US Railroad Strike Temporarily Averted by Biden's Intervention... Provisional Agreement Reached

[Image source=AP Yonhap News]

[Asia Economy New York=Special Correspondent Joselgina] Just before the deadline for the strike by the US railroad union, which had raised concerns about a large-scale economic disruption, a dramatic labor-management agreement was reached through the intervention of President Joe Biden. The worst logistics crisis, which was expected to cause not only supply chain disruptions but also fuel inflation, has been averted for now.

According to the White House, President Joe Biden issued a statement on the morning of the 15th (local time) announcing a tentative agreement between the railroad labor and management, calling it "an important victory for our economy and the American people."

In the statement, President Biden emphasized, "Railroad workers have gained better wages, improved working conditions, and peace of mind regarding healthcare costs, and railroad companies will be able to hire and retain more workers for an industry that will be the backbone of the US economy for decades to come."

The labor and management had been negotiating working conditions including wages since 2020 but failed to narrow their differences. Accordingly, the union had warned of a strike if no agreement was reached by 12:01 AM on the 17th Eastern Time.

There were growing concerns that if railroad operations, which handle nearly 30% of freight transportation in the US, were halted, a supply chain crisis within the country would be inevitable. The railroad strike was estimated to cause more than $2 billion (approximately 2.8 trillion KRW) in damages to the US economy per day. Considering that the average daily production scale in the US last year was $63 billion, this exceeds 3%.

This tentative agreement came after marathon negotiations lasting over 20 hours under the mediation of Labor Secretary Marty Walsh and others in the administration. Ahead of the midterm elections in November, the Biden administration, concerned about the repercussions of supply chain disruptions caused by the first railroad strike in 30 years, had actively moved since July by forming a presidential emergency committee and proposing mediation plans.

President Biden called Labor Secretary Walsh and both labor and management sides to emphasize the negative impact the strike would have on the US economy and encouraged agreement. Local media reported after the news of the tentative agreement, "President Biden personally communicated with the negotiation teams to mediate between labor and management, resulting in this 'tentative labor agreement'."

The new agreement, finalized after the tentative agreement, includes retroactive payment of a 24% wage increase over five years from 2020 to 2024 to railroad workers, and an average bonus payment of $11,000 immediately after ratification. It also includes provisions such as unpaid leave for hospital visits.

The tentative agreement involved unions representing about 120,000 US railroad workers and companies including Union Pacific, BNSF, and CSX. The union plans to hold a vote on the tentative agreement. While the union described this agreement as a historic victory, it emphasized that "it must be ratified by union members." Local media reported that this process is expected to take at least a week.

President Biden stated, "Thousands of railroad workers who worked hard during the pandemic negotiated in good faith to prevent disruption to our homes and communities and to keep operations running continuously, and I am even more grateful that they ultimately agreed to avoid economic chaos."

Meanwhile, Amtrak, the passenger railroad that had canceled long-distance services due to concerns about the impact of the railroad union strike on tracks, has begun to normalize services. Amtrak stated that all operations are expected to be normalized by the 16th.

This content was produced with the assistance of AI translation services.