A Probable Railroad Strike Is Guaranteed to Derail the Economy in the Lead-up to the Holidays

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    A major rail strike across the country is seen as becoming more likely since four unions refused to sign a tentative agreement reached with railroad companies.

    In September, Secretary of Labor Marty Walsh brokered a tentative agreement between the unions representing rail workers and rail companies, while President Joe Biden and Transportation Secretary Pete Buttigieg were out of town. The unions' concerns were centered around sick time and schedules, and Walsh's deal was able to avert strikes that had the potential for sweeping effects on the American economy. However, the arrangement is now in ruins, and the clock has begun to run out of time as a strike on December 9 seems imminent.

    On Monday, the members of the SMART Transportation Division, the largest rail union that participated in negotiations in September, rejected the deal, Bloomberg Law‘s Ian Kullgren reported. Three other unions also voted against the proposed agreement, while seven unions ratified the agreement's terms.

    If the railroad firms and unions do not reach a deal, Congress could “intervene and impose contract terms on railroad workers,” similar to what occurred during the rail strike of 1992, the Associated Press reported. If no solution can be found, a strike will start early next month. In this scenario, American consumers would suffer from a wide-ranging economic crisis, and Congressional intervention would become more likely.

    Jared Cassity, the alternate legislative director of the SMART Transportation Division, noted that he's tapered expectations about the rail companies' willingness to engage with unions. He claimed that the possibility of Congress becoming involved provides the carriers with the leverage to avoid concessions. Cassity said that the strike was likely.

    “I'm not optimistic about the railroads' willingness to negotiate for more,” Cassity declared. “I’m hopeful, but really not that optimistic. And there’s really nothing that obligates them to give more at this point.”

    He concluded, “We're at the end of the Railway Labor Act, and ultimately the end is a lockout or strike. That’s where we are.”

    In a similar vein to Cassity's comments, the Brotherhood of Locomotive Engineers and Trainmen President Dennis Pearce stated that “Congress staying out of it would obviously giving [sic] unions leverage,” as CNN Business noted.

    Biden and the other union-friendly Democrats in Congress have to deal with a political situation. A prolonged strike could result in negative economic consequences for Americans who are suffering the brunt of record-breaking inflation, which hasn't been seen in the last few years. If Congress decides to intervene, the provisions of its bill could cause a backlash from the very unionized workers whom members of Congress claim to support.

    On Monday, a White House official stated that a strike would be “unacceptable,” according to Kullgren: “As the President has said from the beginning, a shutdown is unacceptable because of the harm it would inflict on jobs, families, farms, businesses, and communities across the country. A majority of unions have voted to ratify the tentative agreement, and the best option is still for the parties to resolve this themselves.”

    Railroad companies estimate that $2 billion a day would be sucked out of the American economy in the event of a strike, as the Associated Press reported:

    “Railroads haul about 40 percent of the nation’s freight each year. The railroads estimated that a rail strike would cost the economy $2 billion a day in a report issued earlier this fall. Another recent report put together by a chemical industry trade group projected that if a strike drags on for a month, some 700,000 jobs would be lost as manufacturers who rely on railroads shut down, prices of nearly everything would increase even more, and the economy could be thrust into a recession. And although some businesses would try to shift shipments over to trucks, there aren’t nearly enough of them available. The Association of American Railroads trade group estimated that 467,000 additional trucks a day would be needed to handle everything railroads deliver.”

    The ability to transport critical chemical substances, packaged food for humans and livestock, and retail products will be severely impacted as families prepare to celebrate Christmas and Hanukkah.

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