Episode Preview with TTI's Allan Rutter (audio, 38s):
Full Episode (audio):
December 15, 2022Episode 47. All Aboard? When unions, management, and Congress dodged a nationwide rail strike.
FEATURING: Allan Rutter
Rail industry employees and management were at odds for months and on the verge of a nationwide shutdown, until Congress and the White House invoked an arcane 1926 law to settle the dispute in only a few days.
About Our Guest
Senior Research Scientist
Allan Rutter is head of TTI's Freight and Investment Analysis Division and helps coordinate the Institute’s freight research practice. Allan led the U.S. Department of Transportation's Federal Railroad Administration for President George W. Bush from 2001 to 2004 and has also served as executive director of the North Texas Tollway Authority. Allan worked for four different Texas governors and was associated with the first iteration of high-speed rail in Texas in 1990.
Bernie Fette (host) (00:14):
Hello. This is Thinking Transportation — conversations about how we get ourselves and the things we need from point A to point B, and what may happen along the way. I’m Bernie Fette with the Texas A&M Transportation Institute. News of a nationwide strike by rail workers may have come as a surprise to those of us who thought the dispute was behind us earlier in the year. So when a handful of unions rejected a tentative deal, worries over a walkout immediately began to threaten fragile supply chains just as the holiday shopping season was moving into high gear. Allan Rutter is a senior research scientist and an expert in freight movement, especially the freight that moves on railroad tracks. He’s with us for this episode to help us understand how things almost reached a boiling point, where we are now in the story, and what may lie ahead. Welcome, Allan. Thanks for joining our conversation today.
Allan Rutter (guest) (01:20):
Happy to do it, Bernie.
Bernie Fette (01:23):
So we’re here to talk about the nationwide railroad strike that almost happened.
Allan Rutter (01:29):
Bernie Fette (01:30):
It seems that the pot had been simmering for quite a while before it got to the boiling point, or close to the boiling point, and some people would say, I think, that it did actually reach that point. So how did we get there?
Allan Rutter (01:42):
Well, it’s a long story. This particular contract negotiation had been stirring around unresolved since before COVID happened. I think the contract that these guys were all under expired sometime in 2020. COVID comes in and really inhibits the ability for the parties, the rail labor, and the railroads themselves who negotiate through intermediaries. They were unable to do this face-to-face, and that’s really the best way for this kind of thing to be resolved.
Bernie Fette (02:17):
Allan Rutter (02:19):
So this really kind of comes to a head earlier this year about March or so, when the National Mediation Board, an actual federal agency with three Senate-confirmed people released the parties, which is a formal way of saying that the railroads and the rail labor who had been talking with each other were no longer going to formally mediate through the National Mediation Board. And then under the 1926 Railway Labor Act, which applies to railroads and to commercial aviation, that set into effect a whole series of deadlines, cooling off periods, which got us to the point where we were a little over a week ago.
Bernie Fette (03:08):
So that really changed the rules of the game kind of in midstream, huh?
Allan Rutter (03:11):
It accelerated things.
Bernie Fette (03:13):
I see. Okay.
Allan Rutter (03:15):
It was interesting given that as this was coming up for Congressional consideration, a number of parties both on the, the legislative side and on the rail labor were like, why can’t people talk this out amongst themselves? Well, they were kind of doing that for a while. The mediation board’s action put this into, I mean, to overuse a rail metaphor, this train was on that track and that’s where it was going.
Bernie Fette (03:42):
You were talking about the progression of the talks, and I think that there was a tentative agreement that happened several months ago that was brokered by the White House.
Allan Rutter (03:54):
Yes. So after the National Mediation Board released the parties, the President created, which he is allowed to do or authorized to do under the Railway Labor Act, a presidential emergency board, A PEB — PEB 250 — they came up with their set of recommendations sometime in August. And it was one of those cooling off periods where there was a possibility of a strike that the administration acting through Secretary Buttigieg of the Department of Transportation, and Marty Walsh, the Secretary of Labor, a former union guy and mayor from Boston, they brokered a deal between the railroads and the labor that is based on that PEB 250 with a couple of sweeteners, some additional lifestyle working condition-related stuff that goes beyond the sort of salaries and benefits kind of discussion that was in the PEB. So they worked out a deal on September 15th, that’s what was sent back to all the rail unions, all 12 of them. And ultimately eight of those unions said, yes, we’re ready to go. And four of them said, nah, that’s not good enough.
