose on all 12 labor unions an amended contract containing provisions of congressional choosing.
If a strike does occur, Congress could end it in a similar legislative manner. Even though there has not been a nationwide railroad shutdown in more than three decades, history is replete with Congress taking such action.
The risk to labor of not settling voluntarily and forcing congressional action is that the terms imposed by arbitrators or lawmakers could be those recommended in August by a Presidential Emergency Board (PEB), which are less generous than sweetened offers made by carriers subsequent to those settlement recommendations. Terms could be worse if the mood of the congressional majority is that the work stoppage was irresponsible.
The risk to carriers of not settling voluntarily and forcing congressional action is that terms imposed by arbitrators or lawmakers could exceed the railroads’ latest sweetened offers.
A joint risk for labor and carriers is that Congress, given its deep political divide, is unable to find in both chambers (House and Senate) majority votes to end the work stoppage. A lingering nationwide rail shutdown would deeply wound railroads and cut off carrier paychecks and even healthcare benefits for employees and their families.
Discounting the likelihood of Congress not acting in a timely manner—or not at all—ignores the depth and width of the current political divide, and that in recent years there have been two government-wide shutdowns following congressional paralysis over federal budget approval, with one shutdown lasting 35 days beginning Dec. 22, 2019.
Although unions maintain strike benefit funds, there is a multi-day waiting period for benefits to be paid. Within a week, many of those funds will be drained. The $8 million available in the SMART-TD strike fund, for example, would be exhausted in just four days were it to pay to each striking member just $100 daily (less than California’s minimum wage of $15 hourly). While unemployment benefits are paid to striking rail workers under provisions of the Railroad Unemployment and Insurance Act (RUIA), those benefits also have a waiting period and are considerably less than earnings of striking railroaders.
Then there is the economic fallout of a rail work stoppage, which is the reason Congress has acted in the past. Innocent victims will include military readiness to move heavy weaponry; just-in-time assembly line inventories; laid-off factory workers; a still rickety supply chain; food distribution networks; refineries depending on rail deliveries of crude oil; and stalled intercity passenger and commuter trains.
What’s The Beef?
The “no” votes being cast do not reflect discontent with compensation. Rail employees are among the top compensated—wages and healthcare insurance—in the work force, with a majority of conductors and locomotive engineers already earning more than $100,000 annually. The tentative agreements boost all crafts’ wages another 24% over five years (retroactive to January 2020), add annual performance bonuses and cap the employee share of healthcare insurance premiums at 12% of the plan’s cost.
What the “no” votes threatening a work stoppage reflect is a festering discontent over non-existent paid sick leave for unionized rail workers, yet available to 76% of America’s workforce and near ubiquitous among other higher-earning workers.
Who’s To Blame?
How and why rail labor and rail management put each other and the nation’s economy in these circumstances should be an embarrassment to union and carrier contract negotiators as well as the National Mediation Board (NMB), which failed in its mission to administer the Railway Labor Act (RLA) as a manual of peace rather than one of war.
Rail labor chiefs have pursued a dodgy scheme intended to assure that what can’t be achieved at the bargaining table or through recommendations of a PEB named by a Democratic President will be delivered by a labor-friendly Democratic controlled Congress.
Railroad negotiators cling to a bygone notion that the Sword in Stone is their divine right to wield and that business-friendly Republicans in Congress, even if in the minority, will block labor’s backdoor attempt to game the collective bargaining process.
And to all appearances, the NMB’s Democratic majority abandoned its treasured neutrality to cozy up to labor by prematurely releasing the parties from mediation—which had barely begun following COVID-19 related delays—to ensure labor’s expectation of having a labor-friendly Democratic majority available to write back-to-work legislation. Republicans are projected to regain House and/or Senate majorities in 2023 following November mid-term elections.
There is no shortage of contenders for the honorific title, “Uncle Stupidhead,” a recurring character of dubious celebrity in cartoonist Gary Trudeau’s political satire comic strip, Doonesbury.
