Railroad strike looms over holidays after major union rejects deal

An image of a question created by a railway.

Example: Aïda Amer/Axios

A prominent railroad union rejected Biden’s labor contract Monday morning, prompting a public strike.

Why it matters: The failure of the deal is a setback for the White House, which sold it and sold it as a major victory in September.

Running a story: The SMART Transportation Division, the union that represents railroad operators, voted against the deal. Railway workers may strike after 9 Dec. if the two sides do not agree.

  • After that date, a strike can happen at any time – unless lawmakers step in to impose a cooling-off period or force workers to agree to a contract.
  • “Our hope is that no matter what happens, Congress still needs to step in,” said Scott Jensen, director of issue communications, at the American Chemistry Council. It is one of many trade groups that are sounding the alarm that they may close.
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Between the lines: The union was run by the union’s leadership and had a difficult time selling the product to the members who hold positions, many of whom are very angry with the way they have been treated in recent years – especially during the pandemic.

  • Union leaders trying to sell the union to members have gotten more than they bargained for, in part because a group of workers — not affiliated with the unions — have been pushing hard for the union.
  • Unlike most careers, salary is not a fixed amount. It’s the benefits of working life – especially sick leave.
  • “We were surprised,” when members did not vote, said Peter Kennedy, director of Strategic Coordination Research at BMWED, the third largest organization, which voted on the agreement in October.
  • “This is the best money I’ve ever seen in my career,” said Kennedy, a nearly 20-year railroad veteran. “If employees are willing to vote for sick time, that tells you something.”
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Main picture: Any disruption to freight rail operations could disrupt economic recovery and the economy.

  • A prolonged strike – not impossible – could bring the country to a standstill, according to the Chemistry Council. The group wants the one-month interest rate to pull about $160 billion out of the economy, causing a 1% drop in GDP.

Lots of possibilities and anxiety: As the December deadline nears, shipping companies are beginning to lock up some cargo — of dangerous drugs, say — ahead of a potential collision.

  • For example, in preparation for the labor agreement that began in September, the railroad industry suspended all shipments of hazardous chemicals — which meant a drop in nearly 2,000 truckloads of chemicals for one week in September.
  • These chemicals get the daily necessities – chlorine, which is used to purify drinking water, and ethanol and ammonia, which are used as fertilizers.
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Observations: Businesses are preparing for disruption, said Jess Dankert, vice president of retail at the Retail Industry Leaders Association. This is where you will start to see cargo being stored at the docks, for example.

  • One word of encouragement: Salespeople have holidays, he says. “We’ll still have Christmas this year.”

Editor’s note: This article has been updated with updates throughout.


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