Supply chain crisis staved off with new deal between unions and railroads

From truck driver shortages to shipping port volume problems, supply chains have had one issue after another for the better part of two years now. The looming possibility of the nation's railways being shutdown due to labor strike would only add insult to injury.

But it appears that at the 11th hour, the work stoppage has been averted after the two sides hashed out a deal.

Although the ink isn't dry quite yet, Class I freight railroads and labor unions have come to an agreement in principle regarding employee contracts, as announced by the National Railway Labor Conference in a press release. Railway employers have agreed to increase union members' pay by 24% by 2024 retroactive to 2020, in addition to $1,000 lump sum payments paid out over a five-year period. The brunt of that increase — approximately 14% — will go into effect right away.

Over the past several months, the unions representing the nation's tens of thousands of railroad employees — the Brotherhood of Locomotive Engineers and Trainmen Division of the International Brotherhood of Teamsters; International Association of Sheet Metal, Air, Rail and Transportation Workers; and the Brotherhood of Railroad Signalmen — were in negotiations with their employers about increasing their wages with their contracts due for renewal. The two sides have been at loggerheads, however, which prompted the federal government to get involved, serving as a mediator. In August, the Presidential Emergency Board released its recommendations, which advised railroads to increase workers' compensation 24% incrementally. The last time union members received a raise was back in 2019.

But with the board's recommendations coming several weeks ago and railway providers limiting service just a few days before the contract deadline, many believed the strike was inevitable.

Mere hours before the deadline, though, the only thing that struck was a deal, albeit tentative.

The railroads are a major thoroughfare for the nation's freight transportation.

"The NCCC would like to thank the unions' leadership teams for their professionalism and efforts during the bargaining process," the organization representing railworkers said in a statement. "We also would like to thank the Biden administration – in particular Secretary of Labor Marty Walsh and his team, Secretary of Transportation Pete Buttigieg, Secretary of Agriculture Tom Vilsack, and the board members and staff at the National Mediation Board – for their assistance in reaching these settlements."

White House hails agreement as a victory for the country
In a statement of his own, President Biden applauded the fact that the two sides were able to find common ground, adding both parties stand to benefit.

"These rail workers will get better pay, improved working conditions, and peace of mind around their health care costs: all hard-earned," Biden said in an official White House press release. "The agreement is also a victory for railway companies who will be able to retain and recruit more workers for an industry that will continue to be part of the backbone of the American economy for decades to come."

Several organizations, businesses and industries that rely on the supply chain have released statements expressing their relief that a strike was averted. A shutdown had the potential to cost the economy $2 billion per day in lost work productivity, according to a report from the Association of American Railroads.