House of Representatives approves preliminary labor deal and sends to Senate

A railroad employee works at the Union Pacific Intermodal Terminal on November 21, 2022 in Los Angeles, California.

Mario Tama | Getty Images

On Wednesday, the House of Representatives passed legislation that would enforce a pre-labor agreement in railroads and prevent a nationwide strike. The bill is now heading to the Senate, where Majority Leader Chuck Schumer, DN.Y., has promised swift passage.

A separate vote in the House of Representatives added seven days of paid sick leave to the agreement.

The resolution’s passage by a vote of 290 to 137 came after President Joe Biden called on Congress to intervene in deadlocked negotiations between railroads and some of the industry’s major unions. On Tuesday, he met with four House and Senate leaders to avoid the economic fallout from a rail strike that the industry predicts could cost the US economy $2 billion a day.

Biden said he did not want to overturn some unions’ vote against the contract, but that shutting down the railroad would “devastate” the economy.

The railroads and their unions had until December 9 to reach an agreement before the workers promised to strike. The issue is the amount of paid sick leave for railroad workers.

In a statement on Tuesday, the International Brotherhood of Drivers’ Lines Maintenance Brotherhood said passing a law to enforce the agreement takes away their right to strike and will not solve the railroad workers’ problems or concerns.

The union said it was calling on Biden and any member of Congress who “really supports the working class to act quickly to pass any reforms and regulations that will provide paid sick leave to all railroad workers.”

According to the Association of American Railroads (AAR), an industry group, the president’s board, set up to help negotiate the contract, considered the union’s request for additional paid sick days and offered an extra paycheck instead.

“If unions are interested in a holistic discussion of structural changes related to their sick leave, I think the rail carriers are absolutely ready for a holistic discussion, but [they] didn’t do it at zero hour,” AAR President and CEO Ian Jeffreys said at a press conference on rail preparations.

According to the National Railroad Labor Conference, each union has its own sick leave policy. If an employee is sick, they must be out of work for four to seven days before they receive their version of sickness benefit.

The pre-labor agreement grants workers one extra day of work, for a total of three days for rail workers. The employee must provide 48 hours notice to request a personal day.

Senator Bernie Sanders of Vermont said on social media that the preliminary agreement did not go far enough.

Strike preparations hold back trade

Even the threat of a strike can affect rail traffic.

According to federal security measures, railroad carriers begin to prepare for a strike seven days before the strike date. Carriers are beginning to prioritize securing and moving sensitive materials such as drinking water chlorine and hazardous materials.

Ninety-six hours before the strike date, no more chemicals are transported. According to the American Chemistry Council, data from the railroad industry shows a drop of 1,975 wagons of chemical cargo in the week of September 10, when railroads stopped receiving cargo due to a previous threat of a railroad strike.

Corey Rosenbush, president and CEO of the Fertilizer Institute, said railroad carriers have told their members that supplies of ammonia, a critical ingredient for fertilizer companies, will not be allowed on the railroad from Dec. 4 unless a labor agreement is reached.

“Traditionally, it takes five to seven days for the supply chain to catch up in the event of a shutdown,” Rosenbusch said. “Fertilizer production should be curtailed.”

The four major railroads typically carry over 80% of agricultural freight traffic, according to the National Grain and Feed Association.

“Now we are looking for alternatives to position our product,” said Mike Seifert, president and chief executive officer of the association. “Now we have zero elasticity. There are no drivers and the barge situation due to the low water level has only exacerbated this problem.”

The Future of Collective Bargaining

Brendan Branon, chairman of the National Railroad Workers Conference, told CNBC that Congress is also evaluating the future of collective bargaining when it votes on the labor agreement. He urged Congress to follow the recommendations of the President’s Emergency Management Council, which Biden created in July to resolve an ongoing dispute between major freight railroad carriers and labor unions.

The Council develops its recommendations in accordance with a principle known as Model Negotiation, which is the process used by unions and employers to raise demands and rights.

“Exemplary bargaining promotes stability in collective bargaining and encourages settlement,” Branon said. “There are many arbitrators and PEBs who have recognized that this is not only acceptable, but also the most appropriate form for settling complex negotiations, especially multi-employer and multi-master agreements.”

Brenon said a number of industries, including railroads, have developed a set of clear practices for negotiating and additional negotiation by unions after a preliminary agreement goes beyond what the PEB has recommended.

“A break from the template will set the precedent that a better outcome is still possible, and I think this will create significant stress and risk for future collective bargaining for the railway industry,” he said.

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