This is not how this round of national contract negotiations was supposed to progress, especially following a Sept. 15 pledge by both sides to the President of the United States—during an Oval Office visit, no less—that they would find a harmonious solution and avoid an economy-jolting national rail shutdown.
Former White House labor adviser Seth Harris wrote that President Biden’s expectation was for union members to “recalibrate their view of a reasonable and achievable outcome” following release of PEB recommendations and that voluntary agreements would be reached and ratified.
A labor-management FUBAR (fouled up beyond all repair) now lurks.
A Road To Perdition
Negotiations to amend railroad wage, benefits and work rules agreements began in January 2020, with a record number of new faces at the bargaining table. They included Railroad Chief Negotiator Brendan M. Branon—an expert on the RLA from years of bargaining on behalf of Delta Airlines (airline labor relations also are governed by the RLA), but short of knowledge on railroad bargaining history, rail operations and players.
An uninvited guest to the already tricky rail contract negotiations was the COVID-19 pandemic, limiting face-to-face formal and informal gatherings essential to bonding and building mutual trust and understanding. The seclusion was especially problematic, given the participation of so many newbies whose personalities, predilections and differing perceptions of bargaining precedent were largely mysteries within the group dynamic.
Union negotiators initially turned thumbs down on remote video bargaining sessions. Even after face-to-face negotiations commenced, the labor side insisted—as their script dictated—that no voluntarily negotiated deal with their carrier counterparts was possible. Labor chiefs repeatedly demanded—and succeeded—that the NMB release the parties and allow a Biden-appointed PEB to make settlement recommendations. Biden is self-described as “the most pro-union President leading the most pro-union administration in American history.”
Given that labor unions have more friends than do carriers among Democratic lawmakers—of 435 House seats and 34 Senate seats up for reelection Nov. 8, rail labor unions are endorsing fewer than 20 Republicans—labor’s presumption was that if PEB recommendations were not sufficiently labor-friendly, then a short work stoppage would allow a labor-friendly Democratic majority in Congress to legislate a more union-favorable outcome that Biden would sign into law.
What Could Go Wrong?
While the PEB’s Aug. 16, 2022, non-binding recommendations exceeded the carriers’ offers—Biden calling the recommendations “a framework for a successful outcome”—they stopped short of what labor negotiators sought, and well short of what the rank-and-file was demanding and amplifying on social media.
Carriers responded by embracing many of the PEB’s settlement recommendations. Eight of the 12 union chiefs proceeded to sign a tentative agreement subject to rank-and-file ratification. BMWED leadership told members, ahead of their ratification vote, that the tentative agreement would “substantially improve all BMWED members’ wages and working conditions.”
But leaders of BLET, BRS, SMART-TD and the rail division (Division 19) of the International Association of Machinists balked, confident they could squeeze more from the carriers or depend on their congressional friends to deliver their contract aspirations.
Darkness Descends
Not according to labor’s script, those increasingly angry rank-and-file social media posts—many attacking their own union leaders in urging a work stoppage rather than a settlement—reached the eyes of labor-friendly congressional lawmakers, who recognized that they would be blamed for an economy-jolting rail work stoppage just shy of Election Day (thanks to the NMB’s premature release of the parties from mediation). Anguished phone calls from Democratic lawmakers to the Democratic President commenced, with suggestions that rail labor be taken to the woodshed.
President Biden responded with a “let us reason together [or Democrats will be devoured by the sword]” appeal to the four still reluctant labor leaders. Labor’s blueprint was unraveling.
At the President’s behest, Labor Secretary Marty Walsh—a tough-talking and streetwise former Boston mayor, Massachusetts House member and once president of the Laborers’ International Union—ordered the parties to a tough-love bargaining session. During a 20-hour, bare-knuckles affair, termed “a protracted shouting match” by one participant, carriers coughed up additional sweeteners and labor chiefs backed away from a pre-Election Day strike theat.