Bernie Fette (05:09):
And this isn’t necessarily a democracy we’re talking about. Just because there was a majority vote doesn’t mean that it was a done deal.
Allan Rutter (05:17):
Yes. So it’s not so much that eight unions are in and four are out, so everybody wins. And it’s really, all of those votes were close. I think none of ’em were more than sort of 51, 53. It was a very closely run thing. But you know, I think we have to understand the effects of COVID on rail labor as a whole, that these guys were feeling sort of hard pressed and not really recognized. And so a lot of their members were like, nah, this, this isn’t working for us and we don’t feel appreciated.
Bernie Fette (05:53):
Okay. And then we get to the point where Congress enters stage left, stage right. And in a lot of public opinion polls that we see from time to time, the United States Congress does not typically get high marks for getting things done — fairly or unfairly accused. But in this particular case, things did seem to happen pretty quickly. A bill was passed, quickly signed by the President, and viola! No rail strike.
Allan Rutter (06:21):
It’s really remarkable. I mean, uh, a lot of the discussion of this as the labor unions were voting on this back in October, most rail industry observers pointed to the possibility of Congressional action as not being guaranteed, given the relative polarization of the parties. There was a thought that, you know, you can’t really depend on Congress to agree to this really quickly so that a strike was going to be possible. That the fact is that the President stepped in and said, “Hey, all things considered, I would rather we not be in this position, but we cannot have a strike happen.” The House introduces a resolution and votes it out. And then the Senate does the very same thing. So, you know, to go from the President saying, this ought to happen to both houses saying yes, there shouldn’t be a strike, and the deal that you guys executed on September 15th, that’s the deal. So it’s remarkably quick and really bipartisan the votes margins in both the House and Senate were pretty strong.
Bernie Fette (07:27):
Why was this dispute any different in terms of the Congressional action? Was it just the fact that it was driven so much by urgency?
Allan Rutter (07:35):
Well, one, most collective bargaining things don’t get resolved by Congress. And that’s the function of this Railway Labor Act. In 1926, Congress decided that the railroads were too important to the economy and to the people they serve. And of course, consider back in 1926, the railroads were the means by which most people got around between cities. And most freight was being moved by rail. So it, you know, incredibly critical to the economy, both from a passenger and a freight standpoint. They said in this condition or in this instance the the overall collective bargaining between parties, that’s too important to just leave them up to themselves. So we create this structure for a Presidential Emergency Board and for possible Congressional action. Now, Congress could have said, okay, guys, go back to the bargaining table. Mm-hmm. <affirmative>, they could have said, we send you guys to mandatory arbitration. But given the fact that the president and his cabinet had negotiated a deal back in September, they had something really on the table. And so they said, this is the deal. That’s what’s gonna happen.
Bernie Fette (08:49):
And they could have also, I think, imposed another 90-day cooling off period as I understand it. But they chose, no, let’s get this done now.
Allan Rutter (08:57):
Yeah. I think for a whole host of reasons, not the least of which is the reduction in uncertainty. Uh, and I think there were also some indications that it wasn’t like protracted negotiations were gonna resolve the main issues and sticking points. I think it became pretty clear that rail labor was really concerned about the lack of paid sick leave, which is something they had asked for. The Presidential Emergency Board considered it and said, you know, that’s really more for a grievance and arbitration thing between rail labor and the individual railroads. But the rail labor guys were like, listen, we would like two weeks of paid sick leave. And the railroads were like, nah, we’re not gonna do that. You know, it’s interesting if you consider that about 75 percent of the private sector workforce gets paid sick leave as a benefit. But there’s an awful lot of parts of that private workforce that don’t, and not the least of which are independent operators who are truckers, like the guys who pick up the containers from the ports and take them to the railroads. Those guys don’t get paid sick leave either.
