Biden secures deal to avert US rail strike

US president Joe Biden has announced that a tentative deal has been reached to avert a rail strike that threatened to disrupt supply chains and inflict serious damage to the economy as early as Friday.

The agreement came after months of negotiations involving America’s largest rail companies and the unions, which became increasingly intense in the past few days.

Top Biden administration officials stepped in to mediate the talks, including Marty Walsh, the labour secretary, Pete Buttigieg, the transportation secretary, and Brian Deese, director of the National Economic Council.

“I thank the unions and rail companies for negotiating in good faith and reaching a tentative agreement that will keep our critical rail system working and avoid disruption of our economy,” Biden said in a statement on Thursday.

He said rail workers would get “better pay, improved working conditions, and peace of mind around their healthcare costs: all hard-earned” while companies would “be able to retain and recruit more workers for an industry that will continue to be part of the backbone of the American economy for decades to come”.

In a statement, the unions said the new contracts would provide rail employees with “a 24 per cent wage increase during the five-year period from 2020 through 2024, including an immediate payout on average of $11,000”.

The risk of a rail strike across the world’s largest economy had risen sharply in recent days, triggering increasingly strident warnings, particularly from business groups and leaders, that it would deal a new and immediate blow to supply chains at a time when they were already strained, exacerbating inflationary pressures and leading to widespread shortages.

For Biden and congressional Democrats, such a hit to the economy with less than two months to go before the November midterm elections would have been politically toxic.

A strike would have also been crushing for Biden because he has cast himself as the most union-friendly US president in decades, as well as being a longtime user of the American railroad system during his decades in the Senate when he commuted daily to Washington from Delaware on Amtrak trains.

Congressional leaders were also relieved by the deal, since they had been exploring options to stop a potential strike through legislation. “With hope for an agreement, but concern for the challenges that a strike would present, Congress stood ready to take action,” Nancy Pelosi, the speaker of the House of Representatives, said on Thursday. “Thankfully, this action may not be necessary,” she added.