BLET, BRS and SMART-TD immediately signed revised tentative agreements. The Oval Office visit followed, with Biden taking a victory lap and saying before media cameras in a Rose Garden ceremony, “This is a win for tens of thousands of rail workers, for their dignity, and for the dignity of their work.”
The IAM Rail division subsequently signed the tentative agreement. All 12 unions were on board. Surely, union members now would be enthusiastic, as the agreement included an immediate $11,000 cash payment reflecting retroactive pay and a performance bonus.
Yet once back in their own offices and serenaded by continuing rank-and-file disenchantment—notwithstanding the dangled carrier cash payout—many of previously ebullient labor chiefs ducked for cover. They declined to endorse the very tentative agreements they had signed. They commenced lashing out anew at railroads and the profits that make possible the wages and benefits paid union members.
Rather than urge contract ratification, labor chiefs whose members had yet to vote instructed them to interpret the tentative agreements as they wished and to cast ballots accordingly. The void was populated by union radicals and fringe-group provocateurs.
Where We Are Now
Although members of six of the 12 rail labor unions voted to ratify (American Train Dispatchers Association, Brotherhood Railway Carmen, International Brotherhood of Electrical Workers, Mechanical Division of SMART, National Conference of Firemen and Oilers, and the Transportation Communications Union), BMWED members voted “no”—their 57% vote “against” followed by more than 60% of BRS members rejecting the deal.
Last up for ratification votes are four remaining unions. The IAM rail division will announce vote results Nov. 5; the International Association of Boilermakers and Blacksmiths on Nov. 11, and the BLET and SMART-TD on Nov. 17. Optimism for ratification is in short supply.
Congressional Democrats, however, are breathing easier, as the strike threat has now advanced beyond Nov. 8 elections—but even a later work stoppage will be embarrassing to the President given his past comments. And should a work stoppage continue more than a couple of days, it will adversely affect the Biden Administration’s efforts to curb inflation and restore a reliable supply chain.
Just Gimme Sick Leave
Paid sick leave—specifically, the lack of it for railroad workers—has emerged as the driver of “no” votes. The optics are not pleasant for railroads, nor for President Biden, given his praise of the Marty Walsh all-nighter that left paid sick leave on the bargaining table and rail union members incensed.
Not coincidentally, Biden was Vice President in 2015 when President Obama signed Executive Order 13706 mandating that federal contractors provide employees with paid sick leave. And not lost on the railroad rank-and-file is that railroad managers, federal workers and commercial airline flight attendants and pilots enjoy paid sick leave.
Rail officials are deflecting the issue of paid sick leave, saying unionized employees already have up to five weeks of paid vacation (based on seniority), up to 11 paid holidays, plus personal leave days, although the latter is not an alternative to paid sick leave as it is granted “consistent with the requirements of the carrier’s service” and must be scheduled in advance. (The number of days available for paid vacation, holiday and personal leave varies among unions. For example, under the national collective bargaining agreements, BMWED- and BRS-represented employees receive, on average, three weeks of paid vacation. More senior employees receive up to five weeks. They also receive 11 paid holidays and up to two personal leave days. The recent tentative agreements include an additional day.)
The NCCC says labor chiefs “repeatedly agreed that short-term absences would be unpaid in favor of higher compensation for days worked and more generous sickness benefits for longer absences.” Those “more generous sickness benefits for longer term absences,” however, are required by federal law.
As for alternatives to paid sick leave, RUIA (100% funded by carriers through experience-rated premiums) pays only 60% of wage losses—and that only following the fourth day of illness. The Family and Medical Leave Act requires only that employers provide unpaid time-off for sickness and not discipline employees who become ill.
The stomach flu or a head cold—typically a one or two-day event—can be especially expensive for on-board conductors and engineers, who risk losing a week’s pay for calling in sick. They may not be called back to duty until the run for which they were scheduled completes its turn, and then be placed at the bottom of the rotation list to wait their next trip-rate-paid assignment. The result, say workers, is that they often report for work ill.
