A Potential Rail Strike Looms. Here’s What to Know.

Date: Thursday, December 1, 2022
Source: Wall Street Journal

Railroad companies and their unions are locked in a battle over a new labor contract, and some of the unions are threatening to call a strike as early as Dec. 9.

The negative effects of a labor stoppage could hobble the nation’s rail network and ripple through the economy. So the White House has called on Congress to use its authority to prevent a strike, and lawmakers in both parties have expressed support for quick action.

Here is what you need to know:

What are rail unions and railroad companies fighting over?

Railroads and their unions negotiate labor contracts every five years. The current round of discussions included disputes over wages, attendance policies and paid time off, prompting the White House to intervene in July, which led to a tentative agreement in September.

But four of the unions involved have voted against ratifying the deal, setting the stage again for a possible strike once a cooling-off period ends on Dec. 9. Rather than wages, workers say the biggest remaining sticking point is dissatisfaction over the number of paid sick days included in the proposed deal.

The White House agreement included one additional paid personal day which could be used as a sick day. Railroad companies say that apart from vacation days, workers already have paid sickness benefits, some of which can be used for paid sick days off.

But workers say conditions placed on getting additional paid sick days off are too onerous. They also dislike penalties under strict attendance policies for missing work due to illness.

How likely are rail unions to strike?

It depends on how quickly Congress moves. Under the Railway Labor Act, Congress can make both sides accept an agreement that their members have voted down.

The House voted Wednesday to approve a measure ending a rail workers’ labor dispute ahead of a possible strike, while also backing a proposal to impose paid sick leave, a step demanded by some lawmakers. Both measures now head to the Senate.

Some unions have asked members of Congress not to intervene. But such bills tend to have bipartisan support, with both parties worried about the disruption to the broader economy that would result from a strike.

President Biden has urged Congress to act “without modifications or delay.” Following the House votes on Wednesday, senators from both parties, including Majority Leader Chuck Schumer (D., N.Y.) and Minority Leader Mitch McConnell (R., Ky.), have said they would support new legislation in the Senate.

If Congress moves quickly to pass a back-to-work bill for Mr. Biden to sign in the coming days, workers won’t be allowed to form picket lines on Dec 9. But quick passage isn’t guaranteed.

How would a strike affect the U.S. economy?

A prolonged strike could raise prices for food, gasoline, new cars, electricity and other items.

Rail moves almost 30% of all freight by ton-mile, a measure of weight and distance traveled. Some products, such as coal, grains, lumber, chemicals and autos are particularly reliant on rail.

For instance, about 52% of coal shipments move by train. More than half of the fertilizer used in the U.S. and a quarter of all U.S. grains go over the rails, as does about 95% of the ethanol used in gasoline.

A strike would force some companies to scramble for alternative modes of transportation, driving up shipping costs and putting added pressure on inflation, which is already close to a 40-year high.

Low water levels on the Mississippi River have already forced many grain farmers to send more of their products via rail. A strike would leave them with few good options, said Mike Steenhoek, executive director of the Soy Transportation Coalition.

The Association of American Railroads estimates a railroad strike would cost the U.S. economy $2 billion a day, or roughly 3% of output.

What happens if Congress delays, or negotiations go down to the wire?

Even the threat of a strike next week would have a cost. Chemical companies, for example, would have to take steps to cancel shipments of hazardous cargo such as chlorine for water purification as soon as this weekend, said Scott Jensen, a spokesman for the American Chemistry Council.

In one week in mid-September, when a strike looked likely, chemical companies reduced shipments by about 2,000 carloads. In a typical week the companies ship 33,000 carloads valued at about $2.8 billion.

Other industries might have to delay shipments or look to move their goods by truck instead. But there simply aren’t enough trucks and truck drivers available. The American Trucking Associations estimate it would take about 460,000 additional trucks to replace trains in the event of a strike.

How will a strike affect the holidays?

Most retailers already have their holiday products stocked up, which means customers shouldn’t see empty shelves as a result of a strike.

Passengers traveling across the country on Amtrak trains could see some cancellations in the event of a strike. Many of Amtrak’s passenger trains use tracks owned by commercial railroad companies, which means trains couldn’t run if railroad workers don’t show up to work.

This wouldn’t affect the busy Northeast Corridor or Acela routes, however, since Amtrak owns those tracks.

Will there be long-term repercussions?

It is hard to say. Many industries have made significant capital investments to be able to move their goods by rail. Some chemical companies have gone so far as to buy their own railcars. Shifting to other modes will take time.

Other modes have their own problems. Barge traffic has been disrupted by low water levels on the Mississippi and its tributaries. And the trucking industry is short about 80,000 drivers, according to the ATA. That means there isn’t enough trucking capacity to pick up the slack.

For now, companies have no choice but to rely on rail.

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