Rail Strike Threat Adds to Pressure on Congress to Intervene (1)

Several powerful industry groups are urging Congress to step in and prevent a rail strike ahead of the holiday season if railway unions don’t agree to a labor pact.

The nation’s two largest railway unions held conflicting votes — with the results announced Monday — on the labor deal, increasing the threat of a strike next month. Congress will need to step in if unions and railroads fail to reach an agreement before the cooling-off period ends in December, retail, agriculture, and consumer brands trade groups said Monday.

Members of Congress will have to decide what to do when they return from their Thanksgiving break. Democrats have been wary of intervening in labor disputes, but industries are warning of economic consequences if they can’t move goods ahead of the holidays.

“A rail strike will create greater inflationary pressures and will threaten business resiliency,” Matthew Shay, president and CEO of the National Retail Federation, said Monday. “Congress must intervene immediately to avoid a rail strike and a catastrophic shutdown of the freight rail system.”

Photographer: Bing Guan/Bloomberg via Getty Images

Travelers wait for an Amtrak Pacific Surfliner train arriving at LA Union Station in Los Angeles, Calif., in September 2022.

Big Rail Unions Split on Labor Deal, Raising Odds of Strike

The US Chamber of Commerce used the rejected vote to urge Congress to act, arguing the issue should be lawmakers’ top priority. The Consumer Brands Association, which represents packaged goods makers, and the National Grain and Feed Association also said Monday they want lawmakers to prevent a strike through legislative action.

“A voluntary agreement between the railroads and 12 unions remains a best-case scenario, but an increasingly unlikely one,” Tom Madrecki, vice president of supply chain and logistics at the brands association, wrote to lawmakers. “Playing a game of chicken with consumers’ access to everyday essential products is a risky proposition.”

The holidays make the situation particularly fraught. Jess Dankert, vice president of supply chain at the Retail Industry Leaders Association, said disruption in rail service would “pose a significant challenge to getting items like perishable food products and e-commerce shipments delivered on time.”

Balancing Act

Congress can pass legislation to keep the railroads operating under the Railway Labor Act. Lawmakers have previously intervened in labor negotiations. But the issue puts Democrats in a difficult position: balancing the economic impact of a potential strike with their support for labor.

When the threat of strike heightened in September, before the Biden administration brokered a tentative deal, some Republican senators sought unanimous consent for a resolution (S. J. Res. 61) to force an agreement. Sen. Bernie Sanders (I-Vt.) objected, arguing freight rail workers need better sick leave — a position other Democrats backed.

Rail Shutdown Is Unacceptable, White House Official Says

“I’m hoping the railroads will get reasonable, this is the 21st Century and to have skilled workers being denied sick leave, even unpaid sick leave, is unconscionable,” Rep. Peter DeFazio (D-Ore.), chair of the House Transportation and Infrastructure Committee, said in an emailed statement Monday. “Freight rail companies are watching their record profits, ‘Oh my God, if we give people paid sick leave our stock might drop by a dollar.’ Give me a break.”

House Agriculture Committee Chair David Scott (D-Ga.) remains hopeful a strike can be avoided without the need for Congress to intervene and reiterated support for union workers, a spokesperson said in an email. The committee has been hearing from agriculture businesses and is working with the transportation panel, spokesperson Detrick Manning said.

Republicans could move to bring a similar resolution again when Congress returns.

“I thought that was the end of it. It obviously wasn’t the end of it,” Sen. Chuck Grassley (R-Iowa) said on a press call Tuesday, referring to the unions avoiding a strike threat in September. “Whenever this cooling off period ends and there’s not an agreement, Congress should act like we did in the 1990s.”

Sen. Roger Wicker (R-Miss.), ranking member on the Senate Commerce, Science and Transportation Committee, agreed last week that Congress would step in if it came to a strike.

“The last thing we want to do is add another huge wrecking ball to an economy that’s already in recession,” Wicker said in a hallway interview.

With assistance from Maeve Sheehey

To contact the reporter on this story: Lillianna Byington in Washington at lbyington@bloombergindustry.com

To contact the editors responsible for this story: Anna Yukhananov at ayukhananov@bloombergindustry.com; Angela Greiling Keane at agreilingkeane@bloombergindustry.com; Loren Duggan at lduggan@bgov.com