Subscribe to Entrepreneur for $5
Subscribe

'Devastating' Economic Disaster Avoided After Labor Unions, Freight Companies Reach Potential Deal

Unions representing some 60,000 workers reached a deal with companies to provide wage increases, the American Association of Railroads said.

By

The trains will keep going, for now.

Labor Unions and freight companies reached a potential deal early Thursday morning after an all-night bargaining session, Labor Secretary Marty Walsh announced.

Unions had said their workers would go on strike Friday without a deal. That possibility would have wreaked havoc in various industries, costing the economy around $2 billion a day, according to a report from the Association of American Railroads (AAR).

On Wednesday, Amtrak canceled all of its long-distance routes in anticipation of a strike by railroad workers but announced Thursday it was working to get them back online.

This labor dispute has been going on since 2019, per Axios.

Critics have noted that freight rail companies have trimmed workforces steadily — while bringing in the big bucks.

Two of the largest US railroad companies, Union Pacific and BNSF, (which is owned by Berkshire Hathaway) have given out $196 billion to shareholders via buybacks and dividends since 2010, according to The Guardian.

"The job is just really becoming fewer people doing more work faster," said Ross Grooters, co-chair of union Railroad Workers United and engineer at Union Pacific told the outlet.

Labor unions were looking for less demanding attendance policies and the ability to take (not paid) time off for doctor's appointments, according to the New York Times and The Guardian.

According to the AAR press release, this union dispute involved organizations including the Brotherhood of Locomotive Engineers and Brotherhood of Railroad Signalmen, collectively representing about 60,000 employees.

"Thanks to the dedication of all members involved in the collective bargaining process, these new contracts provide rail employees a 24 percent wage increase during the five-year period from 2020 through 2024, including an immediate payout on average of $11,000 upon ratification," the statement added.

Union Pacific also released a statement about the issue:

If the freight railroads had shut down, it would have slowed down systems from food delivery to oil, per the AP.

Now, the agreement goes back to unions for a vote.

Entrepreneur Editors' Picks