Supply chain problems could get much, much worse in September if 115,000 railroad workers go on strike. The workers have gone more than two years without a contract, dealing with one cut after another, including job cuts that have led to serious understaffing. The rail companies have been very profitable as they’ve put these and other cuts into place, but they’ve continued to squeeze workers—and they’re making moves that could harm a lot of people beyond their own workers. In fact, many observers say the rail companies have contributed to supply chain problems as they’ve tried to cut costs to the bone.
The rail industry has consolidated enormously over a period of decades, David Dayen reported at The American Prospect, and the companies have “intentionally gutted their own spare capacity, which meant the surge in goods production during the pandemic has produced skyrocketing freight prices—and then record profits—instead of more deliveries.” Now two of the remaining seven Class I railroads in the country want to merge, which would worsen the situation.
Rep. Katie Porter, Rep. Raja Krishnamoorthi, and Sen. Dick Durbin have expressed varying levels of concern about that merger, with Porter saying it posed “a grave threat to competition in the domestic rail industry” that would result in “job losses, harm to other industries reliant on railroads, and more fragility in American supply chain infrastructure.”
The merger could also worsen problems already being created by the railroad companies running longer trains to cut labor costs. “Trains can be up to three miles long, which many tracks were not designed to handle,” Dayen reported. “Such enormous trains can not only block intersections but also crowd out passenger rail that often moves along the same tracks. Metra, the Chicago commuter rail system, has estimated that the Canadian Pacific/Kansas City Southern merger could cause a ‘1,200 percent increase in delays.’”
Greedy companies don’t just hurt their own workers. But the railroad workers have faced grueling work hours and extended periods on call in which they can be called in to work at any time, and the rail companies have offered just a 3% raise during contract negotiations.
“The truth is the three biggest railroads at the negotiating table don’t want to part with any of their record profits, nor do they wish to reward the workers who have busted their asses for the last three years without a raise, to get them those record profits,” Jeremy Ferguson, president of one of the rail unions, said in a statement.
Earlier in the month, the workers voted to authorize a strike with more than 99% support, but for railroad workers specifically, the path to striking is a complicated one. The strike vote came after mediation failed, leading to a legally mandated 30-day “cooling off” period. Late in that 30 days, after the strike authorization, President Joe Biden created a Presidential Emergency Board, which has 30 days to come up with recommendations to settle the dispute and avert a strike. After that 30 days is up in mid-August, there’s another 30-day cooling off period. After that, if the workers don’t have a contract they can accept, the Railway Labor Act allows them to strike—if Congress doesn’t step in.
The authors of the Railway Labor Act really wanted to make it difficult for these workers to strike, in other words. But a 99% strike authorization vote shows just how fired up the workers are.
The companies that ship goods via rail also point to the rail companies as responsible for delays and supply chain issues.
“When [National Grain and Feed Association] members cannot load a train because a crew is out with COVID, they will be charged demurrage by the rail line, and if they cannot unload a train due to COVID, they will pay demurrage and face the risk of penalties or loss of contracts with their own customer,” Mike Seyfert, president and CEO of the National Grain and Feed Association, said in April testimony to the Surface Transportation Board.
“However, if the railroad cannot deliver or move a train due to COVID—or any other reason—NGFA members cannot charge and are not entitled to any demurrage from the railroad,” Seyfert continued.
Greg Regan, president of the Transportation Trades Department of the AFL-CIO, pointed directly to job cuts in testimony at the same hearing, saying, “Despite the claims made by the Class I carriers, it is simply impossible to provide an equivalent level of service after eliminating a third of the workforce in less than a decade. These cuts have guaranteed that adequate crews will be unavailable, that equipment and infrastructure will not be adequately maintained and that critical inspections will be deferred. TTD categorically rejects the absurd claim that the hard work of those 45,000 employees had no demonstrable impact on the quality of service offered by Class I railroads.
“While the elimination of jobs across all crafts of the freight rail network has undoubtedly contributed to operational breakdowns and service degradation, TTD notes that a number of shippers have specifically cited a lack of available crews as a major component of reduced service quality,” Regan added. “Railroads have long engaged in a concerted effort to cut headcount to the absolute bone. They have created a degraded safety culture that has driven away long-time employees, and in many cases second or third-generation railroaders, who have chosen to walk away from what were 'jobs for life' in previous generations.”
The Biden administration can start fixing these problems by blocking the Canadian Pacific/Kansas City Southern merger. But if the companies won’t come to a fair deal with the workers and their unions, the administration and Congress should allow a strike to go forward so the workers can have their say, rather than protecting the companies from the consequences of their cost-cutting and abuses.