If, as sleep-medicine physicians say, going to work tired is equivalent to going to work drunk, then going to work sick to avoid losing pay could also be a safety issue if one’s ability to solve problems quickly in novel situations is impaired. Reported The Economist magazine recently, “Being even mildly sick can impair brain function as much as high altitude. It is difficult to exercise proper judgment if one cannot focus on the task at hand.”
Can Railroads Afford It?
BNSF, CSX, Norfolk Southern and Union Pacific are on track this year to generate some $15 billion in free cash flow (what’s left over after deducting operating expenses and capital expenditures). Free cash flow is the source of dividends and stock buybacks—$180 billion worth since 2010.
Railroads and their investors say that dividend payouts and stock buybacks are influenced—as are wages, benefits and prices of commodities—by market forces. And rail management sits at the pleasure of shareholders, not employees.
One Wall Street analyst, however, said recently that if productivity improvements, such as from implementation of Precision Scheduled Railroading, slashed operating costs by 30%, then shaving the 30% savings to 28% to provide paid sick leave would not be an unacceptable drag on earnings.
Carriers estimate that granting unionized employees seven days of paid sick leave annually would cost around $400 million. That is less than three cents of each dollar of this year’s projected free cash flow among the Big Four.
The Path Forward
Personalities on both sides of the bargaining table have so poisoned the well of good feelings that a negotiated settlement may be out of reach.
During the BLET’s National Convention in Las Vegas in mid-October, BLET President Dennis Pierce (above, left) stood beside Teamsters President Sean O’Brien (above, right), who identified railroads “as the true enemy.” Ignored were non-union owner-operator truckers whose meager earnings make possible a rail-job-threatening hijacking of intermodal.
BMWED President Tony Cardwell has been quoted that his members “hold their employer in low regard.” Unionized rail employees, once frequently spotted wearing t-shirts and caps bearing their railroad’s logo, now carry informational pickets reading, “They use us and abuse us.” SMART-TD President Jeremy Ferguson told members, “I know the contempt the carriers treat you with at work and have faced it in negotiations.”
The NCCC, meanwhile, may have shut the door on further productive negotiations, telling labor Oct. 19, “Now is not the time to introduce new demands.”
There was quiet chatter months ago that some rail union presidents—perturbed that a strike would damage Democratic prospects in November elections and undermine Biden’s pro-union agenda—might risk their own political futures and override their members’ “no” votes. That now looks highly unlikely, given those officials’ demonstrated political cowardice in refusing to endorse the tentative agreements they negotiated and signed.
There is, in fact, precedent for vote overrides. In 1996, SMART-TD predecessor United Transportation Union overrode its members’ rejection of a tentative agreement in favor of binding arbitration. In 2018, former Teamsters President James P. Hoffa orchestrated an override of a member-rejected tentative UPS contract.
Congress, of course, can head off a rail strike and order binding arbitration, as was done following a national rail shutdown in 1991, or impose its own settlement. That may now be the only viable course.
The senior Republican on the Senate Labor Committee, Richard Burr of North Carolina, and his Republican counterpart on the Senate Commerce Committee, Roger Wicker of Mississippi, introduced in September a resolution to head off a work stoppage by imposing on the parties the August PEB recommendations.
Sen. Bernie Sanders (I-Vt.), using parliamentary procedure, blocked it from reaching the Senate floor for a vote. Otherwise, Burr and Wicker may have found enough moderate Senate Democrats to move the resolution over the goal line. (Congressional resolutions have the same effect as legislation. They are used to enact temporary legislative objectives or amend legislation already adopted and must be signed into law by the President.)
In the House, Rep. Jim Jordan (R-Ohio) preferred mocking Democrats than getting behind efforts to head off a rail strike, writing, “Uh-oh, Joe Biden’s tentative railroad union deal fell apart. Strike imminent? If so, get ready for prices to go even higher.”
