President Joe Biden signed a bill into law making a rail strike illegal, preventing workers from walking off the job weeks before the holiday season.
"The bill I'm about to sign ends a difficult rail dispute and helps our nation avoid what, without a doubt, would have been an economic catastrophe at a very bad time in the calendar," Biden said Friday morning before signing the bill.
After his administration aided in negotiations for months, and the sides reached a tentative agreement in September, talks ultimately stalled and rail workers threatened a strike. Biden then asked Congress to intervene, and the Senate passed a bill Thursday making a strike illegal.
The initial agreement brokered by the Biden administration was accepted by all but four rail unions, who were holding out for guaranteed paid sick leave days. The opposing unions, though, represent the majority of rail workers. The workers and companies had until Dec. 9 to reach an agreement before they vowed to strike, which the industry estimated would cost the U.S. economy $2 billion per day.
"Our nation's rail system is literally the backbone of our supply chain," Biden said Friday. "So much of what we rely on is delivered on rail, from clean water to food and gas and every other good. A rail shutdown would have devastated our economy. Without freight rail, many of our industries would have literally shut down."
A strike by rail workers so close to the holiday season — and in a period of high inflation — could potentially raze the economy. Biden was adamant that Congress send the legislation to his desk by Saturday. Without an agreement, rail movement of certain goods was set to be curtailed as soon as this weekend in preparation for the strike.
Biden at the bill signing Friday said his economic advisors told him as many as 765,000 Americans, "many of them union members themselves," would have lost their jobs.
Railroad carriers begin prepping for a strike seven days in advance, according to federal safety measures. The carriers start to prioritize the securing and movement of sensitive materials such as chlorine for drinking water and hazardous materials.
Ninety-six hours before a strike date, chemicals are no longer transported. The American Chemistry Council found a drop of 1,975 carloads of chemical shipments during the week of Sept. 10, when the railroads stopped accepting shipments due to the previous threat of a rail strike.
The four major railroads also typically move more than 80% of the agricultural freight traffic, according to the National Grain and Feed Association.
Congress has the authority to regulate interstate commerce under Article 1, Section 8 of the Constitution, and the Supreme Court has ruled it can use that authority to intervene in disputes by rail labor that have the potential to affect trade across state lines. A nearly century-old law, the Railway Labor Act of 1926, gives the president the authority to intervene as well in situations where a rail strike could significantly affect essential transportation. The act has been invoked 18 times since it was signed into law.
The House on Wednesday approved a separate measure that would have added seven days of paid sick leave to the contract instead of just one. Though it had bipartisan support in both chambers, that measure was defeated in the Senate vote. Biden at the bill signing thanked Congress for acting so quickly even though he acknowledged it wasn't an easy vote.
"I know this was a tough vote for members of both parties. It was a tough vote for me," Biden said. "But it was the right thing to do at the moment to save jobs, to protect millions of working families from harm and disruption and to keep the supply chain stable around the holidays."
The situation put "union Joe" Biden in a difficult position. Biden said Thursday he supports unions as much as ever, but as president of the United States, rather than a single senator from Delaware, it was his job to look out for all Americans. He said has long been a proponent of paid sick leave, and will still work to make it a right for all workers, not just rail workers.
The initial agreement brokered by the White House would give rail workers a 24% pay increase over five years from 2020 through 2024, immediate payouts averaging $11,000 upon ratification. Under the agreement, workers would receive one extra paid day off and the promise they could attend medical appointments without penalty.
Workers, though, balked at the lack of paid sick leave, because under the agreement they would have to use unpaid time off for medical appointments. Biden on Friday acknowledged his disappointment that paid sick leave was not included in the agreement.
"Look, I know this bill doesn't have paid sick leave that these workers, frankly every worker in America, deserves, but that fight isn't over," Biden said. "I didn't commit we were going to stop, that just because we couldn't get it into this bill that we were going to stop fighting for it. I supported paid sick leave for a long time and I'm going to continue that fight until we succeed."
Union leaders told CNBC they would remember who sided against them in upcoming elections. Union support was critical to forming Biden's ultimately winning coalition in the 2020 election.
"Our membership is going to support whoever stands with them," said Tony Cardwell, president of the Brotherhood of Maintenance of Way Employees Division. "It's looking like the Democrats are standing with our members and making sure that our members get sick leave. If that's the case, we will. If Republicans are bold enough to step out, stand with labor, stand with the blue-collar workers, and vote with our members, then it's likely that they can gain votes as well."
The provision to add seven days of paid sick leave failed in the Senate in a 52-43 vote. All Democrats present to vote supported it except Sen. Joe Manchin, D-W.Va. Six Republicans also backed the measure.
In the House, three GOP representatives joined with all Democrats to pass the sick leave proposal.