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Why Are Labor Unions Divided Over A New Deal for Freight Workers?

This week the International Association of Machinists and Aerospace Workers (IAM) ratified a new contract with US railroads, taking the freight rail industry one step closer to avoiding devastating strikes. IAM voting members approved the contract terms agreed between unions and railroads in September. However, the fine margin of passage, with 52% in favour and 48% against, is indicative of simmering discontent within the industry over “deficiencies” in sick leave and working hours conditions. IAM are the seventh union to ratify the agreement but all twelve are required for the contract to come into force.

Should all twelve unions fail to ratify the agreement, strike action can begin on November 19.

With the US facing a troubling year-on-year core inflation rate of 6.6%, there is significant anxiety surrounding the further disruption such industrial action could cause. With rail strikes expected to cost the US economy an estimated $2 billion per day, and President Biden’s position expected to weaken following Tuesday’s midterm elections, the US government has been pushing hard for a resolution. Under federal law, workers’ contracts do not expire but they have been up for renegotiation since January 2020. Talks, however, have repeatedly broken down and a Presidential Emergency Board was convened earlier this year in order to mediate a breakdown in communications and suggest compromised labor terms.

The recommendations of this Presidential Emergency Board formed the primary basis for a tentative new deal agreed upon between unions and railroads on September 15. However, to come into effect this deal must be ratified by the rank-and-file members of all twelve unions. This process is causing significant headaches.

The new deal would include record-breaking raises for rail workers. In addition to an immediate pay-out, designed to compensate for the time since 2020 when workers have operated without an up-to-date contract, workers will receive a 24% raise and $5,000 in bonuses. Railroad negotiators have emphasised that this is “the largest wage package in nearly five decades” and is close to the recommendations of the Presidential Emergency Board. The contract would also introduce an additional day of annual paid sick leave and three additional days of unpaid sick leave.

The IAM are insistent “this is the best deal for our members” and President Biden has described the agreement as a “big win” for America but the offer has not been universally well received.

IAM themselves acknowledged not all workers were satisfied with the deal and reaffirmed their commitment “to find[ing] a solution to the overtime policies in our industry.” Similarly, the National Carriers’ Conference Committee (NCCC), which represented freight railroads during labor talks, insisted that although the deal does not significantly alter the terms of unpaid leave, it is understood “short-term absences would be unpaid in favor of higher compensation for days workers and more generous sickness benefits for longer absences.”

However, as railroad profits soar, two unions are holding firm. The rank-and-file members of the Brotherhood of Maintenance of Way Employees Division (BMWED) and the Brotherhood of Railroad Signalmen (BRS) have rejected the new contract, citing failures to address quality of life concerns. A spokesperson from the reform group BMWED Rank and File United emphasised: “a vast majority of our membership lives pay-check to pay-check. Taking four days off to care for a child or ourselves is a choice many have to make, whether to rest up at home and get better, or go to work and possibly get sicker.”

There has been criticism over the deal due to its outright refusal to offer the additional 15 days of paid sick leave sought by the unions during initial negotiations. Railroad representatives argue this demand is unrealistic as, at a cost of $688 million per year, it would destroy their ability to reinvest in railroad infrastructure.

BRS President Michael Baldwin accused the NCCC and the Presidential Advisory Board of showing a “lack of good faith” in denying workers the “basic right” of paid sick leave. His view is apparently shared by the members as 60.57% rejected the deal.

Workers from these unions believe agreeing to the new deal would deny them an adequate quality of life. Since the introduction of Precision Scheduled Railroading, equivalent to the Just in Time model that predominates in manufacturing, staff have been cut and demands have increased. While the new deal includes an additional paid day off per year and three unpaid days for medical appointments, one anonymous member emphasised how managers rejecting requests for medical leave ultimately undermine such changes: “they could give me 300 personal leave days and if they [don’t have] to let me use them when I want to, then what good are they?”

This rejection creates a significant problem. All twelve unions must accept the deal in order to avoid strike action. With the next strike deadline of November 19th approaching, industry stakeholders are becoming increasingly nervous. Indeed 300 industry groups have written to President Biden to encourage him to step in and avoid a rail strike.

This places the President in a precarious situation. The self described “most pro-union president in history” is unlikely to emulate the bullish interjections of Ronald Regan, but with 30% of US cargo shipments reliant on rail and the US economy teetering, a strike must be avoided.

The new deal will increase security for union members by ending years of negotiation and potential strike action. Further, it does represent a very significant pay-rise to around $110,000 per annum for some workers and a marginal improvement on worker conditions. However, by signing the agreement, workers lose their bargaining power and ultimately subject themselves to contracts whereby they may have to continue working pay-check to pay-check with disturbed sleep and social schedules owing to a lack of progress on on-call scheduling.

Image via Getty Images

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