Most Americans may not appreciate the central role that private railroads play in supporting the U.S. economy and their everyday lives. Recent fears of a railroad strike may have changed that.
After 20 straight hours of negotiations, brokered by President Joe Biden, U.S. railroads on Sept. 15, 2022, reached a tentative agreement with their unions to avert a devastating strike that had the potential to grind freight rail activity to a halt, worsen already sky-high inflation and drive the economy into a recession.
The costs of a possible work stoppage were already becoming apparent, as some railroads stopped taking certain hazardous goods, such as fertilizer and chlorine destined for water purification plants. And Amtrak said it was canceling all long-distance trains – though the company said it was working to restore service following news of the deal.
The agreement, however, still needs to be approved by workers, and so a strike is still possible once the cooling off period ends in several weeks.
Given how close the U.S. economy was to a strike, the question remains: What would happen if railroad workers did walk off their jobs for an extended period?
A prolonged railroad strike has the potential to be far more disruptive, affecting Americans across the country and imperiling the economy at a time when it’s already experiencing the twin threats of decades-high inflation and a Federal Reserve willing to slow growth to rein in the rising cost of living.
Why workers might strike
Rail workers have been without a contract since 2019, as management and unions have failed to agree on wage increases, paid sick leave and other issues.
On Aug. 16, 2022, a government panel drafted a compromise that included a 22% raise over six years and a cap on monthly health care contributions. Initially, 10 of the 12 rail unions tentatively agreed to the deal. But the Brotherhood of Locomotive Engineers and Trainmen and the International Association of Sheet Metal Air, Rail and Transportation Workers refused.
The key sticking points concerned working conditions, such as a lack of sick leave and policies that punish workers for taking unscheduled time off for a personal emergency.
The new deal, agreed to in the wee hours of Sept. 15, includes a 24% wage increase over five years effective retroactively to 2020 – meaning workers would get an immediate 14.1% bump. It would also allow workers to get time off for some medical events, which was a key issue for some unions.
Given the political paralysis in Washington, it’s uncertain whether lawmakers would be able to agree on a measure to resolve a strike in the current climate.