The government of President Joe Biden reached a provisional agreement to avoid a rail strike that could have wreaked serious havoc on the economy. At the moment, the unions have not yet ratified the agreement, less than two months before the mid-term elections in the United States.

The administration of US President Joe Biden dodged a rail strike. This Thursday, September 15, the White House reported that a “tentative agreement” was reached to avoid a freight train strike in the United States.

The deal between major US railroads and unions representing tens of thousands of workers was reached after a marathon 20-hour bargaining session at the Labor Department and came just a day before the strike threat.

The president of the North American country celebrated the provisional agreement and assured that “it is the confirmation” that “the unions and the management can work together for the benefit of all”.

Now, the unions will have to convince their members to vote in favor of the agreement, which should be finalized at the negotiating table in the coming weeks.

What does the agreement include?

At the center of the dispute was the negotiation of a new contract, in which the workers asked for a salary increase and better working conditions.

Under this proposal, railway employees “will have a better salary”, since their remuneration will be increased by 24% percent during a period of five years, contemplated from 2020 to 2024, as well as bonuses of 1,000 in the next five years.

Additionally, railroad workers will now be able to take unpaid days off to attend medical appointments without penalty.

Previously, workers lost points on the BNSF and Union Pacific railroad attendance systems, and could be penalized if they lost all of their points.

What is Joe Biden avoiding with this deal?

A rail strike could have frozen nearly 30% of US freight shipments by weight. This would have cost the US economy up to $2 billion a day.

It could also have sparked transportation problems, disrupting passenger traffic as well as freight, affecting America’s energy, agriculture, manufacturing, healthcare and retail sectors.

In addition, many companies would have been forced to reduce or cease production and consider layoffs.

Biden also knew that a walkout could worsen the dynamics fueling rising inflation.

The impact of a shutdown would also have spread beyond US borders, as trains connect the United States with Canada and Mexico and provide vital connections to ships carrying goods around the globe.

Cutbacks in the rail industry

According to the Bureau of Labor Statistics, the number of rail workers in the North American country has been reduced from more than 600,000 in 1970 to about 150,000 in 2022. This, due to technology and cost reduction.

In the past six years, the rail sector has cut almost 30% of its workforce, cutting wages and other costs, while companies increased profits, share buybacks and dividends for investors.

Biden and Democrats, who routinely express support for unions, have criticized companies for making “excessive” profits.

Union activism has skyrocketed since the Democrat came to power, so he faces other supply chain labor issues.

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