When President Biden met with the railroad and union leaders in the Oval Office after a deal was struck, he characterized the tentative agreement reached by the parties as “an important win for our economy and the American people … I thank the unions and the rail companies for negotiating in good faith and reaching a tentative agreement that will keep our critical rail system working and avoid disruption of our economy.”
While this sentiment sounds like a civic and political description of the collective bargaining process, it has its very essential roots in the Railway Labor Act, the federal law enacted nearly 100 years ago that governs labor relations in both the railroad and airline industries. That Act shaped and ultimately brought the unions and the railroads to a private labor agreement that has a statutory responsibility to maintain the essential transportation service of the United States. And the public gets involved in a big way.
When the parties’ bargaining attempts fail to implement “an intended change in agreements affecting rates of pay, rules or working conditions,” the National Mediation Board notifies the President that the failure will “deprive any section of the country of essential transportation service.” At the President’s discretion, a PEB (Presidential Emergency Board) is created to investigate and report on such dispute. And that process led to the Report of PEB No. 250 in August, and the tentative agreements.
During that process, however, the private collective bargaining process becomes responsive to the needs of the public. And everyone—from the President, the Cabinet and the Congress to the customers, political commentators, local officials and all of the employees—has an opinion.
In the railroad industry, both labor and management have long recognized their responsibility to provide that “essential transportation service” to the economy. Sometimes, despite their best efforts, the parties are unable to find the necessary compromises.
The public analysis of the issues provided by the Emergency Board report gave the parties a foundation of an agreement, and the subsequent negotiations, and final mediation by Labor Secretary Walsh, allowed for the fine tuning necessary to make a practical collective bargaining agreement that both the employees and the shareholders can ratify. Walsh, in an interview with the Boston Globe, described the fine tuning this way, “I didn’t suggest to them what to do, what not to do. If they asked my opinion, which they did several times, both sides, I gave my opinion of how to get to the final deal.” That is what public involvement looks like.
And, as the President said, the agreement is an important win for the shippers, the economy and the American people. The economics work for the railroad companies and their shareholders; the wages, healthcare and quality of work life issues work for the employees; and the U.S. economy continues to enjoy a transportation system that is premier in the world.
Despite its age, the Railway Labor Act continues to provide the parties with the collective bargaining tools that make this work. The quality of work life issue of “time off” has been present in the railroad industry since it became an industry more than 180 years ago. During this round of bargaining, the unions were articulate in their advocacy that the workforce of today has changed, and that the employers needed to respond to that change. The Railway Labor Act process gave the parties the clear track to addressing that change.
So, the collective bargaining process leads back to the stakeholders’ goal of having a better transportation product and quality of life. There are always lessons from the collective bargaining process that both sides can take if they are willing and smart about their own self-interest, and their collective self-interest. The solution to improved operating ratio and better on time performance lies in the ability of the railroads, their employees and their customers to reach agreement, something that the current incarnation of “precision scheduling” does not always provide.
Perhaps the Railway Labor Act model of reaching agreement, with its recognition of preserving and improving “essential transportation service,” could provide the lesson and the method for the railroad industry to achieve its next levels of service excellence and financial performance.
Paul Lundberg served as Vice President Labor Relations and Chief Operating Officer of the Chicago & North Western, and was the C&NW’s member on the NCCC. He also served as General Manager of Boston’s Commuter Rail, COO of RailAmerica, and currently consults on freight and passenger rail issues.