Bernie Fette (10:09):
Right. And, and you’re talking about some of the particulars of what was negotiated and what wasn’t negotiated, which makes me wonder on the surface, looking at the law that that was invoked to resolve the dispute. It’s easy to see or it’s easy to get the impression, I should say, that the management side of the conflict has the upper hand in cases like this one. Am I oversimplifying there? Am I misreading there?
Allan Rutter (10:37):
Uh, not necessarily. I think it all depends on what’s at issue. In this particular case, I think if you look at what the Presidential Emergency Board recommended, which was some fairly substantial wage increases, increases in benefits, and of course rail labor already has some pretty substantial benefits in terms of their medical insurance being provided at some very small co-pays and they’re subject to a different retirement system than Social Security. So at the end of this Presidential Emergency Board, they were already looking at some pretty substantial gains from a monetary standpoint. It’s the working conditions stuff that were still a problem. And frankly, if you look at what happened over the pandemic, I think rail labor felt that they showed up to work every day. Trains don’t run remotely. Uh, so the sorts of working conditions and the fact that they’re on call pretty much 24/7, when you’re told to go to work, you have to go to work. It’s a difficult job and it’s a dangerous job, and it’s a job where you’re showing up all hours of the day, all seasons of the year. It’s a tough gig. And so I think they weren’t really feeling a whole lot of appreciation or affection.
Bernie Fette (12:00):
So, regarding which side perhaps had the upper hand in this dispute depends a lot on whose lens you’re looking through.
Allan Rutter (12:07):
Yes. And, and certainly the labor folks were not seeing that they had gained enough in the resolution of this.
Bernie Fette (12:15):
I’m curious about your thoughts on where we’d be right now if the strike had not been prevented, how the dominoes may have fallen, you might say. Can you talk a little about the railroads more broadly? What do they carry every day? You talked about how it’s a 24/7 thing. They don’t run remotely. Can you expand on that a little bit?
Allan Rutter (12:38):
Let me talk a little bit about how a strike would’ve affected businesses and industry in Texas in particular. A lot of livestock in Texas depends on grain that moves by rail. That means beef, cattle, poultry, both turkeys and chickens. There’s an awful lot of livestock operations in Texas that depend on grain coming by train. Fracking depends on sand that comes from Wisconsin. For some reason, there’s just something special about, uh, Wisconsin sand and that moves by rail car. Most electricity in Texas is produced by natural gas, but there’s still some coal-fired plants and particularly the LCRA plant in LaGrange uses.
Bernie Fette (13:20):
And that’s the Lower Colorado River Authority’s power plant?
Allan Rutter (13:23):
Yes, sir. They’ve used coal for the Powder River basin in Wyoming. That moves by rail. Ethanol. That gets mixed into gasoline as you can see that from every gas pump, tells you how much ethanol is in it — that gets produced in the Midwest from corn and then moves by rail car and not by pipeline. Drinking water depends on chlorine. And a lot of that chlorine moves by rail car because it’s so specialized and toxic; rail is the safest and most direct way to make that happen. And then finally, there’s a lot of, uh, motor vehicle manufacturing in Texas, particularly GM in Arlington and Toyota in San Antonio. They depend on rail to move parts and finished goods in and out. So not having freight rail service would’ve been a big deal for Texas.
Bernie Fette (14:13):
So one of the things I was waiting for you to talk about was whether or not this had any impact at all on passenger rail, on Amtrak. Is this exclusively a freight rail thing or is there any overlap there?
Allan Rutter (14:25):
There are a lot of Amtrak services that depend on freight rail access, most long distance services of which is what operates through Texas. That depends on freight railroads. And if they go out and can’t be served, then those services don’t happen. There’s an interesting thing about the Northeast corridor, which Amtrak owns, but there’s some freight rail that goes across it, particularly in Delaware, that goes into the Delaware- Maryland peninsula. To the extent that there are issues with some of that freight rail that crosses there, there may have been some problems with Northeast Corridor service, but there’s an awful lot of Amtrak services. I’m thinking in particular about what happens in California. Most of those move on freight rail rights-of-way.
