Association of American Railroads makes its case for rail labor deals to be ratified

As six of the 12 railroad labor unions have ratified new contracts with United States Class I freight railroads, the Washington, D.C.-based Association of American Railroads (AAR) continues to make its case for continued progress.

AAR explained that these negotiations between the freight rail sector and its employees address quality of life issues, including historic pay raises and maintain premium healthcare plans, adding it has reiterated its support for rail employees and the Presidential Emergency Board’s (PEB) recommendations.

As previously reported, those agreements followed the announcement of the appointment of the PEB by President Biden focused on reaching a new deal. The August 16 release of the PEB’s recommendations, which include a 24% wage increase over the five-year period from 2020 through 2024, coupled with a 14.1% wage increase. It also includes an immediate payout on average of $11,000 upon ratification and $5,000 in performance bonuses, total average annual pay reaching $110,000, AAR said.

And it also stated that through the PEB’s recommendations, railroad employees would maintain some of the best healthcare plans in the U.S., as well as receive an additional day of personal time off and also continue to have multiple options for time off, adding that for those railroad employees operating trains the agreements include what it called enhanced abilities to schedule time off and local agreements to be finalized following ratification of the national agreement, which will augment quality of life and schedule predictability.

“Rarely in modern history has the U.S. freight rail industry been such a focus of national attention,” said AAR president and CEO Ian Jefferies in a statement. “Thankfully, there are some foundational truths that observers should note, namely that railroad jobs are among the most critical in the country—and are justly compensated accordingly. Ratification of new contracts molded by the Biden administration and endorsed by labor leaders at the bargaining table will only improve the quality and benefits of railroading.”

The AAR’s top executive said that railroads are pleased to see that the PEB’s recommendations focused on issues related to railroad employees taking time off, coupled with the U.S. freight rail industry offering leave programs allowing employees to receive sickness benefits that can kick in after four days of absences and are able to last up to 52 weeks.

“The negotiating parties deserve credit for their ability to deliver results for their members and constituents,” he said. “No contract is going to give a single side all it seeks, but with agreements based on the PEB recommendations, implementation of the new contracts has begun in earnest with those unions who have ratified. We look forward to following suit with those still out for ratification right now.”

As of press time, six railroad labor unions have ratified the tentative agreements, based on the recommendations made by the PEB, along with five having reached a tentative agreement pending ratification, and one not ratified, with status quo maintained.

“Six of the twelve unions have ratified, and this must not be discounted,” Ted Greener, AAR’s AVP, Public Affairs, told LM. “Their vote matters and affirms these are good deals. Leadership and clear communication to voting members about the undeniably historic gains provided in these deals can only help in successfully ending this round of bargaining.”

As for what U.S. freight railroads can do to work with their shipper customers in an efficient and effective way in the event of any type of labor stoppage, or strike, Greener emphasized that the parties are focused on ratification, as railroads and their customers, and industry groups continue to be communicating and in touch to ensure they are aware of the process.

“In September, as a shutdown became more of a possibility, communication increased and would if needed again in the future,” he said. “Working together is paramount. As is listening. The railroads understand the importance of the sticking point around leave policies. The fact that the deals enable parties to further address these in the future at the local level is important.”

Tony Hatch, president of New York-based ABH Consulting, told LM that railroad labor union leadership strongly want these agreements approved.

“They'll look bad if it's not approved, and they want to keep their jobs,” he said. “That's a really important thing to consider. Just think of it like any other elected official; they want to be doing what they are doing and if their constituents feel like they did not do right by them, the leadership is gone. There are some other things that could happen. One is the BMWED union members [the lone union to reject the PEB’s recommendations] will go on strike and the industry will follow, because nobody will cross the picket line. They are very good about that. Also, the T&E (train and equipment) unions, BLET and SMART-TD ratification dates are not until November 17. Or the other [unions] could reject the contract…and there will be more deadlines and clocks.”

What’s more, Hatch said that if a strike were to occur, there would likely be a subsequent impact on many other industries that run on a just-in-time basis, like automotive and steel, with workers in those sectors being laid off, albeit not likely for a long time. And he added that when a deal is ultimately reached, it is likely to be very close to the PEB’s recommendations.

“There will be some people like Bernie Sanders, who want to interfere,” he said. “But will Congress, really, in an election year, want to interfere on behalf of rail workers in a way that's more complicated? They don't really understand all the rules, in a way that could potentially be hurting other workers and hurting the economy. Do they want to be viewed as hurting the economy. Behold the unions when they go back to the votes. A strike like this could very well last only one day or even less. All the things labor is saying and the AAR’s report saying that a strike could cost the economy $2 billion a day is to make sure Congress does its job, which is to basically do nothing and rubber stamp the PEB’s recommendations.”