Rail Workers Authorize Strike That Could Upend Supply Chains

Rail workers could be going on strike soon for the first time in nearly 30 years, which could result in enormous impacts on the wider economy and supply chains.

In a release posted midday Wednesday, the International Association of Machinists and Aerospace Workers (IAM) said 4,900 members of District 19 voted to reject the tentative agreement they had hashed out with the National Carriers’ Conference Committee alongside a board first appointed by the White House in August.

Negotiations failed after a closed-door meeting at the Department of Labor headquarters in Washington. There is a so-called “cooling off period” limiting union strikes while these negotiations go on, but that’s set to end at midnight Friday. Freight rail workers and the IAM union put an extension on the ratification process until Sept. 29 at 12 p.m.

But there’s far more at stake than a little under 5,000 railroad staff going without a contract. After Thursday, over 100,000 unionized workers on the railroad who haven’t inked agreements with carriers will be legally able to strike all the live-long day. The Association of American Railroads told CNBC they had “no plans to lock out workers Friday should negotiations not be successfully completed.”

Freight workers report having to come into work at a moment’s notice, making it near impossible to schedule anything or attend something as simple as their own birthday party. Under the Railway Labor Act, workers are only guaranteed 10 hours off every 24 hours and can expect to effectively be on call all day, every day. Considering the average 9-to-5er is often allowed 16 hours off every 24 hours, it’s easy to see why railroad workers are drawing a line in the sand.

Eight of 12 railroad unions had reached tentative deals with the companies as of Wednesday, but other groups are still talking to carriers including the two biggest freight railroad worker unions BLET and SMART Transportation Division.

A strike at this point would likely impact already-straining U.S. supply chains and cause other knock-on effects within the transportation sector like Amtrak.

The original agreement included 24% raises and back pay but didn’t address calls for more standardized hours and the ability to take necessary time off for events like doctors’ appointments without being penalized.

The IAM represents members of freight rail workers as well as people in the motorcycle manufacturing and aerospace businesses, totaling nearly 600,000 members. They were one of the first unions to reach an initial agreement with the railroads, but now that they’re pulling back it could change the balance of power between the carriers and the Biden administration versus the unions. It would also likely mean affiliated members would be incentivized to not cross the picket line, which could prove a problem for companies like Boeing and Lockheed Martin who have workers in the IAM.

According to Politico, Republicans in congress are more willing to extend the cooling-off period which would make it illegal for the union to strike, but Democrats are much more reluctant to go that far. Some GOP senators are putting their weight behind a bill that would prevent workers from walking out, according to The Hill.

The Biden admin’s press secretary Karine Jean-Pierre told reporters Wednesday “All parties need to stay at the table, bargain in good faith to resolve outstanding issues, and come to an agreement.”

Jean-Pierre later added, “this is an issue that can and should be worked out between the rail companies and the unions, not by Congress.”

Industries that depend on rail shipments are already mumbling about the possible costs they’ll push onto consumers. The American Fuel & Petrochemical Manufacturers trade organization told Bloomberg that railroad shutdowns could boost gasoline prices just as the average price at the pump was on its way down.

Though railroad workers themselves are not beholden to the entirety of the supply chain, attempts to paint them as the main cause for people paying more for products is just a cynical way of ignoring workers’ requests. The AAR, for its part, claims workers already have sufficient time off and leave. BLET union president Dennis Pierce told CNBC that workers are “just looking for time away from work to address our medical issues,” citing carriers like Union Pacific and BNSF that issue penalties for daring to see a doctor.

Rail workers could be going on strike soon for the first time in nearly 30 years, which could result in enormous impacts on the wider economy and supply chains.

In a release posted midday Wednesday, the International Association of Machinists and Aerospace Workers (IAM) said 4,900 members of District 19 voted to reject the tentative agreement they had hashed out with the National Carriers’ Conference Committee alongside a board first appointed by the White House in August.

Negotiations failed after a closed-door meeting at the Department of Labor headquarters in Washington. There is a so-called “cooling off period” limiting union strikes while these negotiations go on, but that’s set to end at midnight Friday. Freight rail workers and the IAM union put an extension on the ratification process until Sept. 29 at 12 p.m.

But there’s far more at stake than a little under 5,000 railroad staff going without a contract. After Thursday, over 100,000 unionized workers on the railroad who haven’t inked agreements with carriers will be legally able to strike all the live-long day. The Association of American Railroads told CNBC they had “no plans to lock out workers Friday should negotiations not be successfully completed.”

Freight workers report having to come into work at a moment’s notice, making it near impossible to schedule anything or attend something as simple as their own birthday party. Under the Railway Labor Act, workers are only guaranteed 10 hours off every 24 hours and can expect to effectively be on call all day, every day. Considering the average 9-to-5er is often allowed 16 hours off every 24 hours, it’s easy to see why railroad workers are drawing a line in the sand.

Eight of 12 railroad unions had reached tentative deals with the companies as of Wednesday, but other groups are still talking to carriers including the two biggest freight railroad worker unions BLET and SMART Transportation Division.

A strike at this point would likely impact already-straining U.S. supply chains and cause other knock-on effects within the transportation sector like Amtrak.

The original agreement included 24% raises and back pay but didn’t address calls for more standardized hours and the ability to take necessary time off for events like doctors’ appointments without being penalized.

The IAM represents members of freight rail workers as well as people in the motorcycle manufacturing and aerospace businesses, totaling nearly 600,000 members. They were one of the first unions to reach an initial agreement with the railroads, but now that they’re pulling back it could change the balance of power between the carriers and the Biden administration versus the unions. It would also likely mean affiliated members would be incentivized to not cross the picket line, which could prove a problem for companies like Boeing and Lockheed Martin who have workers in the IAM.

According to Politico, Republicans in congress are more willing to extend the cooling-off period which would make it illegal for the union to strike, but Democrats are much more reluctant to go that far. Some GOP senators are putting their weight behind a bill that would prevent workers from walking out, according to The Hill.

The Biden admin’s press secretary Karine Jean-Pierre told reporters Wednesday “All parties need to stay at the table, bargain in good faith to resolve outstanding issues, and come to an agreement.”

Jean-Pierre later added, “this is an issue that can and should be worked out between the rail companies and the unions, not by Congress.”

Industries that depend on rail shipments are already mumbling about the possible costs they’ll push onto consumers. The American Fuel & Petrochemical Manufacturers trade organization told Bloomberg that railroad shutdowns could boost gasoline prices just as the average price at the pump was on its way down.

Though railroad workers themselves are not beholden to the entirety of the supply chain, attempts to paint them as the main cause for people paying more for products is just a cynical way of ignoring workers’ requests. The AAR, for its part, claims workers already have sufficient time off and leave. BLET union president Dennis Pierce told CNBC that workers are “just looking for time away from work to address our medical issues,” citing carriers like Union Pacific and BNSF that issue penalties for daring to see a doctor.