Even though Biden lacks Executive Branch authority beyond his bully pulpit to head off a rail strike, more than 300 business groups—including the American Farm Bureau Federation, American Petroleum Institute, Chamber of Commerce, National Association of Manufacturers and National Retail Federation—signed a letter urging White House pressure. These groups also are lobbying Congress to craft strike-preemption legislation.
Burr and Wicker intend to try again ahead of the BMWED Nov. 19 strike deadline—but after the mid-term elections when political one-upmanship expectedly gives way on both sides of the political aisle to sober thought as to the economic consequences of a national rail shutdown.
The bottom line is there are no guarantees Congress can head off a railroad strike or even quickly end it. The second highest-ranking Senate Democrat, Dick Durbin of Illinois, said, “I think it is naïve to believe that we could just quickly come up with an agreement on settling this strike. It takes a lot more work than that.”
Former Biden labor adviser Seth Harris echoed that assessment, writing, “The hyper-partisanship that surrounds labor policy in the U.S. Congress makes finding 60 votes for any solution in an evenly divided Senate a long shot, at best.” (To avoid a legislation-blocking filibuster, a minimum of 60 votes is required.)
The mood in Congress may change dramatically following the Nov. 8 elections. Neither political party benefits long-term from a national rail shutdown.
If the Gordian knot is to be untangled, majorities must be found in the House and Senate able to reconcile differing points of view—of which there are many.
There will be Republicans refusing to back legislation going beyond the August PEB recommendations. There will be Democrats refusing to back legislation holding railroads to their post-PEB and post-Walsh negotiations sweeteners. And there will be Democrats and moderate Republicans agreeable to granting rail labor the 15 days of paid sick leave they unsuccessfully sought from the PEB.
Post Script
Railroads operate the most expansive and largely unsupervised shop floor in America. Only incentives, sincere recognition and genuine trust will restore employee loyalty and teamwork essential to delivering levels of customer service that grows and protects market share and keeps economic regulators at bay.
Yet, railroads implemented harsh attendance policies and Precision Scheduled Railroading without employee collaboration and buy-in, and oppose providing paid sick leave available to 76% of the American work force. Why is it a surprise to railroad employers that employees—despite receiving pay and benefits putting them ahead of a least 90% of the American workforce—have packed away their railroad-branded caps and t-shirts in exchange for informational picket signs with carrier-derogative messages?
Opinions matter and it is the opinion of a growing number of rail employees that profits—not human resources, safety or customer service—are management’s highest priority. As rail officials keep their eyes wide shut, radical elements will continue gaining converts. Management may not be a popularity contest, but it needn’t be an unpopularity contest.
Two rail officials understanding the difference are former Conrail Shared Assets President and Federal Railroad Administrator Ronald L. Batory and current CSX Executive Vice President of Operations Jamie Boychuk.
It was said by a union president of Batory—son of a rail union officer and who was known while running Conrail to promise, “If it’s wrong, we’ll fix it”—that if other rail executives were of the same frame of mind, they “could put [unions] out of business.”
Boychuk—also a multi-generation railroader, and unlike most rail officials today who directly moved from college campus and law school to the C-suite—walked the walk early in his career as a CN conductor, yardmaster and locomotive engineer.
Among Boycuk’s recent eyebrow-raising comments was the urgency of collaboration with labor and essentiality of a well-trained, loyal and motivated work force in improving customer service. CSX, says Boychuk, is “trying to create a different railroader, trying to create a different [work] schedule” so that an on-board crew member “isn’t on call all the time.”
Small steps can be meaningful. Among quality-of-life improvements Boychuk is instituting is installation of microwave ovens in locomotive cabs so that on-board crew members “don’t have to eat cold sandwiches” and have access to more healthy, balanced and nutritious meals. Given the $3 million sticker price of a six-axle, 4,000-hp locomotive, the benefit/cost analysis of installing a $200 microwave oven is quite positive.
Perhaps Batory and Boychuk should have been sitting with rail negotiators at the bargaining table.