MONEY

Rail workers strike: Will other unions seek what the railroad unions are asking for?

Unions representing workers in other industries will undoubtedly take notice of the tentative deal reached Thursday by the nation’s rail unions.

The deal, if it passes, will sharply increase worker pay and increase sick leave. 

But other workers may not be able to exert the same pressure on employers as the people who operate the trains and tracks that carry 30% of the nation’s freight and hundreds of thousands of commuters each day, some experts say.

“Does this really inform other negotiations? I don’t really think so,'' says Scott Lincicome, director of general economics and trade for the Libertarian-leaning Cato Institute, who added that the rail industry is "kind of its own animal,'' with statutes that dictate how the government can intervene  

"It’s not analogous because rail has a lot more leverage,'' says Carl Van Horn, Distinguished Professor of Public Policy and Director of the John J. Heldrich Center for Workforce Development at Rutgers University. "A single airline is not going to cripple the whole economy'' if its workers go on strike.

Other unions tout the deal

Union officials representing workers outside the rail industry touted the tentative agreement as an example of what happens when workers join together.   

"Transportation workers are essential but have been treated as disposable,'' tweeted Mary Kay Henry, president of the Service Employees International Union (SEIU). "Grateful for the Biden admin’s mediation to broker a tentative agreement giving rail workers a better deal. This is the power of workers coming together in their unions.''

The agreement would give rail workers an immediate pay bump of 14%, and 24% over the next five years, $5,000 yearly bonuses and sick leave for freight rail workers for the first time.

“Collective bargaining works,'' Teamsters General President Sean M. O’Brien said in a statement.

The Brotherhood of Locomotive Engineers and Trainmen and the Brotherhood of Maintenance of Way Employees Division are part of the The International Brotherhood of Teamsters.

O'Brien worked with President Joe Biden and Labor Secretary Marty Walsh to avert a strike, the union said.

Rail strike could have cost billions:Looming railroad strike could be 'economic disaster,' impacting consumers from all angles

Amtrak restores service:Amtrak working to restore canceled trips after railroad strike averted with freight deal

Other unions may want to go for similar boosts in pay and benefits.

 "Does it have a psychological impact on unions and workers? Yeah, it can have that effect,'' Van Horn says. "It can embolden union leaders or their membership to say, 'Why don't we do try to do that?''

Are railroad unions different?  

But because of the rail industry's historic importance to the nation's economy and defense, other industry unions may not have the same sway, experts say.

If the nation's rail system ground to a halt because of a strike, the nation's economic losses could have amounted to more than $2 billion a day, according to the Association of American Railroads.

Rail strike tentatively averted

Many commuters would also have needed to find another way to work, since half of commuter train systems travel at least partly on rails or passages owned by freight railroads. Those rail companies own and operate almost 97% of the track traveled by Amtrak trains.

"It's important to understand rail unions have a different arrangement than many other unions, and this goes back to an earlier era of American history when we were totally dependent on the railroads to move goods around,'' Van Horn says.

Though the trucking industry also ferries a good portion of goods, there are statutes that dictate negotiations regarding rail service to keep trains moving, says Lincicome. That helped create the timeline that led to the appointment of a Presidential Emergency Board by Biden to make recommendations and arbitrate a deal.

John Deere workers end strike:John Deere employees approve third contract proposal, ending five-week strike

Chipotle union:Chipotle restaurant in Michigan becomes the first in chain to unionize

Despite the significant pay increase and other benefits, some union leadership was negotiating for workers to get 15 sick days, but the tentative deal only offers one. Not achieving that major ask also may make other unions less likely to see the agreement as a major victory.

"Given ... the union doesn't appear to have won a major victory on this issue, it doesn't strike me it's going to have a lot of influence elsewhere,'' Lincicome says.

Will consumers have to pay more? 

The costs for retailers and other businesses to transport goods by train may go up if the deal raising rail workers' wages and benefits gets final approval, says Lincicome.  

Most freight is transported by trucks or trains.

"Trucks are pretty maxed out, so yes, I imagine the rail industry will take this and pass it on,'' he says. "The reality is that farmers and others who need transport, particularly of heavy bulky stuff over long distances, don't have a lot of other options.''

But that doesn't necessarily mean consumers will have to pay significantly more at the supermarket. 

"To the extent that consumers don’t have any other options, then they'll be on the hook for any higher costs,’’ he says. "(But) there's always a question of what consumers will bear, (and) what alternatives might exist ... Somebody has to pay for it and it’s very hard to say exactly where the buck stops.’’  

Van Horn said that there might be a slight impact on prices, but consumers shouldn't expect to see a spike in what they have to pay equal to the raises rail workers receive.

"It's certainly not going to be reflected in one-to-one increases,'' Van Horn says.

And as long as consumers have alternatives, businesses will likely tread lightly when it comes to price increases to keep them from shifting to a competitor. 

"Sometimes there’s a narrative that, 'Oh, I’m going to have to pay 24% more for fill in the blank,' " because that's the wage increase that's been proposed, Van Horn said. "It doesn’t work that way. The economy is much more complicated than that.’’