Rail workers strike 2022: What it could mean for you and the economy

A railroad strike that would disrupt the entire American economy: not ideal, given, you know, everything. Nevertheless, one can be on the horizon.

Tens of thousands of rail workers are set to go on strike on Friday at 12:01 a.m., which could have far-reaching effects across the economy. It is already causing some disruption to rail passengers, freight companies and others.

The reason is a dispute between the freight industry and the workers who make it run.

Most of the 12 unions representing the workers have already agreed to a proposal put together by a presidential emergency relief committee set up by the White House over the summer to try to help resolve the dispute. The proposal includes a 24 percent increase in wages for workers by 2024, but many workers have complained that it does not address leave, shift planning and poor working conditions.

The holdout unions’ position is that wage increases are not enough to compensate for some real disadvantages – and dangerous aspects – of the job.

The two most powerful unions involved in the negotiations, representing engineers and conductors, continue to oppose the proposal, leaving both sides deadlocked. If workers go ahead with the strike they appear to be pushing for, it will be the first such strike in 30 years.

“If they were to go on strike, all the other unions would respect the strike,” said Tony Hatch, a transportation analyst and head of consulting firm ABH Consulting, referring to the engineers and conductors. “We are in a pressure cooker era.”

If a shipping strike were to occur – and especially if it is prolonged – it could have catastrophic effects across an already fragile economy that is still reeling from supply chain disruptions and inflation.

“Rail moves a lot of the basic, fundamental goods that we don’t think about on a day-to-day basis,” said Rachel Premack, editorial director of FreightWaves, which covers supply chains. “They will move sand and gravel that will then be crushed into concrete for roads or to lay home foundations. Railroads move the chemicals used to purify water or compromise fertilizers for crops, soybeans that can become food for people or [animals] which is then food for humans. There is a lot of early chain goods.”

Many passenger trains also run on freight tracks and their service may be suspended. Amtrak has already warned of potential disruptions and canceled cross-country trains in anticipation of a strike, but so far Northeast service will not be affected.

Federal officials and lawmakers are urging a compromise, acknowledging that a national freight strike involving tens of thousands of workers is not a good look when the 2022 midterm elections are approaching, and once again the economy is already on a slant.

Replacing freight with other forms of transport is not easy if workers leave. Mike Steenhoek, executive director of the Soy Transportation Coalition, told Vox in an interview that one train has a cargo capacity of 400 semi-trucks. “I don’t know of a shipper that has just 400 semis sitting in a garage ready to be available,” he said. He noted that for agriculture, the timing could not have been worse because of the harvest season, adding to the urgency of an agreement.

Right now, workers and unions realize they have a pro-labor administration in place and believe they can push a little more in negotiations on what would constitute a five-year deal retroactive to 2020, Hatch said. “All sides play the cards they were dealt,” he said. “It’s all alarming, it’s all part of the game.” The Association of American Railroads has estimated that a strike could cost the economy $2 billion a day — which is why Hatch doesn’t think a strike, if it happens, will last long.

But if it spreads, “yes, it would have a huge effect,” he said, affecting everything from agriculture to cars, gas to food.

Premack was even more serious in his warning. “We will definitely start to see a lot of important parts of our consumer society really break down,” she said, “which is a little apocalyptic to say the least.”

That is why there is an urgency in Washington to reach an agreement. While congressional Democrats have yet to provide a policy response, the Labor Department is scrambling to lead negotiations between unions and carriers in a series of last-minute meetings.

If forced to act, Democrats must weigh the political pressure to stop a strike against their long-held commitment to unions, which are pushing for fundamental improvements to working conditions. “It’s time for Congress to stand with workers for a change,” Sen. Bernie Sanders (I-VT) said in a speech. “Railway workers have the right to strike for reliable schedules, they have the right to strike for paid sick days, they have the right to strike for safe working conditions.”

Politically, this is complicated for many parties involved, given the state of the economy and the vote fast approaching. “They need a rail disruption like they need a hole in the head,” Steenhoek said.

Indeed, a shipping strike would not be fun

What happens next for consumers depends on two factors: whether a strike happens at all, and how long it lasts.

Currently, we are in what can be considered the first phase of the strike: the pre-strike disruptions as companies and shippers prepare. Amtrak cancellations fall into this category. Some shipping companies also stop the shipment of dangerous or sensitive cargo, such as fertilizers, chemicals for water purification or items that need to be kept at a certain temperature. Railroad companies such as Union Pacific and CSX embargoed shipments of several materials, which the Wall Street Journal notes are often used in manufacturing and pharmaceutical products.