Bernie Fette (15:14):
Okay. In just talking with people while this story was unfolding, I was a bit surprised to find out that some people weren’t aware of the impending strike at all, or if they were aware of it, they didn’t seem to be terribly concerned about it. I’m not sure how to ask this question, but what do you think that that says about our collective dependence on the railroads? Are we taking things for granted?
Allan Rutter (15:39):
I think there’s a certain amount of that, and that’s a good thing. Frankly, not having to worry about it in the same way that up until February of 2021, most Texans didn’t have to worry about switching on the light switch and power coming on. We depend on this sort of background service and freight railroads are one of those things where their dependability becomes something that you sort of take for granted. I think this particular strike is — and its resolution by Congress — is a way of saying to both railroads and the people that work for them, this is really important and we can’t afford for it not to be working.
Bernie Fette (16:21):
And the COVID-19 pandemic that you had mentioned early on in our conversation really brought the concept of supply chains into a national conversation. How we get our toilet paper and our gasoline and our bananas and everything else that we need. Do you think that the pandemic’s effect on supply chains had any impact on how people may have viewed the potential of a nationwide rail strike?
Allan Rutter (16:47):
I think it had a, uh, there was a hook there that, uh, people in Congress looked at that and said, for all kinds of reasons, we don’t want to put our supply chain in crisis. Regardless of how different parts of industries may or may not use railroads, it’s too interdependent for that to go away. I think in particular, if you think about intermodal containers that move from ship to trucks to railroads, so much of the supply chain is so interdependent between modes that having the railroads go offline became something that a whole lot of parts of industry said, nah, we can’t really take that.
Bernie Fette (17:30):
We don’t wanna risk that.
Allan Rutter (17:32):
It’s too fragile.
Bernie Fette (17:33):
Yeah. For a few years you served as the head of the Federal Railroad Administration, and even though you were not in an elected position, you operated very closely to people who were. You’re a researcher and a, a spectator of sorts now, but there was a time when you were much more in the middle of the public policy mix. Reflecting back on that time, were there any moments that looked anything like what you’ve been watching lately?
Allan Rutter (18:06):
I think the, probably the closest thing that we had to work through really were two things. One is two months after I was confirmed by the Senate in July of 2001, September 11th happened. I was actually in Chicago on an event with the Chicago Commuter Rail Agency and we were gonna talk about grade crossings — while we were watching the towers falling. That really changed our, the things that were on our plate and rail security, rail vulnerability became something that we had to think about a lot. So I, I think the biggest impact thing that I can remember, that’s one of them. And then maybe a year or two later, Amtrak itself was having some financial problems and difficulties. And one of the things that we did at the FRA was issued them a rail rehabilitation and improvement financing loan, a RIF loan, of $200 million that kept them solvent. And had that not been done, they would’ve had some operating problems and faced some real challenges. So I can see what the administration was in a position to be thinking about and watching the Secretary of Transportation and the Secretary of Labor in the middle of all of this made me think that would’ve been some high-profile, high-intensity conversations that were going on.
Bernie Fette (19:35):
Yeah. I would like to start wrapping up by asking you to offer a contrast on a couple of things. First, now that this most recent dispute has been put to rest, at least for the time, are there any looming threats on the horizon with regard to labor and management conditions in the rail industry that you’re concerned about? And second, I’m wondering whether there’s any bright spot in what we just went through, something positive that we can carry forward, maybe? So maybe two sides of that coin.
Allan Rutter (20:14):
I think the challenge that we’re facing really isn’t rail-related. It’s another labor/management thing and it’s west coast ports. They have chosen to continue to be negotiating without the threat of a strike. And their deal expired in July of this year. So there’s an ongoing sort of risk that’s associated with west coast ports that needs to be resolved. The good news is that labor and management on both sides of that, in part encouraged by the administration, have kept their negotiations at the table instead of spilling out into actions or the possibilities of a strike. So I think the remaining risk to the supply chain is associated with west coast ports. I think they’re probably a couple of bright spots here. One of them is the extent to which working conditions and the importance of rail labor has been increased in visibility. Their jobs are really tough. That’s a tough gig to have and to make sure that there’s a lot of people throughout the industry, throughout Congress who now have a heightened appreciation for what these guys do. That’s something that’s good news from all of this. And I think that there’s continued attention to shippers and what they depend on railroads to do. The Surface Transportation Board, another entity that’s independent of the Department of Transportation, five Senate confirmed members on that, and they are really focused in a laser beam on making sure that railroads do what they have promised shippers that they would do. And their chairman, Marty Oberman from Chicago is really calling attention to, let’s make sure that railroads are functioning in a way that works for everybody. There’s a lot more attention on how railroads function and they’re getting a lot more attention on the national level.
