Tuesday, March 14, 2017

Labor’s double-down bet on Trump

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Labor’s double-down bet on Trump

With collective bargaining between 13 labor unions and the nation’s Class I freight railroads (plus some regionals and short lines) over wages, benefits and work rules in its third fitful year, the National Mediation Board (NMB) could declare an impasse as early as late 2017.

That puts rail labor on a path to assign the outcome to a President whose businesses were cited scores of times for failure to pay minimum and overtime wages and violating workers’ rights; and whose first choice for Labor Secretary—Andrew Puzder, who withdrew—“routinely violated labor law, disrespected workers [and] opposed a living wage,” according to the AFL-CIO.

Upon an NMB-declared impasse, the Railway Labor Act allows naming of a Presidential Emergency Board (PEB) to make non-binding settlement recommendations. Traditionally, PEB appointees are seasoned arbitrators, but there is precedent for selecting those with an anti-labor animus—a probable outcome from Donald J. Trump, who historically walks a walk less labor-friendly than his talk.

If the sides cannot settle based on PEB recommendations, Congress typically imposes them through legislation. This Republican-led Congress is not a recommended testing ground to achieve better. Indeed, labor-friendly Democrats accuse the Republican majority of seeking to “bankrupt” labor unions, such as with a national right-to-work law allowing many union members to opt out of paying dues.

Over the past decade—notwithstanding a banking calamity, an economic downturn and concessionary labor agreements accepted by most non-rail labor unions—rail workers fared exceedingly well at the bargaining table. Their previous national contract, retroactive to 2010, delivered wage hikes of from 17% to 18.6% over 60 months. The largest of the unions said that agreement delivered “a greater boost in purchasing power than any other national contract in the past 40 years.”

Funding those gains was the strength of America’s energy sector—rail haulage of coal, materials for oil and natural gas exploration, and the crude oil extracted. No longer. The economic storm clouds that have affected the global economy and other American industries now hover over railroads.

Rail revenue from coal traffic is down more than $4 billion since 2011, and lower global oil prices damped domestic oil and gas exploration, decreasing crude-by-rail shipments. A Trump-promised upsetting of global trade agreements could sharply curtail intermodal container shipments. Hopes for massive infrastructure spending, benefiting railroads that haul construction materials, could be dashed by congressional budget hawks resistant to increasing federal deficits.

Duplication of the previous rail agreement’s hefty wage increase, which included a cap on healthcare insurance premiums, is unrealistic in today’s economic climate, and more improbable given election results.

A significant obstacle to settlement is the share of ever-increasing healthcare costs to be borne by rail workers, who now pay just seven cents (railroads pay 93 cents) of every healthcare-dollar cost. Federal workers and non-rail private sector employees pay a considerably larger share. Rail workers have lower deductibles and copays, and their monthly healthcare insurance premium, capped at $228.89 since 2010 (with health care costs climbing 30% since), is less than half that paid by other private sector workers, says the Kaiser Family Foundation. Unlike other plans, rail worker premiums do not increase as family size does.

No matter the tilt of the playing field, voluntary settlements are preferable to ones imposed by Congress. Just the threat of a work stoppage damages union members and railroads alike, as it propels substantial freight to trucks, adversely affecting jobs along with profits.

Elected rail labor leaders, who solicit votes by talking tough, are promising members they “never” will accept what carriers are proposing, even though no details have been released. NMB mediators seek common ground ahead of more strident oration.

Given that few, if any, American workers enjoy the wage level, healthcare advantages and retirement benefits of American rail workers, it is relevant to invoke labor icon Samuel Gompers, who tempered his strident, “more, now” refrain with a sober caution: “The worst crime against working people is a company that fails to operate at a profit.” And did we mention the risks to labor of the current political environment?











Frank N. Wilner, Contributing Editor

Frank N. Wilner is author of six books, including, Amtrak: Past, Present, Future; Understanding the Railway Labor Act; and, Railroad Mergers: History, Analysis, Insight. He earned undergraduate and graduate degrees in economics and labor relations from Virginia Tech. He has been assistant vice president, policy, for the Association of American Railroads; a White House appointed chief of staff at the Surface Transportation Board; and director of public relations for the United Transportation Union. He is a past president of the Association of Transportation Law Professionals. Wilner drafted the railroad section of the Heritage Foundation’s Mandate for Change (Volumes I and II), which were policy blueprints for the two Reagan Administrations; and was a guest columnist for the Cato Institute’s Regulation magazine.

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