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Railroads Reach Tentative Deal With Labor Unions

Railroads and labor unions reached a tentative deal early Thursday, which could help avoid a massive rail strike that threatened to impede the U.S. economy as soon as Friday.

The tentative agreement includes compounded wage increases of 24% over the five years between 2020 and 2024 and an additional paid day off for workers.

Previously, two outstanding unions — the SMART Transportation Division and the Brotherhood of Locomotive Engineers and Trainmen — which represent engineers and conductors, had yet to come to an agreement. In the event that the groups did not settle on a contract, a strike could have commenced as soon as Friday, which would have marked the first national rail strike in 30 years and pose a series of problems for commuters as well as the already shaky supply chain situation ahead of the holiday season. 10 of the 12 unions representing railroads had already reached agreements for new contracts with management.

“We applaud the Biden administration and Members of Congress for intervening on behalf of complex and critical supply chains that depend on the rail system, and for establishing the additional cooling off period while rank-and-file considers the deal,” said American Apparel & Footwear Association president and CEO Steve Lamar in a statement. Lamar previously sent a letter to Congress urging it to impose recommendations for resolution via the Presidential Emergency Board (PEB), which was created to help settle the dispute.According to AAFA, a railroad strike would have caused significant disruption to an already volatile supply chain, especially in footwear and apparel, where the vast majority of products are imported to the U.S.

“We are relieved and cautiously optimistic that this devastating nationwide rail strike has been averted,” said president and CEO Matthew Shay in a statement on Thursday. “We appreciate the Biden administration’s intervention on behalf of the businesses and consumers who would have been impacted at a time when high inflation and economic uncertainty are challenging consumer budgets and putting business resiliency at risk.”

According to the Association of American Railroads (AAR), a strike could have costed the U.S. economy $2 billion a day.

“The industry would like to thank all unions involved in negotiations for their efforts and dedication to reaching agreements throughout this process,” the Association of American Railroads said in a Thursday statement.

Other retail leaders previously expressed concern with the possibility of a strike.

Thomas Crockett, the VP of government affairs for the Footwear Distributors & Retailers of America (FDRA), said on Wednesday that a rail strike “would prevent footwear companies from getting products to U.S. consumers and create another supply chain crisis.”

In joint Sunday statement, the leaders of both remaining unions emphasized the need for improvements to working conditions, including ending drastic penalizations for engineers and conductors who get sick or visit a doctor.

“Our members are being terminated for getting sick or for attending routine medical visits as we crawl our way out of worldwide pandemic,” the unions said.

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