WASHINGTON — After 24-hour negotiations, President Joe Biden said Thursday morning that freight rail companies and workers had reached a tentative agreement that will avert a rail closure that could have crippled the economy.
Biden celebrated the tentative deal alongside union leaders and railroad executives in the White House Rose Garden, calling it a “huge victory for America” and for both sides of the labor dispute. He said rail workers will receive better wages, better working conditions and “peace of mind” about health insurance, while companies will be able to build capacity and retain workers.
“Together we reached an agreement that will keep our critical rail system running and prevent disruption to our economy,” he said, calling it “validation” that unions and executives “can work together.”
Ahead of Friday’s deadline for a possible workers’ strike, the railways had prepared to stop crop shipments as early as Thursday, while farm fertilizer shipments were delayed this week.
Amtrak and the commuter railroads had braced for service cuts, interruptions and cancellations amid the dispute that pitted Biden’s loyalties to the rail companies and the unions against each other.
A strike by freight rail workers could have further strained supply chains and dealt a heavy blow to Democrats ahead of the midterm elections.
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Biden: Railroads are the ‘backbone of the economy’
Railroads are the “backbone of the economy,” Biden said Thursday as he praised the tentative deal between unions and rail companies to avoid a shutdown.
“I have a visual image that the railroad is the backbone, I mean literally the backbone of the economy,” Biden said during brief remarks in the Rose Garden after meeting in the Oval Office with negotiators who brokered the deal.
Biden said the trains carry everything from clean water to food to liquefied natural gas, “everything good you need.”
A shutdown would disrupt supply chains and contribute to persistent consumer goods inflation.
As Biden turned to return to the White House, a reporter asked the president what he would say to Americans struggling with rising food costs.
“With the rails moving,” he replied, “it’s not going to go up.”
As the parties met in the Oval Office earlier this morning, Biden told his favorite stories from his years traveling on Amtrak and thanked companies and unions for resolving differences.
As a senator, Biden commuted between Washington and Delaware.
“It feels good,” he said, pointing to the 20 hours of consecutive talks on the verge of a possible rail strike. “They should be in bed.”
The agreement includes salary increases, bonuses, no increases in copays and deductibles and, for the first time, paid time off for sick workers and waivers for doctor visits. The rail companies’ strict attendance policies had been a sticking point for the two largest unions representing drivers and engineers, who were among the latest holdouts.
The terms of the agreement include:
- Assigned voluntary days off and one additional paid day off (rail freight workers do not have sick days);
- Guaranteed free time for medical visits;
- No breaks in current health care plans;
- An immediate salary increase of 14% and 24% in the next five years;
- $5,000 annual lump sum bonuses.
“The solidarity shown by our members, workers essential to this economy, who keep America’s freight trains moving, made all the difference in getting a deal done,” Jeremy Ferguson, SMART Transportation Division President and Dennis Pierce , president of the Brotherhood of Locomotive Engineers. and Trainmen, they said in a joint statement.
Union members still need to vote on the contract for it to be finalized.
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Labor Secretary Marty Walsh led 20 straight hours of meetings with union and trucking leaders in Washington that went into Thursday morning. He applauded a “close and mutually beneficial agreement.”
“Our rail system is an integral part of our supply chain, and an outage would have had a catastrophic impact on industries, travelers and families across the country.” Walsh said in a tweet.
Terms beyond recommendations
Negotiations for a new contract between the nation’s six largest freight forwarders (Union Pacific, CSX, Norfolk Southern, BNSF, Canadian National and Kansas City Southern) and 12 unions date back nearly three years. Biden appointed an Emergency Presidential Board in July to mediate the dispute. Nine of the unions had already agreed to the terms.
By guaranteeing paid time off for medical visits, the deal goes beyond Biden’s presidential caucus recommendations in a major victory for the unions that demanded the benefits.
Ian Jefferies, president and CEO of the Association of American Railroads, said a work stoppage would result in an “needless $2 billion daily economic hit” just as the freight sector enters peak shipping season.
Biden was personally in contact with rail companies and union representatives this week to try to prevent a shutdown.
The White House was exploring contingencies, including invoking emergency authorities to ensure crucial materials would still be delivered if one were to occur, according to a White House official, who discussed the talks on condition of anonymity.
In the end, the unions that threatened a freight rail strike over the labor dispute were the clear winners of the confrontation.
“Most importantly, for the first time in history, the agreement provides our members with the ability to take time off work to attend preventive and routine medical services, as well as exemptions from attendance policies for hospital stays and surgical procedures.” Ferguson and Pierce said in their statement on behalf of their unions.
Republican lawmakers introduced legislation that would have used the powers of Congress to step in and adopt the board’s recommendations, which offered no guarantees of paid time off, for the 115,000 union rail workers.
Sen. Bernie Sanders, I-Vt., opposed push from Republicans Wednesday to pass the bill by unanimous consent, giving unions time to push their demands through to the end.
The country’s largest freight rail companies said deals had been reached with the three unions that had refused to support a new contract.
Those resistances, representing some 60,000 railway workers, were:
- Brotherhood of Railway and Locomotive Engineers Division of the International Brotherhood of Teamsters
- International Association of Sheet Metal, Air, Rail and Transportation Workers – Transportation Division (SMART-TD)
- Brotherhood of Railway Signalmen
The Association of American Railroads, a coalition representing the rail industry, released a statement thanking “all unions involved in the negotiations for their efforts” and the Biden administration for its help.
Amtrak was working to undo the cancellations it had announced for Thursday.
“Amtrak is working to quickly restore canceled trains and contact affected customers to accommodate them on the earliest available departures,” the system announced shortly after Biden broadcast news of the tentative deal.
House Speaker Nancy Pelosi said in a statement Thursday morning that Congress was also considering any action it might take.
“Under the Commerce Clause of the Constitution, Congress has the authority and responsibility to ensure the uninterrupted operation of essential transportation services and has in the past enacted legislation to that end,” Pelosi said. “Led by the Committee on Transportation and Infrastructure, the House prepared and reviewed legislation, so that we would be ready to act, pursuant to Section 10 of the Railroad Labor Act.”
Biden’s loyalties tested
Biden was stuck in a politically difficult situation as an outspoken supporter of unions while desperately wanting to avoid the repercussions of a shutdown.
More than any other modern president, Biden regularly hails organized labor. He said last year that his goal is to be “the most pro-union president leading the most pro-union administration in the history of the United States.”
A strike and congested supply chains could have undermined Democrats’ credibility on the economy, giving Republicans new ammunition as they seek to regain control of Congress in November elections.
Such a setback could have stopped Biden’s recent momentum. The president is seeing a rebound in approval ratings after a string of legislative victories in Congress and falling gasoline prices. And Democrats have been encouraged by the Supreme Court’s decision to overturn Roe v. Wade, reversing his once bleak prospects for maintaining control of Congress.