Presidential Emergency Board concludes hearings on rail labor dispute

The Presidential Emergency Board last week wrapped up hearings on a dispute between 11 unions representing railroad workers and the nation’s largest rail freight carriers. The board was appointed by President Obama after negotiators for the unions and National Carriers Conference Committee (NCCC), which represents the carriers in labor negotiations, broke down last summer.

The board will use testimony presented by both sides during the hearing to make non-binding recommendations by November 7 for a final settlement of the dispute.

During the hearings, the NCCC argued that rail workers were overpaid, lucky to have jobs in the current economy, and generally greedy for rejecting the NCCC’s final offer that included cuts to their health care benefit. Furthermore, the NCCC argued, a pattern agreement had already been established last summer when the United Transportation Union, accepted an agreement similar to the one that the 11 other unions had rejected.

The unions responded that the deal accepted by UTU was not a pattern since the union represents only about a third of the union workers in the rail industry and that union accepted the deal because the UTU leadership was having second thoughts about a merger with another union that the UTU executive board had agreed to.

The union also testified that union members deserved to share the fruits of their labor that has created record-setting profits for the carriers, multi-million dollar bonuses for the carriers’ CEOs, and, according to CSX, one of the carriers represented by NCCC, “truly outstanding results for investors.”

One of the points that caused negotiations to break down was the NCCC’s insistence that rail workers pay more for their health care coverage. According to Robert Scardelletti, president of the Transportation Communication Union, who testified at the hearing, the NCCC never bargained in good faith on the health care issue. It demanded the cuts and rejected union attempts to meet half way on the issue.

The health care concessions proposed by NCCC would, according to the Rail Labor Bargaining Coalition, which represents six unions in the negotiations, shift $250 million in health care costs away from employers and onto workers. Those who actually seek health care services would bear the brunt of these increases.

The health care issue is important to rail workers because their job is dangerous and working conditions can be unhealthy. According to the Brotherhood of Maintenance of Way Employees Division of the Teamsters, rail workers’ health care costs are 20 percent higher than the national average due to the nature of their jobs.

In his testimony before the board, Scardelletti said that carriers want to shift the cost of health care onto workers even though they are some of the most profitable businesses in the US. During 2010, Class I Railroads, the nation’s largest had operating revenue of $58.4 billion.

Four of the largest railroads, BNSF, CSX, Union Pacific, and Norfolk Southern Railway, which account for 92 percent of total revenue and employment for Class I Railroads, enjoyed average annual profits of 13.4 percent over the last five years, which enabled them to pay down debt, initiate a stock buy back program, and pay record bonuses to their executives.

During 2010, CEO’s of BNSF, CSX, and Union Pacific received bonuses averaging $15 million and had an average fixed salary of $1.2 million.

These bonuses, stock buy backs, and debt pay down were all possible because of the $60,983 in profit produced last year by railway workers.

The unions also challenged the NCCC’s assumptions used to estimate future health care costs increases that it said justified the cost shifting.

Thomas Roth, an economist advising the unions, rebutted some of the testimony that the carriers made about rail workers compensation. The carriers argued that rail workers are overcompensated by about 80 percent. Roth said that this assertion is based on a faulty comparison.

For example, the carriers compared the pay for dispatchers in railway and non-railway jobs. But Roth pointed out that rail dispatchers jobs are highly complex, require special and higher skills than do the jobs of non-railway dispatchers, and require more training and on-the-job experience to master. It’s only fair that these workers be rewarded for their skills, abilities, and productivity, Roth said.

When the board issues its recommendations, both sides will have an opportunity to accept or reject them. If either side rejects, then the two parties must continue negotiations for another 30 days. If no agreement is reached after that, then after another 30 days, a strike or a lockout is possible.

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