If you know it’s going to take four to five days for a freight train to get the goods you’re shipping from New Hampshire to California, you don’t want your cargo stuck on said freight train in the middle of Kansas on day two or three. Knowing that a potential shutdown is on the horizon, some companies and shippers are not going to load their cargo on that train today.

The first hours or days of the actual strike are the second phase. Steenhoek compared the situation to thinking about your pantry. If, for some reason, you can’t make it to the grocery store for a few extra days, hopefully you’re stocked up enough that it’s not the end of the world. But as the days go by, the situation becomes increasingly serious. If you’re an egg farmer, you’ve probably stored enough soybeans to feed your chickens for a while.

Still, given that some industries are already suffering from supply chain issues and inflation is already an issue, a short strike would be disruptive. The degree of disruption depends on the industry.

Even if the strike ends quickly, transport and rail are not as easy to turn on and off as a light switch. “It takes a while to get all this up and running and back to full speed,” Steenhoek said.

Companies can try to seek out alternative routes, but switching to trucks and barges is a demanding and complicated process. Also, the trucking industry suffers from a shortage of its own.

The scary scenario here is if we reach phase three, where a strike lasts weeks or longer, costing the economy something like $2 billion a day. One can imagine a scenario where car factories have to shut down production because their finished vehicles cannot be shipped out and are piling up. This would mean that the movement of important goods, such as soya and wheat, could be severely restricted. “A rail shutdown would result in devastating consequences for national and global food security,” the National Association of Wheat Prowers said in an emailed statement.

Premack drew a comparison with the delays and bottlenecks at West Coast ports in recent months – as well as a rather scary difference. “It’s not like, ‘Oh, no, my Peloton isn’t coming.’ It’s like, ‘My bread isn’t going to get made because it doesn’t move grain or flour,'” she said. “It’s a little scarier. We can survive without bringing in our new couch, but we can’t really survive without purified water.” She added that rail moves e-commerce shipments, but it’s usually earlier in the process than what shows up on your doorstep tomorrow.

What Congress Can Do

Under the Railway Labor Act, Congress has the ability to block or end a railroad strike. Since 1963, it has passed legislation more than 10 times to intervene in railroad disputes.

So far, however, Democratic leaders have been reluctant to commit to doing so, while Republicans have been eager to pressure workers to accept the terms set by the president’s emergency relief administration.

If Congress were to intervene, there are a few avenues lawmakers could take. They could demand that the unions and carriers accept the president’s emergency management terms, which included a wage increase but no recognition of other demands such as sick leave. They can extend the existing cooling-off period so that both sides have more time to negotiate. Or they can entrust the talks to independent arbitrators who will be tasked with finding a solution.

For now, congressional Democrats are waiting to see what might come of the talks the Labor Department is leading between unions and railroad companies on Wednesday before laying out a policy response. “Secretary Walsh continues to lead discussions at the Department of Labor between the rail companies and the unions,” a Labor spokesperson told Vox on Wednesday afternoon. “The parties are negotiating in good faith and have committed to staying at the table today.”

Several lawmakers, including Senate Majority Leader Chuck Schumer and House Speaker Nancy Pelosi have expressed hope that the two sides will be able to work things out and prevent the need for any legal response at this point. “I’d rather see negotiations prevail, so there’s no need for action by Congress,” Pelosi said at a news conference Wednesday. After all, Democrats are in a difficult position: They may well be blamed by the public if a strike has serious economic consequences, but any action they take to stifle workers will betray their purported support for unions, a key party constituency.

Senate Republicans, meanwhile, have urged Congress to pass a resolution that would require unions to accept the president’s emergency board deal that the Biden administration previously offered, an outcome that business interests and carriers are also pushing for. Later Richard Burr (R-NC) and Roger Wicker (R-MS) earlier this week introduced a measure that would effectively put the PEB conditions in place if passed, ignoring other concerns that workers have expressed. They tried to force a floor vote on the measure Wednesday, though it was blocked by Sanders.

Instead of enacting the PEB agreement, some Democrats are debating proposals that would take into account other union demands, according to The Hill. “If the Burr-Wicker resolution passed, railroad workers would be entitled to zero paid sick days and zero unpaid sick days,” Sanders said. – It is clearly unacceptable.

It has been 30 years since there was a railway strike. Less than 24 hours after the strike began in 1991, Congress approved a bipartisan resolution, establishing a new board that had 65 days to resolve any outstanding differences the unions and carriers had.

It’s still not clear if they would do the same this time around — or if things will even get that far.

If Congress were forced to act, it could well be a showdown between Republican and Democratic approaches to the issue, since 10 GOP senators would be needed for any resolution to pass.

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