Railway strike would cost US government a fortune. And it still can happen
The freight rail workers strike has gotten more traction in the American mainstream media in the past week. A topic that has often situated itself on the fringes of reporting has now become a national issue. After all, it might cost the US government 2 billion dollars daily if a solution is not found.
In the morning hours of Thursday, September 15, just a day before the cooling-off was about to expire, the railway companies and the unions have reached a tentative agreement, calming down the spirits. A tentative agreement is simply what the name entails and before we can actually conclude whether or not workers will go on strike, we are awaiting for their vote which might take up to a week.
For now the situation looks calmer and Amtrak, the commercial railway company, has been trying to reschedule and rebook the cancelled trips. Even if the possible strike would have affected the freight companies, Amtrak relies on those tracks to transport people across the country. Not only Amtrak relies on those, but the US economy, with railroad accounting for roughly 33% of the freight transportation inside the country, second only to trucking.
The magnitude of a strike is beyond imaginable.
The estimated two billion dollars do not account for the overall pressure that would have been put on businesses as a result of delayed shipment times. Some would have closed, others would have asked the government to further intervene, just as the railway companies have done so far.
The intervention by the White House with the Presidential Emergency Board only bought the government some time and allowed for more negative news about the “tough winter ahead of us” to solidify in people’s mindsets. A strike two months ago, started by the rail workers would have looked different in the public imagination, compared to now when only negative news are filling the TV channels.
The gasoline prices might decrease, yet core inflation is still high, and for Europe a tough winter is just ahead. Additionally, Democrats have an election ahead in November that they must win in order to maintain credibility despite all the demonization coming from the Republican side.
While for many it was surprising to witness the freight rail workers discussing striking and preparing for industrial action, the spirits have not been calmer since the negotiations started three years ago. The current tentative agreement will give raises amounting to 24% of the current wage until 2024, retroactively applying to both 2020 and 2021 as well. Additionally, workers will now benefit of an immediate payout amounting to $11.000 on average upon ratification of the contract. Very few other details about the contract have been made public, yet both President Biden and the labor unions claimed that the agreement will be beneficial to the worker.
The negotiations lasted over twenty hours, which indicates the bargaining power that unions in key industries have. Also, how undesirable industrial action is for business and for the entire economy as a whole.
The marathon, as CNN referred to the talks, is a term that we should work to describe also the working conditions that freight rail workers have experienced over the past years. They have been on call 24/7 and if they had to take unpaid time off for medical reasons, they were penalized under a points system. A certain number of penalties, and they were out.
Regardless of workers having to sacrifice themselves for the economy to stay alive, railway companies have had soaring profits in 2021. They have turned themselves from companies that deliver quality and standards of living for the American workers into corporations that serve the interest of shareholders and deliver the required numbers to Wall Street. In aggressive cost cutting measures, since 2017, 20% of the staff has been cut under a new operating model.
The new model is simple to understand: work harder and faster otherwise you are out.
Now, more than ever, the clock is really ticking for the lockout or strike to come. Even if the tentative agreement was reached, workers themselves still have the chance to say no. They can outrightly reject the project and declare a strike. More than ever, the moment is prime right now, with union approval rating reaching decades-time high and with the UPS strike around the corner.