Biden Regulators Take Unions’ Side in Freight-Rail Dispute

T he freight-rail industry is currently engaged in tense labor negotiations. As I wrote on July 15, President Biden has appointed a presidential emergency board (PEB) to help resolve the labor disputes, which have been ongoing since 2020. Both railroads and unions applauded his appointments to the PEB, all of whom are experienced and considered neutral.

Those selections were welcome after the process that led to the creation of the PEB in the first place. The National Mediation Board, an independent federal agency tasked with facilitating labor negotiations, this year cut off negotiations between employers and unions after only two months (mediation is allowed to continue indefinitely and usually lasts much longer). The two members of the three-member board who voted to end negotiations are both Democrats with union-career backgrounds.

The advantage of ending negotiations so quickly, from the unions’ perspective, would be to force the PEB to conclude its work before the midterm elections. After a 30-day period for the board to do its work and a 30-day cooling-off period after that, September 16 becomes the deadline, after which work stoppages become legal. Democrats control both houses of Congress, and if the board’s recommendations are not accepted, Congress would likely step in to resolve the dispute by legislation. If things reach that point, unions would lose their leverage if Republicans retake Congress or negotiations get moved to the lame-duck session where defeated members have nothing to lose by bucking the party line.

A fair PEB was a promising sign that those political shenanigans were over. Then, yesterday, the Federal Railroad Administration issued a notice of proposed rulemaking about the crew sizes of freight railroads. Currently, the industry standard is two-man crews in the cab of a freight train, but technology has made the second crewman less necessary. But the FRA wants to mandate two-man crews in almost all situations nationwide.

A two-man-crew mandate has been a demand of organized labor for years, and the FRA previously tried to implement it in 2016. Unions claim to have safety concerns, but the more likely reason is that technological advance is a threat to union jobs. Just like the West Coast dockworkers’ union opposing port automation, the rail-worker unions oppose proposals that would shrink their membership.

That is, of course, their right. They exist to look out for the members’ interests. But the FRA’s job is to be the safety regulator for the rail industry. FRA administrator Amit Bose insists that his agency is “committed to data-driven decision making,” but as I wrote in November, the safety argument for two-man crews is not very strong.

Trains are not like airplanes; there is only one set of controls. One-man crews are already the norm in the EU, Australia, and New Zealand, and for passenger trains in the U.S. In the past, a second crewman was more useful, but now most of his work is done by positive train control (PTC), which was adopted on every major freight-rail line by the end of 2020. Freight trains have been getting consistently safer over the past 20 years, with accident rates, hazmat-accident rates, and grade-crossing-collision rates all declining. Human error is a leading cause of rail accidents, and the adoption of PTC reduces the opportunities for it to occur.

At the moment, mandating two-man crews would not make a huge difference, since it is already the norm. But the crew-size mandate the FRA is proposing is the kind of decision that entrenches inefficiency in our transportation systems for years to come. It would mandate the current level of labor productivity in freight-rail operations and prohibit improvements.

Labor is one of the largest costs for railroads, and rail employees are very well paid. Total compensation for Class I railroad employees averaged $135,700 in 2020. They work long hours and do difficult work that can often be dangerous, and compensating them for that makes sense. Unions’ latest ask was for a 31 percent raise over the next five years. That’s terrific, but as the cost of labor increases, railroads have stronger and stronger incentives to use fewer workers.

There should be a trade-off there, to be negotiated as part of the industry labor contracts. Labor agrees to fewer workers, but the railroad agrees to pay the remaining workers more money. With the crew-size mandate, the FRA is essentially resolving that trade-off in favor of labor. It’s telling the railroads they have to keep crew sizes the same indefinitely, which removes their ability to negotiate the trade-off between wage increases and the number of workers, both in these negotiations and in future negotiations.

Even though a strike has not occurred in decades, one is possible now. Frank Wilner writes for Railway Age that because “labor leaders have brought their political base to a fever pitch, it may be difficult for some to compromise based on PEB recommendations.” If PEB recommendations are rejected, the dispute will likely go to Congress for resolution by legislation, but “congressional dysfunction or political collusion with labor or management can delay a back to work order and extend the length of a shutdown,” Wilner writes.

The FRA is throwing an unnecessary wrench into the negotiating process, which is already tense enough on its own. Crew size was one of the issues that the parties were negotiating. Instead of letting that process play out and allowing for a compromise to be struck, the FRA is inserting itself from outside the process and attempting to mandate the union position. Biden did promise a two-man crew-size mandate when he was running for president. His appointees in the self-described “most pro-union administration in American history” are behaving as expected.