Rail Strike Could 'Bring the U.S. Economy to Its Knees'

Man, I'm sure glad that supply chain mess is just about over. That was miserable. I mean, I know things are not completely back to normal yet, but they're a lot better, right?.

Wait, what did you say? The supply chain is on the verge of being disrupted again? And this time it would be a lot worse? Huh? That's right. A rail strike could be less than two weeks away.

And if it occurs, economists say the resulting supply chain bottlenecks will create an even greater problem than what we recently experienced due to the pandemic. That's when workers in nearly every industry were sickened, slowing everything down.

Supply chain issues could abound like never before if the 13 rail workers unions call for a strike and Congress does not act to stop it. CNN Business says a strike "would create massive problems for the U.S. economy… triggering widespread bottlenecks and shortages."

Strike Could Cost $2 Billion Per Day

As of this writing, it's still a "potential" strike. But if it does occur, "any prolonged strike could send prices for goods from gasoline to food to cars soaring. 

"In addition, factories could be forced to shut temporarily due to parts shortages. Products that consumers want to buy could be missing from store shelves."

Steve Forbes is chairman and Editor-in-Chief of Forbes Media. He says such a strike would "bring the economy to its knees" and accelerate inflation. It's estimated the cost to the U.S. economy would be about $2 billion per day.

Recently a tentative agreement between freight railroads and their labor unions averted a strike. But workers have to approve that deal and there's no guarantee they will. In fact, so far three of the unions have voted to reject it.

Among the unions rejecting the deal are those representing 23,000 workers who maintain the physical infrastructure for railroads, 7,000 signalers, and another 300 who repair and rebuild diesel locomotives and railroad tracks.

All for One and One for All

Seven of the 13 unions have approved the deal. Including the one representing locomotive machinists, roadway mechanics and facility maintenance personnel.

But a strike could occur unless all 13 unions ratify the deal. If one union strikes, all 13 will honor picket lines. The unions represent approximately 110,000 workers at railroads including the "big four" of Union Pacific, BNSF, Norfolk Southern and Kansas City Southern.

And that strike could freeze nearly 30% of U.S. cargo shipments by weight and make inflation even worse. Sectors negatively impacted would include energy, agriculture, manufacturing, healthcare and retail. In other words, just about everything.

This is why more than 300 corporate associations called on President Joe Biden to prevent a rail strike. Including the American Farm Bureau Federation, Alliance for Automotive Innovation, American Bakers Association, National Retail Federation and the U.S. Chamber of Commerce.

Forbes believes a strike would be unwarranted. He says rail workers already enjoy generous pay, time off and sick leave policies. He adds that labor union leaders refuse to take responsibility for the deals they negotiated. 

Congress Could Order Employees Back to Work

Now, there is a way a strike could be averted. Assuming all 13 unions don't reach an agreement and workers decide to strike, Congress could act quickly to force them to return to work during a cooling-off period. 

This might be something both Republicans and Democrats agree on doing, although Democrats would be more hesitant. 

Marty Walsh is the U.S. Secretary of Labor. He said, "Failing new negotiated agreements, Congress would have to impose a contract on the unions as a way to keep union members on the job.

"If for some reason (one of the unions) doesn't get to an agreement with the companies, then… Congress will have to take action to avert a strike in our country."

Rail Workers Want Bigger Piece of the Pie 

Among those groups encouraging railroad workers to strike is Railroad Workers United. It's a caucus with members in all 13 unions.

The last time railroad workers went on strike was 1992. Congress promptly sent them back to work in order to avoid supply chain problems.

Back then, the railroad workforce was about 500,000 strong. Now it's a much smaller group. Some of these workers claim the brokered deal will barely keep pace with inflation.

They and their unions say the railroad companies have been enjoying record profits and that a new deal would cost those companies only one penny of each earnings dollar.

Boycott Could Follow Work Order

The reason Congress can order railroad employees back to work is they are not covered by the 1935 National Labor Relations Act.

The Railway Labor Act includes language limiting their ability to strike. So, Congress can either impose a contract on them or force them to continue working under their current contract.

The recourse for railway workers would be to engage in boycotting companies that called on the Biden Administration and Congress to act as strikebreakers. In addition, Amtrak workers could stage what are known as sympathy strikes.

Another option is a West Coast dock strike or a general transportation strike. This could involve the International Longshore and Warehouse Union, as well as the Association of Flight Attendants-CWA.

Time will tell how this all shakes out. But it's one more factor illustrating how fragile our supply chain is. The time is now to acquire what you need for your survival.     

Leave a comment

*Required Fields