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Yesterday, the Presidential Emergency Board (PEB) released its recommendations for resolving the labor dispute between U.S. freight railroads and two coalitions representing 11 unions, which represent 75 percent of railroad workers.

The board, appointed by President Obama in October, recommended that railroad workers receive an 18.6 percent wage increase over six years. The recommendations also call for annual increases in health insurance deductibles and employees’ out-of-pocket maximums in 2012, 2013 and 2014, though not at the levels called for by the railroads. The unions sought no increases in what employees pay for health care.

The PEB had 30 days to investigate the dispute and submit recommendations for a resolution. The railroads and unions now have 30 days to accept or reject the recommendations, or come to terms on their own. The 30-day period expires at on Dec. 6. If they can’t come to terms, either party can exercise “self help” — the unions can strike and the railroads can implement a lock-out.

Contract negotiations between rail carriers and 13 unions began in 2009. In September, the National Carriers Conference Committee, the freight railroads’ bargaining representative, and the United Transportation Union (UTU) reached a deal. The pact, which covers 40,000 UTU members, included a 17 percent wage increase over 60 months and a 78-month cap on health insurance contributions.

NCCC and the railroads maintained that the UTU pact should serve as a “pattern” agreement for the other labor unions, but officials at the Rail Labor Bargaining Coalition and the Coalition of Rail Unions, which represent 75 percent of the workers at more than 30 railroads, disagreed. They maintained general wage increases should be greater than the ones agreed to in the last bargaining round, and asked that the PEB recommend no changes to health care benefits.

“We’re pleased that the board, for the most part, agreed that the railroads’ settlement with the United Transportation Union, the industry’s largest union, was an appropriate pattern for settlements with the remaining unions,” said National Carriers’ Conference Committee (NCCC) Chairman A. Kenneth Gradia in a prepared statement.

“While we have concerns about some of the recommendations, we believe the PEB report can serve as a foundation for the bargaining ahead,” Gradia said. “We hope the unions come to the table, as we do, committed to reaching agreements in the next 30 days that fairly address the needs of both sides.”

A railroad strike would “cost the U.S. economy $2 billion a day,” added Gradia.

Frank Wilner, a spokesman for the UTU, said it’s difficult to make “an apples-to-apples comparison” between the UTU’s agreement and the PEB recommendations.

“For example, the [Brotherhood of Locomotive Engineers & Trainmen] earlier settled on wages with BNSF, CSX and NS at lower percentages than the UTU agreement or PEB recommendations, but with profit sharing,” said Wilner via email. “And the percentage wage increases recommended by the PEB for the other crafts do not include the faster progression to pay parity for new hires under the two-tier wage system, bonuses to those under the two-tier system, and conductor certification pay.

“At the end of the day, the PEB recommendations and the UTU agreement have the same bottom-line cost to the carriers,” he said.
 
Brotherhood of Maintenance of Way Employes President Freddie Simpson said in a prepared statement posted today on the union’s website that the union’s national bargaining committee will meet in Washington, D.C., on Tuesday to discuss the board’s recommendations “and attempt to fashion an agreement for rank and file ratification.”

Brotherhood of Locomotive Engineers & Trainmen (BLET) National President Dennis R. Pierce “expressed frustration” with the PEB recommendations, according to a prepared statement.

“The 11 unions working in unison made a compelling case for status quo on health and welfare benefits and an even more compelling argument for wage increases greater than those found in the recommendation,” said Pierce.

“BLET also made very strong arguments for long overdue changes to its craft specific agreements that were documented by substantial evidence, and made it quite clear to the board that our wage settlements with three of the four largest Class I carriers and on-property negotiations with the fourth meant that health care cost-shifting would place a tremendous obstacle in the way of obtaining an acceptable settlement,” Pierce said. “Unfortunately, that is exactly the situation we now face.”