Rail shutdown would be disastrous for consumers
As both supply chain problems and inflation are starting to show some signs of easing, the last thing consumers need is a work stoppage that shuts down freight and passenger rail lines.
Before the start of the COVID-19 pandemic, consumers hardly, if ever, gave thought to “supply chains.” For most people, it sounded like a corporate buzzword, similar to “synergy” or “deep dive.” However, two years later, consumers are painfully aware of how important supply chains are to the availability and cost of common products.
Continued backlogs in producing and transporting goods are one of the main drivers of inflation that reached a four-decade high earlier this summer. This is not going unnoticed by consumers. Polls continue to show that inflation remains one of the most important issues to Americans.
As both supply chain problems and inflation are starting to show some signs of easing, the last thing consumers need is a work stoppage that shuts down freight and passenger rail lines. That is why last month’s recommendation from the Presidential Emergency Board (PEB) of neutral arbitrators appointed by President Joe Biden is so crucial.
Biden issued an Executive Order in July to create the arbitration board after several rounds of negotiating between freight railroads and several labor unions that represent various rail workers failed to achieve an agreement.
The recommendations issued by the PEB are not binding, but they do represent a framework for a potential deal. There is a lot to like for labor and the railroads, as well as many things that will be tough to swallow for both sides.
Most important, for rail workers, wages would increase by 24% during the five-year period from 2020-24, with a 14.1% wage increase becoming effective immediately. The key aspect of this is that because it is retroactive to 2020, it would result in more than $11,000 in immediate payouts to employees on average.
For the railroads, the deal would help them maintain the kind of flexibility that will allow them to quickly respond to their customers’ needs. This is crucial for the industry to remain competitive with other forms of transportation, such as trucking.
To be clear, this is not a perfect agreement for either side. If you gave both industry and labor the chance to write their preferred Collective Bargaining Agreement, neither side would have written the framework recommended by the PEB. That should be taken as a sign that the administration’s experts succeeded in coming up with a recommendation that is fair and requires compromises and concessions from both sides of the bargaining table. This tracks with many of the recent policy wins in Washington, all predicated on compromise.
The PEB’s recommendation triggered a 30-day cooling off period, which gives the two sides a chance to reach an agreement. If the two sides fail to agree to a new deal by Sept. 16, there could be a work stoppage that would shut down our nation’s freight rails, which move about 40 percent of the nation’s freight in terms of tonnage.
This would be absolutely devastating for consumers. Freight rail moves many of the goods we consume daily, including many consumer products found on store shelves. Disrupting the movement of that volume of goods would cripple supply chain and drive inflation even higher, at a time when Americans simply can’t afford more price increases.
Both railroads and labor unions want the best possible deal—workers want deserved pay increases and a better quality of life; railroads want to remain competitive with other modes of transportation. And, they both will have to live with whatever the final deal is.
But, one thing is clear: If they can’t come to an agreement that avoids a work stoppage, it will be a bad deal for our economy, and millions of Americans will be forced to live with the consequences of broken supply chains and higher prices.