The railroad union rejects a Biden-brokered labor agreement, raising the prospect of a strike

A union representing nearly 12,000 railroad workers on Monday voted down the tentative contract agreement between freight railroad companies and all 12 of their unions brokered by the White House last month.

Why is it important: The rejection by the Brotherhood of Maintenance of Way Employes Division of the Teamsters (BMWED), once again raises the prospect of a nationwide railroad strike. That would be devastating to the economy and possibly arrive in peak season — a political headache for the Biden administration.

  • “Railway workers don’t feel valued. They resent management’s lack of consideration for their quality of life, illustrated by their stubborn reluctance to provide a higher amount of paid time off, particularly for sickness,” BMWED president Tony Cardwell said in a statement.
  • The rejection is a “big deal,” a union official told Axios. If the parties cannot come to an agreement, there could be a strike that other unions would honor – or Congress could step in.

The reaction: In a statement, the group representing the carriers in the negotiations, the National Carriers’ Conference Committee, said it was “disappointed” but noted that nothing is changing right now. “The failed ratification does not pose a risk of immediate service interruption,” it said.

  • White House spokeswoman Robyn Patterson told Axios in an email that President Biden “remains focused on avoiding a rail shutdown, and both sides have said they share that desire.”
  • “We stand ready to support the parties in their efforts and continue to encourage both sides to finish their work and avoid even the threat of a shutdown in the future,” Patterson added.

Status: There are 12 unions representing about 115,000 workers. Four other unions have ratified the agreement, and over the next month a further seven will vote.

  • The deal gives employees a significant raise — after nearly three years without raises — but doesn’t address enough workers’ concerns about workplace conditions, insiders told Axios.
  • The two biggest unions representing conductors and engineers – which make up around half of the total rail workforce – are not set to complete the vote until November 17.
  • A longer back and forth would not be unusual. Last year, John Deere union members voted down a contract twice over wage increases they saw as insufficient before finally approving one in mid-November. They also went on strike for a period.

Between the lines: The best-case scenario from a business perspective, Wall Street analysts say, is that the deal goes through and the higher wages attract new hires — crucial in an industry struggling with shortages.

  • If the unions vote down the deal, it could be left to a limping Congress to step up. That would give Democrats more cover to force workers into a deal, Bascome Majors, a railroad analyst at Susquehanna, wrote in a recent memo.

What they say: Jeremy Ferguson, president of SMART, the largest union with 37,000 members, said the tentative deal fell short of his expectations.

  • “I will not sell members on this preliminary agreement. It is my responsibility and duty to provide you with factual information and allow you to make an educated choice,” he added in a separate statement.

In the meantime the most vocal workers say they don’t like the deal — but it’s not clear they’re in the majority.

  • “It’s terrible,” a freight conductor and union member in Nevada told Axios of the deal. He asked Axios to remain anonymous for fear of retaliation from his employer.
  • He urges his colleagues to vote “no” to the provisional agreement.
  • On a Zoom call hosted by Railroad Workers United — an affinity group with members from all the unions — workers said they didn’t like the agreement’s sick leave provisions, worried about changes to how schedules are managed and said health insurance costs was too high in the new agreement. Many said they would not vote for it.

What to see: The upcoming votes.

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