WASHINGTON — President Joe Biden’s administration secured a tentative deal on Thursday after marathon talks to avert a railway labor strike that could have wreaked havoc on the US economy, giving him a victory ahead of November’s midterm elections.
A deal between major US railroads and unions representing tens of thousands of workers was reached after about 20 hours of talks brokered by Labor Secretary Marty Walsh. Unions will now vote on the deal, which the Democratic president called a “big win for America.”
Delivering remarks in the White House Rose Garden, Biden thanked the two sides and promised more worker-company agreements in the future.
“I’m optimistic that we can do this in other fields as well,” Biden said. “Unions and management can work together for the benefit of everyone.”
Even if union votes fail, the deal includes language removing for several weeks the potential of a work stoppage that could have started as soon as a minute after midnight on Friday, a person familiar with the negotiations said. November’s elections will determine whether Democrats retain their narrow control of Congress. Republican control would likely block much of Biden’s legislative agenda for the next two years of his presidency.
Walsh held the contract talks in Washington between unions representing 115,000 workers and railroads including Union Pacific, BNSF, CSX, Norfolk Southern and Kansas City Southern.
If they accept the deal that was announced at about 5 am (0900 GMT), workers whose pay had been frozen would win double-digit increases and would be allowed to seek certain types of medical care without fear of being punished, union leaders said. The agreement also includes an immediate 14.1% wage rise, the railroads said.
A rail shutdown could have frozen almost 30% of US cargo shipments by weight, stoked inflation, cost the American economy as much as $2 billion per day and unleashed a cascade of transport woes affecting US energy, agriculture, manufacturing, healthcare and retail sectors.
Railroad shares pared initial pre-market gains after mixed economic data, with Union Pacific up 2% in midday trading and CSX down 2.3%.
Oil futures fell about 4% to a one-week low on the deal amid expectations for weaker global demand.
The impact of a shutdown would have stretched beyond US borders because trains link the United States to Canada and Mexico and provide vital connections to massive ships that ferry goods from around the globe.
Negotiations on an agreement had stretched for more than two years, leading Biden to appoint an emergency board in July to help break the impasse.
Amtrak, which runs US passenger rail, said it will resume normal service on Friday after canceling long-distance trains in anticipation of a strike.
National Retail Federation CEO Matthew Shay thanked Biden’s administration for intervening and said his group is “relieved and cautiously optimistic.” Also praising the deal, Emily Skor, CEO of the biofuel trade group Growth Energy, noted that much of the country’s ethanol moves by rail .
Before the deal’s announcement, freight railroads had halted transportation of hazardous goods and refrigerated food that use rail and at least one other mode of transport, hoping to prevent cargo from being stranded in unsafe locations.
Congressional leaders had threatened to pass legislation imposing a resolution on the railroads and unions if the negotiations were not successful.
US House Speaker Nancy Pelosi praised the tentative agreement and said that Congress was ready to act.
“Thankfully this action may not be necessary,” Pelosi said in a statement.
The railroad industry slashed almost 30% of its workforce over the past six years, cutting pay and other costs as companies increased profits, stock buybacks and dividends for investors.
Profits at BNSF, owned by billionaire Warren Buffett’s Berkshire Hathaway, rose 9.8% in the quarter ending June 30 to $1.66 billion.
The number of US railway workers has dropped from more than 600,000 in 1970 to about 150,000 in 2022, according to the Bureau of Labor Statistics, due technology and cost-cutting. The result is that many industry workers are on call at all hours, waiting to respond at short notice to work for days at a time.
Thursday’s deal follows some earlier recommendations of the president’s emergency mediators. It includes a 24% percent wage increase over a five-year period from 2020 through 2024 as well$1,000 lump sum payments in each of the next five years.
Biden, who has criticized companies for raking in “excessive” profits, is not yet out of the woods when it comes to supply-chain labor issues. Some 22,000 union workers at 29 West Coast ports that handle almost 40% of US imports are also in high-stakes labor contract negotiations.
(Reporting by Trevor Hunnicutt in Washington; Additional reporting by Lisa Baertlein in Los Angeles, Steve Holland, David Shepardson and Susan Heavey in Washington, Stephanie Kelly in New York, Jahnavi Nidumolu, Aishwarya Nair, Bansari Mayur Kamdar and Kannaki Deka in Bengaluru; Writing by Rami Ayyub; Editing by Will Dunham, Heather Timmons and Catherine Evans)