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Railroads, Unions Clash Over ‘Reasonable’ Pay

Members of the Presidential Emergency Board (PEB) began hearing presentations on Sunday from carriers and labor unions as they look to bring an end to a roughly two-and-a-half-year contract dispute.

Wages, among other parts of the compensation package, along with implementation of technology and other work-related rules, remain major sticking points in getting a deal done.

Union Pacific chair, president and CEO Lance Fritz told Yahoo Finance last week the carriers and unions “are pretty far apart right now in terms of what we think is an appropriate settlement on wages.”

The railroads, of which Union Pacific is one, are being represented by the National Carriers’ Conference Committee (NCCC) in the negotiations with a dozen unions.

“All parties are anxious for a reasonable agreement,” Fritz told analysts last week during Union Pacific’s quarterly update. “Our employees are long overdue for a wage increase. We are ready to put the uncertainty behind us and look forward to a resolution in the near future.”

Employers and the unions don’t see eye to eye on wage increases for the five-year contract being negotiated for Jan. 1, 2020 through Jan. 1, 2024.

The unions have proposed annual increases for that 2020 through 2024 period of 6 percent, 6 percent, 8 percent, 4 percent and 4 percent, respectively. That amounts to a 28 percent uncompounded total increase.

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Meanwhile, carriers have suggested a 16 percent uncompounded increase for the five-year period that includes 2 percent in 2020, along with increases in the following years of 3 percent, 6 percent, 3 percent and 2 percent.

The unions said in a joint statement Sunday that its proposals “are supported by current economic data and are more than warranted when compared to our memberships’ contribution to the record profits of the rail carriers.”

They also went on to blast the carriers for having “the unmitigated gall” to suggest increases in employee healthcare costs and changes to some benefits.

Fritz told Yahoo employers have offered a “Cadillac plan” for healthcare” and support “reasonable wage increases” that he called “reflective of what’s happened in the economy” for the contract years under negotiation.

The PEB hearing is the result of the group President Biden assembled earlier this month as a last-minute effort to avoid a strike or lockout action that could have begun as early as July 18, after mediation failed to produce a new contract for some 115,000 workers.

The PEB will hold hearings through Thursday to investigate the dispute and then make recommendations on a proposed settlement. Employers and labor groups will then have 30 days to negotiate based on those recommendations.

Failure to reach an agreement would put the possibility of a strike or lockout back on the table.  However, at that point, Congress would then have the option of stepping in to propose an agreement.

The labor contract is one of several negotiations being closely monitored for its implications to the movement of cargo as retail manages the back-to-school season and preps for holiday. A new contract for some 22,000 West Coast dockworkers is also being negotiated after the previous one expired July 1.

Rail, in particular, has been a source of congestion within the supply chain in recent months with a labor shortage partly to blame.

In Union Pacific’s case, the congestion hit a high point in mid-April, with the carrier focused on limiting volume and getting a robust pipeline of workers trained to cut its dwell times and make other service improvements.