Railroad union assesses Biden’s pay increase proposal (NYSE:UNP)

Double Headed Freight Train

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The Association of American Railroads, a trade group representing primarily the major freight railroads, praised a pay raise proposed under President Biden’s Presidential Emergency Board (PEB) suggested resolutions to ongoing rail labor negotiations.

The PEB’s proposed terms include immediate pay increases and benefit changes, with an average employee payout of more than $11K upon ratification.

“President Biden’s PEB issued recommendations that should set the framework for a negotiated agreement between railroads and unions,” AAR President and CEO Ian Jefferies said. “The recommendations would provide 24% compounded wage increases by 2024, with 14.1% of those increases effective immediately, along with additional service recognition bonuses totaling $5,000 over the course of the contract. An agreement based on these terms would lead to the largest general wage increase in nearly 40 years.”

He noted that the PEB recommendations also “markedly exceed” the initial overtures made by major railroad operators and urged railroads to come to an agreement on a contract.

Increased wages have been a sticking point for most major unions, with the Brotherhood of Locomotive Engineers and Trainmen (BLET) President Dennis Pierce and SMART Transportation Division (SMART-TD) issuing a joint statement on the issue earlier this month. A full text of the PEB proposal is available here.

Railroad stocks impacted: Union Pacific (NYSE:UNP), Norfolk Southern (NYSE:NSC), and CSX Corporation (NASDAQ:CSX).

Read more on recent rail traffic trends.

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