National Rail Contract: Facts to consider

August 19, 2011

National Rail Contract

National Rail ContractHere are facts to consider when voting on the National Rail Contract:

* The UTU negotiated a 17 percent general wage increase – 18.24 percent compounded — or more than 3 percent annually.

* Compare this more than 3 percent annual wage increase (with no work rules givebacks) with the average wage hikes in other collectively bargained agreements, as computed by the Bureau of National Affairs (BNA):

For example, the BNA mid-August survey shows an average first-year wage hike of 1.4 percent for all collectively bargained settlements reached in 2011.

Frontier Airlines extracted a 1 percent wage giveback over four years; UPS settled with the Teamsters for a 2.4 percent annual average over seven years for UPS pilots; and Southwest Airlines negotiated a four-year agreement with flight attendants for an average of 1 percent annually.

Additionally, the Teamsters accepted a five-year agreement with trucking companies in 2008 for an average annual increase of under 2 percent; the BLET settled individually with BNSF, CSX and Norfolk Southern for as low as 2.2 percent annually over five years; and President Obama imposed a two-year wage freeze on federal employees.

* The Bureau of Labor Statistics reports that the nationwide average of inflation-adjusted hourly earnings declined by 1.5 percent between June 2010 and June 2011.

* By contrast, the UTU National Rail Contract beats existing inflation and projected future inflation in every year of the agreement, and provides greater purchasing power, with no work rules givebacks, than any UTU agreement negotiated over the past 41 years

* With unemployment still over 9 percent, 13 million Americans unemployed and millions more working fewer than 40 hours or having given up a job search, and the nation on the cusp of a second recession, we risk an unfavorable third-party settlement if we do not ratify this agreement.
* As General Chairperson Pate King (NS, GO 680) recalls, “I’m still feeling the devastating effects of PEB 219 in 1991, which were imposed by a Congress where Sen. Ted Kennedy (D-Mass.) and Rep. John Dingell (D-Mich.), both longtime friends of labor, chaired the key Senate and House transportation committees. I shudder to imagine what the current anti-labor chairman of the House Transportation & Infrastructure Committee, John Mica (R-Fla.), might have in store for us if we vote down this agreement and turn our fates over to third parties.”

* Meanwhile, the railroads’ strong volume increases in recent years may be headed for a speed bump. Aside from the impact of a second recession, which will adversely affect carloadings, the U.S. Department of Agriculture forecasts that that the three major crops – corn, wheat and soybeans – have been adversely affected by weather, with rail domestic and export volumes of grain likely to decline.

* The Wall Street firm of Wolfe Trahan expects all U.S. grain exports to decline 8 percent and wheat by as much as 15 percent in the months ahead, forecasting  — for all rail shipments — “weaker demand across all end markets.”

* The economic situation put in front of a PEB by railroads could be quite different than the economic situation of the past year. And the final say will be had by an anti-labor House majority.

The old adage that a bird in hand is worth two in the bush is apt in this situation.

A UTU National Rail Contract, providing 17 percent over five years, plus a 6½ year cap on health care cost sharing of $200 – when federal workers and most private sector workers already are currently paying twice that — is a lot to risk given these uncertain economic and political times. As for health care, Congressional Quarterly reported Aug. 18 that large employers are facing an increase of 7.2 percent in health care insurance costs in 2012, and large employers will be increasing their employee health care cost contributions.

Also at risk if we fail to ratify this contract is additional pay for every FRA-certified job, a faster process for new hires to reach full pay, cash payments to those still under the five-year service scale, no work rules concessions and a process for local negotiations on alternative compensation, compensation enhancement and electronic bidding and bumping. Everything in this tentative contract is off the table if we go to a PEB.

Third party determinations have typically resulted in disappointment for workers. In this poor economic environment and with growing anti-labor sentiment in Congress, rejection of this contract becomes, in the words of National Legislative Director James Stem, “a big gamble we cannot afford to take.”