President Biden’s Presidential Emergency Board (PEB) laid out proposed terms of a new contract agreement for railroad workers and employers that, if accepted, marks the largest pay hike in more than three decades.
The PEB, established by the president in July, made its recommendations report public on Wednesday following a round of hearings last month looking into the causes of the more than two-year contract dispute involving some 115,000 workers.
The PEB’s recommendation calls for an immediate 14.1 percent increase in pay and ultimately a 24 percent compounded increase over the five-year contract. The PEB also recommended bonuses totaling $5,000.
“While the Biden PEB’s recommendations markedly exceed the rail carriers’ proposal, they provide a useful basis to reach a resolution,” Association of American Railroads (AAR) president and CEO Ian Jefferies said in a statement Wednesday. “In the interests of all rail stakeholders, now is the time for railroads and their unions to reach a contract. The industry is prepared to propose agreements based on the PEB’s recommendations to provide our employees with long overdue pay increases and avert rail service interruptions.”
The PEB noted in its 119-page report, the two sides agree on the five-year length of the contract and that what’s proposed for the basic percentage wage increases would be the same across all rail trades.
“The parties take opposing positions on almost everything else relevant to resolution of the wage dispute, as reflected by the wide divergence of proposals, both in percentage and absolute dollar terms,” the PEB report said.
Carriers proposed a 17 percent compounded increase, beginning with a 2 percent increase for the contract’s start in 2020, followed by varying increases in the years following. The railroads also offered a $1,000 signing bonus.
Unions, by contrast, had asked for a 31.3 percent compounded wage increase over the contract’s five-year period beginning in 2020.
The difference between labor and employers’ proposals is in excess of $9 billion, according to the PEB.
Unions had meetings scheduled in the late afternoon Tuesday to discuss the findings and recommendations after the PEB delivered its findings to the unions and employers.
The report addressed the impacts of the contentious Precision Scheduled Railroading (PSR) concept, an operations strategy focused on moving freight in a more direct model that bypasses the need for multiple terminal stops and use of high-volume lanes.
Longer trains averaging 9,500 feet, compared to 7,000 feet, and a 30 percent reduction in the rail workforce have resulted from the PSR system, which major railroads were using by 2017, according to the PEB report.
The report went on to say, citing information from the unions, that rail workers were moving 97 percent of pre-COVID volume at the end of last year with 81 percent of pre-pandemic staffing.
The country’s Class 1 railroads, represented by the National Carriers’ Conference Committee (NCCC), and the dozen railroad unions were unable to resolve their contract dispute with the help of the National Mediation Board, which triggered a 30-day cooling off period that began in June.
The PEB’s creation staved off the possibility of a shutdown in rail service that could have occurred as early as mid-July.
The ongoing contract dispute is happening amid a rail cargo congestion issue that’s become the supply chain’s new pain point. The stacks of containers waiting to be loaded onto rail at ports continues to grow as labor and equipment shortages further exacerbate the issue.
Surface Transportation Board (STB) chair Marty Oberman said in a roundtable discussion with rail labor leaders Friday that the state of freight rail “is not great” and service “has deteriorated to the point of causing urgent problems for a number of rail customers.”
Participants during the roundtable criticized the impact of PSR and the railroads’ cuts to the workforce, pointing to those pre-pandemic decisions as the cause for the decline in service over the years.
“The railroads have cut way too deep,” Vince Verna, vice president and national legislative representative for the Brotherhood of Locomotive Engineers (BLET), said during last week’s roundtable. “They cut too deep thinking they were trimming fat, but they’ve cut into the bone.”