Railroad strike nearly devastated American supply chain, but tentative deal came through

A looming railroad strike was nearly a disaster for America, when President Joe Biden announced that days of negotiations at the US Department of Labor had resulted in a tentative deal. “This agreement is a big win for America and for both, in my view,” Biden said during his speech at the Rose Garden, adding that the tentative labor agreement is “validation of what I’ve always believed: Union and management can work together.” He added, “To the American people. This agreement can avert the significant damage that any shutdown would have brought. Our nation’s rail system is the backbone of our supply chain, everything you rely on.”

The last-minute agreement helped to dodge massive disruptions to the flow of key goods and products across the country. With some 40% of the long distance trade in the country carried by rail, the strike planned by the railroad labor unions would have resulted in the immobilization of more than 7,000 trains and cost up to $2 billion per day. Friday morning was the deadline to come to an agreement. Reaching the deal required 20 consecutive hours of negotiation between the parties.

While meeting with negotiators in the Oval Office, President Joe Biden referred to the rail system as the nation’s “backbone” in a brief statement, before making comments about the agreement. In the last few months, the White House has been in talks with the railroad unions and companies, but negotiations have been suspended because of the issue of unpaid sick leave. As the parties tried to reach the agreement before Friday’s strike deadline, union leaders and rail carriers met at the office of Labor Secretary Marty Walsh this week, said CNBC.

Biden has stated that U.S. rail workers will “get better pay, improved working conditions, and peace of mind around their health care costs: all hard-earned,” as a result of the agreement, which he said was “also a victory for railway companies who will be able to retain and recruit more workers for an industry that will continue to be part of the backbone of the American economy for decades to come.”

There will be an immediate 14% increase for the workers, with a total increase of 24% over the course of the five-year agreement, the unions said. Other benefits will include a $5,000 annual bonus and unchanged health care co-payments and deductibles. In addition to an additional paid day off, all rail workers will have the option to take medical leave, a key demand made by unions during negotiation.

“For the first time, our unions were able to obtain negotiated contract language exempting time off for certain medical events from carrier attendance policies,” the chiefs of the union said.

During the negotiations, the agreements were reached with the International Brotherhood of Teamsters, Brotherhood of Locomotive Engineers and Trainmen Division, Air, Rail and Transportation Workers-Transportation Division, the International Association of Metal and the Brotherhood of Railway Signalmen, which collectively represent about 60,000 railroad employees, according to a news release by the Association of American Railroads.