The railroad industry is a crucial backbone of U.S. infrastructure. Not only does it provide freighting services for consumer goods and transportation, but the energy and water industries rely heavily on trains. This week, however, Americans could be learning that importance the hard way. Right now, railroad unions are clashing with bosses — and workers aren’t afraid to stunt the economy to get what they deserve. What will happen if railroad workers go on strike?
Two prominent rail unions — the Brotherhood of Locomotive Engineers and Trainmen (BLET) and the International Association of Sheet Metal, Air, Rail and Transportation (SMART) Transportation Division — are the focal point of this week’s news. The two unions represent half of all U.S. rail workers and have been negotiating for a labor contract alongside 10 other rail unions. These unions have been without a contract for three years and, from the sounds of it, offerings from management have not met what they have in mind.
BLET President Dennis Pierce says the crux of the disagreement centers around workers’ scheduling. According to Pierce, rail workers have no sick leave — paid nor unpaid — when on call. Seeing as many of these workers can be on call for weeks at a time, there is a real possibility of workers being fired in the case of medical emergencies.
Eight of the 12 unions have agreed to a tentative contract from management, which takes into account recommendations from a White House-approved negotiating board. However, this tentative contract does not include scheduling changes to accommodate health and family emergencies. That has caused BLET, SMART and two other unions to hold back.
On Friday, a federally mandated “cooling off period” comes to an end. This legally enables thousands of rail workers to go on strike in order to leverage favor in negotiations. But what will happen if railroad workers go on strike? Simply put, the effects could be broad.
What Will Happen If Railroad Workers Go on Strike? The Economic Effects, Explained.
Freight railroading in America is vastly important; 40% of the country’s total exports are shipped by rail. Moreover, railroads have become increasingly important as a means of transportation as Americans forgo cars. The rail transportation industry has grown 3.4% every year for the last five years in the United States.
Obviously, railroads make for a powerhouse industry within the country. And already, industries are feeling the heat from these striking workers. Amtrak, a government-owned for-profit rail transportation company, is shutting down a number of its cross-country routes in anticipation of a reduced labor force. State-supported routes are also being threatened, which could have detrimental effects on those who ride Amtrak trains to work.
The White House says it is working with other industries — including long-haul trucking and air freight — to step in during the strike. However, they would have big shoes to fill. The American Trucking Associations said it would take “460,000 additional long-haul trucks every day” to accommodate the same amount of goods that rail freight carries.
Rail freight carries some of the most important industry goods that keep the nation running. Food, chemicals, medical supplies and energy and agricultural supplies are all largely shipped by rail. So, a strike could put even more strain on a supply chain already stretched thin. As such, rail workers and consumers alike hope these parties can reach an agreeable contract ahead of a strike expected on Friday.
Outside of an agreement, Congress could step in and prevent rail workers from striking. This is something many politicians have been calling on in recent days. However, union spokespeople have slammed this move, telling lawmakers to stay out of the negotiations.
On the date of publication, Brenden Rearick did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.