Two Thorny Issues Prolong Rail Dispute

The labor dispute that produced Wednesday’s nationwide rail strike is a complex tangle of collective bargaining issues, made more acrimonious by the fact that the strikers have worked without a contract--and thus without a pay raise--for three years.

Compared to most industrial workers, railroad employees are well paid, making an average wage of about $40,000. At stake, however, is more than money.

At issue are two of the thorniest issues in recent labor relations: employer demands for more flexible work rules and for workers to pay a greater share of their health benefits.

America’s freight railroads enjoyed a net profit of $2.2 billion in 1989, a rate of return of about 6%. The freight railroads, however, contend that they need to double that profit margin to remain competitive. Like all industries, they have pushed hard to cut labor costs.

When negotiations began on a new contract in 1988, it was evident that reaching an agreement would be difficult. Eleven unions, representing 235,000 workers, sought annual wage increases of 5% and additional cost-of-living increases. The railroads called for a freeze in engineers’ pay and cuts in the wages of other crew members.

Management also wanted to stop paying 100% of workers’ health benefits, a decision many employers have made in recent years. A decade ago it was common for companies to pay 100% of the health benefits of unionized workers but soaring health costs have encouraged many companies to demand concessions. A 1989 study found that in 80% of all strikes in the United States, proposed cuts in employer-paid health benefits were the key issue.

Work rules long have been a point of contention in the railroad industry.

Management says that previous contracts have forced it to keep too many crew members on each train. It claims that it pays an extra $1.5 billion a year in wages to 22,000 freight crew members whose services are unnecessary. Unions prefer to reduce staffing through attrition. In some cases, unions have bargained such staffing cuts in exchange for better pension guarantees for laid-off workers.

The question of what constitutes a full day’s work is also an issue. Currently, crew members earn a day’s pay if a train travels 108 miles--little more than the standard used early in the century, when trains moved more slowly. The unions contend that some freight trains still move slowly and have resisted changing the standard.

By 1990, when the two sides still could not reach an agreement, President Bush used the Railway Labor Act to appoint an emergency board to make non-binding recommendations. Last January the board proposed general wage increases totaling 10% over four years--about half as much as the unions sought--and cost-of-living increases totaling 11% over four years.

However, the board said that as much as half of the employees’ cost-of-living allowance money should be used to help the railroads pay for increased health insurance costs. And, it said, employees should pay up to one-quarter of any annual increase in health costs incurred by their companies.

The board also recommended increasing the 108-mile work day to 130 miles by 1995. It did not make a concrete recommendation on work rules.

Unions bitterly criticized the board recommendations. Management indicated that it could live with them. Negotiations from that point on were clouded by the threat of a strike and the power of Congress.