Many American Workers Are Suffering, But Not Those In Not Freight Rail

The rail-labor drama has been on full display since June when twelve labor unions representing 115,000 workers were released from mediation. After many twists and turns, eight have ratified yet four remain holdouts. Without resolution, now squarely in the court of Congress, rail workers will strike and the freight rail network would shut down.

The brinkmanship seems timed to make the most of the holiday season, more than two years of supply chain disruptions, and course politics. If Congress now fails to implement the deal agreed to by eight unions for the four holdouts, the political fallout for the White House and Democrats will be disastrous. The House has made that less of a possibility, but real questions remain in the Senate, particularly after Speaker Pelosi went back on her agreement with the President and Congressional leaders to pass a clean bill that doesn’t add or subtract any of the generous perks forged by the White House and labor union leaders and approved by the majority of unions.

Here are the facts to understand what’s at stake, including for the long-term prospects of bargaining.

Freight rail workers are already well-compensated

Before the recent high-profile negotiations, railroaders were already in the top 93^rd percentile of all U.S. workers for total compensation. Railroaders have long had generous employee health benefits and paid time off, and up to seven weeks of paid time off for senior employees. Sickness benefits begin after as few as four days and can last up to 52 weeks. In an era in which autonomous trains make many jobs redundant, its stunning that the labor unions have demanded such outsized compensation, and moreover that they should reject the latest round.

What the labor unions want

There was almost a strike this summer, and the current predicament was outlined by Ike Brannon here of how we got here after more than a year of prolonged negotiations and various governmental inventions for cooling and arbitration.

In short: labor unions drove the bus and set the rules from the onset, asking for mediation, asking to be released for mediation and asking for White House arbitration recommendations. Many unions, especially the most vocal ones today opposing the deal they helped forge, said recommendations from the White House would be the end of the bargaining round. And yet still today they are holding the economy hostage, plainly wanting to have their cake and eat it too.

In general, railroaders want more money and flexibility. But they also continue to argue they have no sick time. This is ludicrous and Congressional Republicans should be especially wary of the claim.

An industry leader explained succinctly in a Semafor newsletter: “All rail employees have access to several leave policies, including sick leave, although those vary by union based on what they’ve bargained for. Unions have bargained historically and in this round specifically for higher overall wages – they’re in the top 7% and this set of contracts would put total compensation at $160K – and a more generous long term leave policy that lasts for up to a year and is generally unmatched in the economy. The White House’s handpicked arbitrators addressed the issue by effectively baking the benefit into the wage increase – 24% - and pushes parties to deal with sick leave and quality of life matters after this deal is done. 8/12 unions have already ratified the deal, which is a compromise, and progress will continue on all issues as soon as we finish this round.”

Indeed, labor has succeeded in spades. Big Labor finagled that the average rail employee would earn $110,000 per year by the end of this agreement, twice the median salary in the U.S. This gives railroaders historic gains of 24% pay increases and an immediate payout averaging $11,000 upon ratification and before the holidays, something most American workers would welcome. Total compensation would be some $160,000 per employee.

Kicking the gift horse in the mouth

The Senate should follow the House’s lead and pass the bill to avert a strike.

Yet after a remarkable move by Speaker Pelosi to add on even more benefits to the deal – which the House also approved – the Senate must limit its action to simply passing legislation that brings this to a close. It is imprudent and unwise for Republican lawmakers to put their thumb on the scale and add even more benefits being driven by Sen. Sanders and the House Squad.

In a world of political expediency, precedent arguments about what may happen are hard to break through, but they matter. Airlines are governed by many of the same set of laws as the railroads and watch this issue intently. If Congress – with the help of Republicans – were able to disregard the basic realities of what benefits labor unions already have, how they got them through their own collective bargaining, and impose new conditions, private parties will have little incentive down the road to settle their own contracts absent political influence.

Republicans traditionally oppose intervention in private matters. While implementing the patterned agreement may be viewed by some as an intervention, it is small potatoes compared to adding new and costly benefits to an agreement.