By Mike Koetting December 18,2022
Today’s post goes deep into the reaches of the American Political Way-Back Machine. Yup, more than two weeks ago! Back then there was widespread panic about the consequences of a rail strike. Then, poof, all gone, like a very early snow.
Before it drifts completely out of our consciousness, it is worth reminding ourselves how we got to that pass and the implications therefrom.
The Clear but Inchoate Culprit
I believe this event was a nearly perfect microcosm of what is wrong with the way America organizes, to use the term somewhat loosely, its economy.
The specific issue that would have caused a strike was the failure of the proposed deal to give workers sick days as a benefit. The settlement recommended by the arbitration did give workers a substantial raise (24%) and a $5,000 bonus. Railroad workers are unquestionably well paid. But they were still unhappy enough about the quality of life issues to vote down the contract. (Although only some unions rejected the deal, it was a majority of the workers across all the unions.) Currently, rail employees can take days off for any reason, but those days are generally unpaid and workers might be docked under the railroad’s attendance rules. In fact, actually using any paid days off, even if technically allowed, is very difficult unless workers can plan far ahead and have the seniority to secure them. Thus, there are no functional sick leave days—an issue most Americans thought was settled about 100 years ago.
Most of my work experience has been in management at institutions with unionized workforces. I have a robust sense of the difficulties posed when workers get rights for sick days. They take them. Often at inconvenient times (for management) and sometimes in patterns that raise cynical eyebrows. Still, people have generally accepted that a certain amount of sick leave is something that should be readily available to workers in an advanced economy, not just for their convenience but for the broader health of the population. Accordingly, those institutions where I worked figured out how to manage around the constraints.
The railroads are unwilling to do that. Why? As usual, the answers are multi-faceted, but pretty much come down to the way that the railroads now structure their business. In the view of the railroads, they are in mortal combat with the trucking industry for the transportation dollar. And to an extent that is true. Trucks have a flexibility that cannot be matched by trains. And that may be even more true when “self-driving” trucks are actually operational.
But trucks have downsides, although it is harder to quantify those issues than I had imagined. Many of the numbers that get thrown around are dated—at a time when technology is rapidly changing. And most are issued by one side or the other. Still, for instance, it seems likely that fatalities from big trucks materially exceeds those caused by freight trains. It likewise appears that trucks have a worse environmental impact than trains. Historically, trains had a huge environmental advantage, but more recent technology has reduced that gap substantially. And more electric trucks could reduce their carbon emissions materially, although trucks would still have other adverse environmental consequences. Train technology is also subject to change and work on electric locomotives is picking up steam, so to speak.
All things taken into account, the situation of the railroad industry is not particularly dire. In fact, profit statistics suggest the opposite. Recent operating margins in the large freight railroads were some of the highest of any industry. Despite their relative share of freight declining, revenues have doubled. These results have been achieved by charging higher rates and making drastic reductions in the number of employees, cutting work forces by more than a quarter in the past decade. Which has made Wall Street bullish on railroads.
It has also resulted in ever longer trains and fewer employees per train. Which, in turn, means there is lower margin for events like employee call-offs. So no sick leave in the collective bargaining agreement.
But, then again, it wasn’t exactly a collective bargaining agreement. Using powers from the 1926 Railroad Labor Act, which gives Congress the right to override any actual collective bargaining in railroads and airlines, a settlement was simply imposed by Congress, without addressing the fundamental issue in the strike. Union members, not surprisingly, suspect that the companies were unwilling to give on the sick leave days because they believed Congress would intervene to prevent a strike.
Put all this together, and we have the American economy. Profit comes first, workers come second—an arrangement enforced by fiat if necessary. A lack of centralized planning and lower regard for the subsidiary effects (e.g. environment, road safety) than for maintaining stock prices.
I adamantly concede that even the politics aside, these are hard issues to address. Outlining a moral concern is not in itself enough to determine specific policy. There are no simple answers and any specific policy will have trade-offs. People who pretend the answers are simple are simply dangerous. Nevertheless, starting with moral concerns—treating workers humanely and proactively considering the longer-term consequences of economic decisions—is not a bad place to start.
The railroad strike that never happened is a poster child for what we get wrong.
Politics of the Issue
This issue also illustrates the politics of the times.
President Biden, easily the most pro-union president in 50 years, was put in a bind. There is no question that a rail strike would have damaged the economy at a time of fragility. On the other hand, there is no question that he supported the desire of the workers for more considerate sick leave policies. I suppose it is possible to criticize his willingness to sign the legislation imposing a settlement as an abdication of values. I rather see it as a compromise made in the name of the greater good. It’s not clear that he has received the credit he deserves for his position because most of the country sees political decisions as totally transactional. Generally speaking, we have lost sight of the fact it sometimes takes a matter of principle to compromise on another principle.
The specifics of the actual process for ending the strike are also instructive. In fact, there were two separate bills—one that imposed the settlement and a separate bill that mandated the addition of seven days of paid sick leave to the agreement. The first passed with overwhelming bi-partisan support in both houses. The second narrowly passed the House on a party line vote and got 52 votes in the Senate, 49 Democrats and 3 Republicans, eight short of what would be needed to break a filibuster.
On the one hand, this again illustrates that the notion of Republicans as a working class party has a peculiar idea of what it means to be a working class party. On the other hand, I suspect that also illustrates why Republicans are still seen as “better” on the economy. The average person on the street simply assumes that voting to give railroad workers paid sick leave would increase their prices for goods because the cost of transportation would increase. The further assumption is that Democrats must be the party of the elite since they are willing to increase prices for the common man to favor 125,000 unionized railroad workers. The idea that the cost of sick days would come out of company profits as opposed to being passed back to consumers is not given much consideration. This is unsurprising since there is no mechanism to enforce that outcome.
Which brings me back to the original point: this issue illustrates why American society is so broken. There is no ethic of communal good that goes beyond very narrow notions of community. And the mechanisms of governance do not support being able to achieve society-wide goals as opposed to facilitating the accumulation of vast amounts of wealth by individuals lucky enough to get leverage.
There are no easy solutions—technically, let alone politically. Particularly since we are not starting with a blank slate. We exist in a society structured around a set of operating assumptions that embody the values that have gotten us here. Any individual change, like sick leave days for railroad workers, is very hard because the interconnected nature of our system works against it. But it is difficult to imagine how the society thrives without getting a better handle on these core issues.