Crisis just averted – again.

The United States Senate on Thursday, Dec. 1, passed legislation that will effectively prevent a strike by unionized railroad workers that would have crippled supply chains across industries, including promotional products, and had far-reaching negative impacts on the economy, including likely shortages of goods and widespread job losses.

The Senate acted a day after the House of Representatives also voted to adopt the strike-stopping bill. President Joe Biden is inking his signature to it, making it law.

“Working together, we have spared this country a Christmas catastrophe in our grocery stores, in our workplaces, and in our communities,” Biden said in a statement after the Senate vote. “I know that many in Congress shared my reluctance to override the union ratification procedures. But in this case, the consequences of a shutdown were just too great for working families all across the country.”

Why It Matters to Promo and the Economy

Had a strike occurred, the United States’ cargo rail infrastructure would have come to a grinding halt.

With about 30% of the nation’s cargo shipments by weight moving by rail, the work stoppage would have made it exponentially more expensive and logistically difficult for promo suppliers that rely on rail to move product from ports and elsewhere to warehouse facilities. Companies further from coasts would have suffered more than those near them.

Thank you to those Congressional leaders and bipartisan members who voted to avert a rail shutdown.

Together, we pulled our economy from the brink of a devastating shutdown that would've hurt millions of families and union workers.

I look forward to signing the bill into law.

— President Biden (@POTUS) December 2, 2022

Insufficient capacity in the transportation industry for moving the influx of goods (that would otherwise have been taken by rail) could have led to restocking delays for promo suppliers, which could then translate to inventory shortages. Depending on how long a strike would have lasted, the heftier transport costs also could have fueled further inflation on promo product pricing.

More broadly, a rail shutdown could have led to shortages of food and goods at retail stores and kneecapped the ability to move/dispose of hazardous wastes. Some estimates say the cost to the economy would have been $2 billion a day. A recent report put together by a chemical industry trade group projected that if a strike dragged on for a month, then 700,000 jobs would be lost as manufacturers shut down.

What Congress Did

Back in September, rail workers were within days of taking to the picket lines when union leadership and railroad employers reached a tentative agreement for a new contract for the workers. The deal, brokered with help from the Biden administration, staved off the strike but the contract still had to be ratified by the 12 unions it would cover.

Over the next couple months, the rank-and-file members of eight of the unions approved the contract, with four rejecting it. The unions that kiboshed the deal were prepared to strike next week. Had even one union stopped working, all would have followed, even the ones that approved the deal.

Under the Railway Labor Act of 1926, Congress has the authority to prevent a rail strike and keep workers on the job. That’s what it did with the legislation this week, essentially voting to impose the contract Biden’s administration helped broker and that the union leadership and rail line negotiators agreed to in September. Any strike action now would be illegal.

The big gripe from rail workers unhappy with the contract was that they wanted paid sick time added and an easing of schedules that they say keep them working or on call around the clock.

In particular, union members that objected to the contract wanted seven days of paid sick leave added, but won’t be getting them – at least through the contract that was approved. While the House passed a measure that would have granted the seven days, the Senate didn’t provide the 60 votes required and it died.

Still a Good Deal for Workers?

A worker’s average pay under the contract will be $110,000 by 2024. Workers get an immediate 14.1% wage increase. They also get wage increases totaling 24% during the five-year period of the contract: 2020 to 2024. The deal is retroactive.

Unionized workers will see their next annual increase in July 2023 – 4% – followed by a 4.5% rise in July 2024. They also receive five $1,000 annual lump-sum payments, and at a time when healthcare costs are skyrocketing, the workers will see no change to their insurance copays or deductibles. The workers have been without a contract since 2019.

“At the end of the day, this will be a big win for railroad workers,” Greg Regan, president of the AFL-CIO’s Transportation Trades Department, which represents 37 unions across the transportation industry including all the rail workers, told Axios.