The city of Omaha is in Nebraska. 115,000 rail workers should get a 24% raise and thousands of dollars in bonuses as part of a new agreement to avert a strike, according to a recommendation made by a special board appointed by President Joe Biden.
The new round of negotiations will be based on those recommendations. It's not clear whether railroads will agree to higher wages or find ways to address union concerns.
Federal law allows for a strike if the two sides can't agree on a new contract by mid-September. The supply chain is likely to be kept moving before then.
Businesses that depend on major freight railroads to deliver raw materials and ship their products could be devastated by a railroad strike. Lawmakers have voted before to impose terms on the railroads in rail labor disputes.
The report will provide a good framework for successful negotiations because avoiding a rail shutdown is in the nation's interests, according to a White House official.
The railroads and the unions didn't comment on any details of the report after it was given to them.
Twelve unions are taking part in the Presidential Emergency Board process, but the railroads are not. The unions want a 31% raise over the five years of the deal, while the railroads are only giving a 17% raise. The unions don't want the cost of their health care to go up a lot.
The board is suggesting a 24% wage increase and $5,000 in bonus payments over the life of the contract, with one additional paid day off per year. Keeping the same basic health insurance plan but having employees take a bigger share of the costs is recommended by the report.
Current high inflation, tight labor markets and railroads' strong profitability make the board believe that workers are entitled to higher wages than the railroads propose. According to the report, railroad work has become more demanding in recent years because of the cost-cutting at the railroads.
Railroad workers haven't received a raise since the beginning of the year. After enduring extensive job cuts and staying on the job during the Pandemic, the workers expect to get compensated. Over the last two years, strikes have become more common in a variety of industries because unions are more likely to demand more.
Over the past six years, the major freight railroads have eliminated one-third of their jobs as they have streamlined their operations to run fewer, longer trains. Some railroads' tightened attendance policies make it hard to take time off because of all the job cuts, according to unions.
The unions oppose a proposal from the railroads to cut the number of workers in a locomotive from two to one. The railroads have been pressing for the change for several years, but a new federal rule that would require two-person crews in most instances should make it harder for them. The unions say that keeping two people on the crews is more important than preserving jobs.
It would be easier for railroads to hire new employees if they were able to reach a new agreement, which they acknowledge they need to do to improve service and cut down on the delays that have plagued freight shipments this year. Worker shortages are making it hard for the major freight railroads to hire more workers.
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