By Lisa Baertlein
LOS ANGELES (Reuters) - U.S. freight railways and unions representing 115,000 workers may have reached a deal to avert a damaging shutdown that could have battered the U.S. economy, but the industry isn't clear of that danger yet.
Leaders of the 12 unions involved in the talks must now sell agreements to members, who will vote to ratify or reject them over the next several weeks. And if Wednesday's rejection of the agreement by one of the smaller unions and complaints online by numerous union members are any guide, this won't be an easy sell.
U.S. President Joe Biden announced the agreement, which was reached early Thursday, and finalizing the deal is vital to his administration ahead of upcoming midterm U.S. elections that could determine whether his fellow Democrats retain control of Congress.
Biden also has vowed to tackle inflation and supply-chain woes that have hit the economy, and this deal was a key part of that goal. While Biden and his administration may have helped forge the agreement, how workers vote is out of their control, labor experts said.
"He has no role in forcing an agreement," Reliant Labor Consultants principal Joe Brock, a former Teamsters local president, said of the president. "I'm not even sure that this agreement will be passed by the membership."
While rail workers have gone three years without a raise amid the contract dispute and the new deal provides significant wage increases, the real holdup in the talks had revolved around attendance, sick time and scheduling issues.
So far, 11,000 members at two of 12 unions are known to have ratified their deals.
However, another 4,900 members at the International Association of Machinists and Aerospace Workers (IAM) District 19 rejected the deal on Wednesday and appear to be headed back to the negotiating table. IAM was not immediately available for comment on Thursday.
In addition, workers from the various railroad unions took to online sites to complain about Thursday's deal, saying it didn't provide them enough protection.
The industry - including Union Pacific (NYSE:UNP), Berkshire Hathaway (NYSE:BRKa)'s BNSF and Norfolk Southern (NYSE:NSC) - slashed almost 30% of its workforce over the last six years, demanding more from workers who risked COVID-19 exposure while companies increased profits, stock buybacks and dividends.
Workers have agreed not to strike while the ratification votes are tallied.
A strike could have frozen almost 30% of U.S. cargo shipments by weight, stoked inflation, cost the U.S. economy as much as $2 billion per day and unleashed a cascade of transport woes affecting the U.S. energy, agriculture, manufacturing, healthcare and retail sectors.
Two large unions representing about 60,000 workers - the transportation division of the International Association of Sheet Metal, Air, Rail, and Transportation Workers (SMART-TD) and the Brotherhood of Locomotive Engineers and Trainmen (BLET) - were among the last holdouts and now need to get their members to ratify the deal.
They're "going to have to campaign very aggressively," said Seth Harris, a professor at Northeastern University.
"There's a lot of anger among the members of these two unions because they feel, after being essential workers during the COVID pandemic, they were getting screwed on the attendance policy and getting punished for taking sick leave," said Harris, a former Biden administration official focused on labor and the economy.