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This Friday, tens of thousands of railroad workers are poised to go on strike, potentially shutting down nearly a third of all US freight traffic. It would be the first national rail strike in 30 years.
As the clock ticks, the threatened work stoppage is already having an effect. Amtrak has preemptively suspended service on some of its long-haul routes. And railroads have already stopped accepting shipments of hazardous and other safety-sensitive materials, citing concerns about the strike.
Here’s the deal: Freight railroads have been around since the 19th century, but without them you can’t run the 21st-century economy, writes my colleague Chris Isidore.
And right now, companies are worried as unions, representing more than 60,000 workers, plan to quit their jobs at the end of the week if they can’t secure certain quality of life provisions in their contracts. That could mean more empty shelves, temporary factory closures and — of course — higher prices for consumer goods. It’s also a political chess game for the Biden administration and the Democrats, whose midterm election odds had just started to improve.
Why are workers angry?
This is not the usual union pay dispute. In fact, freight railroads have thrived during the pandemic and made record profits.
Instead, unions are squabbling over the rules surrounding scheduling, which forces engineers and conductors to be “on call” seven days a week. And in this industry, being ready means literally being ready to take a hit, not just logging in to send a few emails from the beach.
They are fed up with being deprived of their personal time, which contributes to a high attrition rate and leaves crews woefully understaffed. Employment at the country’s major railroads has fallen by more than 30,000, or about 20% of the workforce, since the last contract was signed in 2017.
Leaders say their members are at a breaking point.
“Our members are being fired for falling ill or attending routine doctor visits as we crawl out of the global pandemic,” union leaders wrote over the weekend. They said the attendance policy “is destroying the lives of our members who are the backbone of the railway industry”.
key background:
- President Biden averted a strike two months ago by imposing a 60-day reflection period during which a panel he appointed would review disputes and make recommendations.
- Only a handful of the 12 unions have backed the panel’s recommendations, which include a 24% pay rise over the next five years and cash bonuses.
- This cooling-off period ends at 12:01 p.m. ET on Friday. After that, Biden will no longer have the power to prevent a strike.
- At this point, only Congress would be able to intervene, either by forcing an agreement on both sides or by extending the current deliberation period. But that would require the two parties to put their dispute aside and actually do something good for the public.
- The unions themselves are urging Congress to withdraw. They say a strike is the only way to reach an agreement that can improve working conditions, which they say are intolerable.
Even companies that would be affected by the strike are not very keen on Washington ending this fight.
“Honestly, if it ends up going to Congress, it doesn’t bode well,” a business official told Chris. “You don’t know what you’re going to get. They could have members who could stop legislation to make demands of one thing or another…Once Congress gets involved, it’s a mess.”
(That’s a tattoo-on-your-arm-worthy capital T-truth.)
The political theme
If you were anywhere in the middle of the Atlantic and heard a throaty yell coming from DC this weekend, it could have been the collective yell of anger from frustrated White House staffers who were just about to take a day off following the passage of the Anti-Inflation Act and federal student loan relief.
No matter how that ends, it’s tough political calculus for Biden and the Democrats just weeks before the midterm elections.
Biden is a unionist. It’s kind of central to all of his working-class charm, born in Scranton-PA. But he’s also sensibly wary of allowing a strike, which could send prices of essential consumer goods higher even as gasoline prices finally come down and American sentiment toward the economy improves (more on that later).
The White House told CNN it “takes no position on what the elements of an agreement should be” but stands ready to support the railroads and unions in their work towards a deal.
“We are confident that the parties will make every effort to negotiate in good faith a mutually acceptable solution, and we urge both sides to do so without delay.”
The clock is ticking.
Rail operators are urging unions to agree to terms recommended by the Presidential Panel, warning a work stoppage would cost the US economy $2 billion a day. It did not specifically call for action from Congress and encouraged the parties to settle the dispute through negotiations, although its statement said, “Ultimately, Congress has the power to step in and avert a shutdown.”
TIED TOGETHER: About 15,000 nurses in Minnesota went on strike Monday, fighting for better staffing and better care for their patients.
It hasn’t exactly been a bonanza year for Wall Street, unless your portfolio is heavily biased towards fossil fuels. But the US dollar is an exception. The greenback is trading near its highest level in 20 years, with the US dollar index up almost 13% since January.
The result: It’s a great time to be an American tourist, but a less great time to be an American multinational as the strong dollar reduces the value of sales and earnings from their overseas operations.
Once upon a time, the Bureau of Labor Statistics released its monthly consumer price index with little fanfare, and there’s a good chance you never read a single headline about it. However, nowadays it’s a must-watch on TV, a breaking news banner, a notification on your phone, a million tweets from economists and real economists analyzing every line of the publication.
Why? Because the so-called CPI has given us a snapshot of the economic misery Americans face every day as prices rise at their fastest pace in 40 years. It’s the hard data that tells us we were right to shake our fist in the air and curse the price of Brussels sprouts at the checkout this weekend.
Here’s the (possible) good news: After more than a year of rising prices, we may finally have peaked.
Economists expect Tuesday’s CPI reading to show prices rose 8.1% year-on-year in August — that’s still historically high, but it would mark a slowdown from June’s high-water mark of 9.1 % mean.
On Monday, we got another glimpse into the inflation conundrum that underpins the June peak theory: According to monthly survey data from the Federal Reserve Bank of New York, Americans now expect prices to fall sharply, with median inflation expectations falling over the next three years to 2.8% of 3.2%.
That might not seem like a big deal, but it’s an important metric for policymakers weighing the psychological impact of inflation. Not only does the central bank need to raise interest rates to curb spending on a real, economic basis, but it also needs to show the public that it’s doing something to make people believe that prices are about to stabilize.
FINAL EFFECT
Tomorrow’s CPI report is one of the last big data releases that Fed policymakers will have in hand ahead of next week’s monetary policy meeting.
Chair Jerome Powell has made it clear that the central bank will hike rates until it brings inflation back to its 2% target – even if that means higher unemployment or wage stagnation. Traders are predicting another three-quarters of a percentage point or 75 basis points hike — the third since June.
But as my colleague Paul R. La Monica explains, if inflation data suggests prices are stabilizing, the odds of another massive rate hike could decrease.
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