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Railroads, Unions Weigh U.S. Settlement Plan to Avert Strike

Shawn Riley uncouples rail cars at the Union Pacific J.R. Davis Yard in Roseville, California. Photographer: Ken James/Bloomberg
Shawn Riley uncouples rail cars at the Union Pacific J.R. Davis Yard in Roseville, California. Photographer: Ken James/Bloomberg

Nov. 7 (Bloomberg) -- U.S. railroads would boost pay for most union workers by 18.6 percent over six years under a recommendation from the board appointed by President Barack Obama to help the industry avert a strike.

That figure, which was submitted to Obama late on Nov. 5, compares with the 19 percent increase over five years sought by unions and the offer of 17 percent over six years from carriers led by Union Pacific Corp. and Burlington Northern Santa Fe, owned by Warren Buffett’s Berkshire Hathaway Inc.

The plan is aimed at preventing a walkout that the Association of American Railroads said would cost the U.S. economy as much as $2 billion a day. More than 90 percent of railroad workers belong to a union, according to the AAR, the industry’s Washington-based trade group.

“While we recognize that this proposed resolution is by no means the only reasonable resolution possible, we believe that it is fair and appropriate,” the five-member presidential board wrote in the report it submitted to Obama.

The two sides now have 30 days to consider the board’s suggestions. If they don’t reach agreement by Dec. 6, the workers are permitted to strike and the railroads can lock them out. The National Railway Labor Act spells out the timetable for the steps that must be followed in a labor dispute.

The largest U.S. freight carriers began talks on wages, work rules and health benefits with 13 unions representing more than 132,000 employees almost two years ago.

Initial Settlement

In April, the United Transportation Union and its yardmasters division, with 30 percent of those workers, reached a five-year agreement with the carriers that includes a 17 percent raise and retains the $200 per-month cap on employee health-care contributions. The union ratified the deal in September.

The value of the UTU’s raise plus other wage-related concessions made by the carriers that don’t apply to the other unions is comparable to the 18.6 percent raise the presidential board recommended for other labor groups, according to Frank Wilner, a spokesman for the union.

The railroads remain at odds with 11 unions representing the remaining 70 percent of workers, including the Brotherhood of Locomotive Engineers and Trainmen, a unit of the International Brotherhood of Teamsters.

‘Jury Still Out’

“I am hopeful that the carriers will recognize that more is needed to achieve a settlement that is satisfactory to both sides,” Dennis R. Pierce, national president of the Brotherhood of Locomotive Engineers and Trainmen, said today in an e-mailed statement. He noted that 97 percent of the union’s members voted in October to strike if necessary.

“The jury is still out on whether or not the board’s recommendations will move the parties to such a voluntary settlement,” Pierce said.

Obama appointed the board Oct. 6 to offer recommendations for resolving the stand-off, citing the National Mediation Board as saying that the dispute threatened “substantially to interrupt” interstate commerce.

‘Appropriate Pattern’

“We’re pleased that the board, for the most part, agreed that the railroads’ settlement with the United Transportation Union, the industry’s largest union, was an appropriate pattern for settlements with the remaining unions,” the National Railway Labor Conference, the Washington-based organization represents the railroads in national bargaining, said in an e-mailed statement.

The organization said it had concerns about some of the board recommendations, without elaborating.

Congress could also intervene and force a settlement or extend the negotiating period, said Joanna Moorhead, general counsel for the National Railway Labor Conference.

U.S. railroad workers last went on strike in 1992, for two days, before Congress stepped in, Moorhead said. In 1994, Congress acted before the 30-day negotiating deadline expired to give the parties more bargaining time, allowing them to reach a deal, Moorhead said.

To contact the reporter on this story: Lisa Caruso in Washington at lcaruso7@bloomberg.net

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net

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