Potential rail strike 'a huge political hot potato' that could spike inflation - analyst

Record ID: 1688987

  • Title: Potential rail strike 'a huge political hot potato' that could spike inflation - analyst
  • Date: 14th September 2022
  • Summary: HOUSTON, TEXAS, UNITED STATES (SEPTEMBER 13, 2022) (Reuters) FREIGHT TRAIN MOVING PAST WIDE OF FREIGHT TRAIN MOVING RAILWAY WORKER ADJUSTING TRACKS BUFFALO, NEW YORK, UNITED STATES (SEPTEMBER 14, 2022) (Reuters) (SOUNDBITE)(ENGLISH) DIRECTOR OF CORNELL UNIVERSITY’S SCHOOL OF INDUSTRIAL AND LABOR RELATIONS, ANDREW WHEATON, SAYING: “It's a huge political hot potato because nobody wants the strike to interfere with an already fragile economy. And a strike could spike the inflation rate. So that once you get that shortage of goods, when cars were in short supply, all of the car dealerships just jacked up the price of the cars, and that was a driver of this. When you don't have enough computer chips you just spike the price of the most important product. So a strike in this sector could raise grain prices, could raise fertilizer prices, any of the materials that are shipped by rail could go up.”
  • Embargoed: 28th September 2022 21:36
  • Keywords: Amtrak Andrew Wheaton Labor Secretary Marty Walsh rail strike railways unions
  • Location: VARIOUS, UNITED STATES
  • City: VARIOUS, UNITED STATES
  • Country: USA
  • Topics: Commodities Markets,Economic Events,United States
  • Reuters ID: LVA001537714092022RP1
  • Aspect Ratio: 16:9
  • Story Text: EDITOR'S NOTE - ADDITIONAL TRAIN AND RAIL YARD VIDEO IS AVAILABLE IN EDIT 5118 FROM SEPTEMBER 13, 2022
    The Biden administration is hosting urgent labor contract talks to avert a railway strike. Should a strike occur, the potential disruption is a "political hot potato" that threatens to unleash further economic turmoil, an industry analyst told Reuters on Wednesday (September 14).
    U.S. Labor Secretary Marty Walsh is hosting talks in Washington on Wednesday with freight railroad and union officials aimed at heading off a rail shutdown that could happen as early as Friday, disrupting cargo shipments and impeding food and fuel supplies.
    A rail strike would spike the already high inflation rate, Andrew Wheaton of Cornell University told Reuters.
    “A strike in this sector could raise grain prices, could raise fertilizer prices, any of the materials that are shipped by rail could go up,” said Wheaton, who is the Director of Cornell’s School of Industrial and Labor Relations.
    “Nobody wants the strike to interfere with an already fragile economy,” he added.
    Railroads including Union Pacific, Berkshire Hathaway's BNSF, and Norfolk Southern have until a minute after midnight on Friday to reach deals with three holdout unions representing about 60,000 workers before a work stoppage affecting freight and Amtrak could begin.
    As the talks continued, one of the smaller rail unions involved in the dispute rejected a deal and Amtrak canceled long-distance passenger trips.
    Railroads have offered significant pay increases. Three of 12 unions, representing about half of the 115,000 workers affected by the negotiations, are holding out for better working conditions.
    Wheaton says working conditions for Railway employees are abysmal.
    “Conductors and the engineers that actually drive or run these trains are on call 24 hours a day, seven days a week, 52 weeks a year, every year,” he said. “And they work an enormous amount of overtime.”
    A shutdown could freeze almost 30% of U.S. cargo shipments by weight, stoke inflation, cost the U.S. economy as much as $2 billion per day and unleash a cascade of transportation woes affecting the U.S. energy, agriculture, manufacturing and retail sectors.
    Cornell University’s Andrew Wheaton says that private rail companies are cuttings costs at the expense of “a safe and healthy environment” for workers.
    “Managers and people who are trying to run these companies are not as able to change or lower the cost structure on many of the other factors that increase the costs or try to reduce their profits… so they're trying to cut their labor costs,” he said.
    President Joe Biden's administration said it has begun making contingency plans to ensure deliveries of critical goods in the event of a shutdown.
    But Wheaton says that it would be impossible to compensate for the loss of rail capacity, particularly with a shortage of semi-truck drivers.
    “It would be a lot like an emergency room where you have to triage,” he said.
    If agreements are not reached, employers could also lock out workers. Railroads and unions may agree to stay at the bargaining table, or the Democratic-led U.S. Congress could intervene by extending talks or establishing settlement terms.
    (Production: Ashraf Fahim)
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