Following long, late night negotiations, the White House announced Thursday morning that the rail operators had reached a tentative agreement with the union.
Key Details
- Now that a tentative agreement is in place, the unions still need to vote before accepting the terms. Following the vote, there will be a mandatory “cooling-off period” so that if the vote fails the railroads will keep running.
- The terms of the deal haven’t been released yet, but the deal likely follows a tentative agreement that had been suggested in August, reports Axios.
- That agreement had recommended a 7% pay increase this year and retroactive increases for the last two years since negotiations have been ongoing since 2019.
- Over the next two years, the agreement includes a 4% and a 4.5% wage increase and an annual $1,000 bonus.
- One of the main points of contention during negotiations had been a disagreement over sick leave policies. Though exact terms haven’t been outlined, President Joe Biden said in an earlier statement, “These rail workers will get better pay, improved working conditions, and peace of mind around their health care costs: all hard-earned.”
Why it’s news
A rail strike threatened to shut down a large part of the U.S. economy as nearly every industry relies on rail transportation in some part.
The negotiations have been ongoing since 2019, but earlier this week the threat of a strike heightened. If a strike occurs, it could cost the U.S. economy $2 billion a day.
A strike would have driven up already high prices as consumers grapple with inflation.
With November midterms quickly approaching, the negotiation was seen by some as a test for the Biden administration. If the negotiations failed, the strike could have been a mark against Democrats during the elections.
Though no strike had started, at the beginning of this week, some railroads had started the process of pausing shipments of hazardous materials. Amtrak had halted long-distance trains in anticipation of a strike.
Even with the immediate threat of a strike gone, it will still take time for rail companies that had paused operations to get moving again. The delays may affect train movement for a few days.
Surprising statistics
Trains represent an important part of the U.S. supply chain. . .
- Freight trains are an $80-billion industry, covering 140,000 miles
- 27.9% of U.S. freight is shipped via railway, second largest behind trucking which handles 39.6% of freight
- 52% of rail freight is agriculture, energy, and other bulk commodities
- 48% of rail freight is consumer goods