Bernie Fette (22:16):
And maybe a, a chance to have a greater appreciation for something before we happened to lose it.
Allan Rutter (22:23):
Absolutely. I think most of us, the only time we think about railroads is when we’re stopped at a grade crossing and wonder when we’re gonna be able to go again. Railroads really provide a really crucial service in our nation’s economy and in Texas. Texas has more railroad employees, more railroad miles than any other state.
Bernie Fette (22:45):
So like a lot of other elements of our transportation system, we really don’t think about it until something goes wrong with it.
Allan Rutter (22:52):
That’s the case. And the good news is Congress took action and acted in quick and bipartisan fashion to keep things running.
Bernie Fette (23:02):
What have I not asked you about that you were wanting me to ask you about?
Allan Rutter (23:06):
I think the only thing that I’d make a case about is how railroad workers did their jobs throughout the pandemic. Just like truck drivers who were keeping our grocery stores fully stocked, railroads were doing their work all throughout the pandemic, these guys were showing up in all kinds of weather, all kinds of conditions, and they showed up and made that part of the industry work. When folks like us had the ability to work from home, they didn’t have that ability and they made the railroads continue to work and think this is one way of showing some appreciation for, hey, you, you guys, we really appreciate how much your actions was such a benefit for our economy.
Bernie Fette (23:59):
And as you said a little earlier, the railroads run 24/7, but they do not run remotely.
Allan Rutter (24:07):
Nope. Right now, those locomotives have two people in that front cab, and it’s way too important. The things that can go wrong can go wrong spectacularly. So it’s really important for those things to have some people involved.
Bernie Fette (24:22):
Last question. What gets you excited to come to work every day after this many years of doing what you’ve been doing?
Allan Rutter (24:30):
I think the thing that really makes me excited about, particularly coming to work at TTI is how many really sharp and smart people we have and how many really important things our people are working on. We were at an event on Tuesday where we were talking with some of the other people who had done these podcasts, and I think about the stars and really incredibly sharp people that we have around us. I get a lot of enthusiasm and excitement about just being around smart people, and we have lots of those.
Bernie Fette (25:03):
That we do. We have been visiting with Allan Rutter, a senior research scientist at TTI. Thank you, Allan. So glad you could join us and bring your characteristically sharp focus to a somewhat cloudy picture. We really appreciate it. Thank you.
Allan Rutter (25:21):
Thanks for the opportunity.
Bernie Fette (25:24):
The only time that many of us think about America’s railroads is when we’re stopped at a train crossing, wondering how long it will be before we can continue on our way. We often fail to consider how important those rail lines are to our economy. Livestock operations depend upon grain. Drinking water requires chlorine. Auto assembly plants need parts that come in to produce cars that are shipped out. And the gasoline for those cars requires ethanol. All of these and more are moved by rail. We often have to face the possibility of losing something before we’re reminded of just how much we appreciate it. COVID-19 helped us understand that. And the railroad strike that almost was, has served as a reminder. Thank you for listening. Please take just a minute to give us a review, subscribe and share this episode. We hope you’ll listen again next time when we visit with Melisa Finley and hear about wrong-way driving, and the newest ways to combat a crash trend that’s somewhat rare, but almost always deadly. Thinking Transportation is a production of the Texas A&M Transportation Institute, a member of the Texas A&M University System. The show is edited and produced by Chris Pourteau. I’m your writer and host, Bernie Fette. Thanks again for listening. We’ll see you next time.