Date: 11/23/2022
Author: Mr. X
The return of organized labor is one of the most underreported stories of our time. Starbucks (SBUX), Amazon (AMZN), Home Depot (HD), and other companies that were once known for their left-leaning image are now facing serious challenges to their model of doing business because of the growth of unions.
This is one of those things where it really matters who is in the White House. The National Labor Relations Board is extremely important when it comes to recognizing certain unions as legitimate. It also makes a big difference when certifying a union election as legitimate or not – especially when companies use every trick they have to prevent workers from collectively bargaining. Under the Biden Administration, even if the company wins an election, corporate leadership needs to worry whether the government will say that workers were intimidated.
President Joe Biden, like any politician, has flip-flopped on several issues throughout his long career. However, he’s always generally had the reputation of a moderate, pro-business Democrat who is nonetheless a strong supporter of organized labor.
Yet no president can tolerate a nationwide railway strike. That’s what could be taking place within just two weeks. SMART-TD, the largest freight-rail union in the country, rejected a deal that had been agreed between the Biden Administration, management, and other railway unions. The BLET (the second largest railway union) has endorsed the deal but said it would honor the picket lines if a strike is called.
“I’m hopeful, but I doubt it’s really in the cards,” union president Jimmy Ferguson said in Politico. “I’ve got a lot of issues that are outstanding; that are the reasons why our guys voted it down.”
The White House has said that a strike is unacceptable and the government has the tools needed to prevent it. Senator Chuck Grassley (R-IA) noted that the government ended a strike in 1991. Republicans tried to introduce legislation that would force railway workers to accept the recommendations of arbitrators, but the unions blocked it.
In September, the Biden Administration enjoyed a wave of positive headlines about a deal to avert a strike. The Democrats’ unexpectedly strong performance in the midterms would not have occurred had this strike taken place. On the surface, the Biden Administration can afford to take a hit with a strike now.
Yet now the GOP has the House. While President Biden may seek to trap the Republicans on unpopular issues, the ramifications of a nationwide railway strike are almost too terrible to contemplate. As it stands, no fewer than four unions are set to go on strike just after midnight on December 9.
The Democrats have a bit of leeway here, as it is a long time to 2024. Unfortunately for them, it’s not that long. The midterms were a missed opportunity for the Republicans, but they will get another chance in 2024, when the Senate math is positively ruinous for the Republicans. And while the GOP didn’t get the “Red Wave” it was hoping for, it captured the House – which means that Republican leaders can put themselves of any effort to prevent a strike.
For President Biden, the railway strike presents a political dilemma. The Democrats can not afford to antagonize organized labor before 2024. It will be especially destructive for the White House if action taken to prevent a strike is interpreted as POTUS giving up on unionization at Amazon, Home Depot, Tesla, and other targets. The president must not be seen to betray organized labor.
The Republicans have no such worries. While the specter of President Donald Trump hangs over 2024 (and ’45 has already announced his candidacy), the GOP also has the up-and-coming star Ron DeSantis in Florida. Other GOP candidates could wage a spirited campaign against President Biden, who will face questions about his ability to do the job if he is opposing anyone other than Donald Trump.
Unfortunately for the Democrats, though Vice President Kamala Harris has been sidelined by the Administration (on purpose, from what I’ve heard), she remains the heir to the throne. She is not popular and has no accomplishments as Vice President she can point to. It’s not her fault, as she’s been given tasks that were seemingly doomed to failure, notably on the border, where the Democrats face another dilemma between satisfying core supporters and losing independents. However, if President Biden chooses not to run or is sidelined by health issues, Harris will probably get the nod – and she will not be that difficult to beat.
A railway strike would be ruinous for the American economy. A report this fall estimated it would cost the economy $2 billion a day. Chemical manufacturers, refineries, food, and of course, Christmas shopping, could all be endangered. It’s my belief that President Biden was able to stave off disaster in the midterms by cynically (but effectively) tapping America’s strategic reserve in order to lower oil prices. However, there’s no reserve he can tap in event of a strike.
Will there be a strike? Almost certainly not. The consequences are simply too terrible to contemplate. However, the unions are strong and looking for a fight. The president is not really in a position to oppose them forcefully. This leaves the GOP House – which we can assume will take the lead on any attempt to prevent economic chaos. That will give Republicans a winning issue with the beginning of a new Congress. President Biden is going to need to disappoint someone. Having effectively won the midterms, he’d be better off forcing the unions to compromise. They may grumble, but they know they’re better off with President Biden in the White House than Republicans eager to pin the country’s economic troubles on organized labor.
Of course, that’s assuming the railway unions won’t go out of their way to prove the Republicans right by calling a strike. It wouldn’t necessarily be in their interest – but as we’ve learned in geopolitics over the last two years, pride counts for more than rationality. Railway workers deserve a raise and more sick time, but toppling the country into recession is no way for them to get what they want. It won’t work anyway – because Republicans will be delighted to save the American economy by defeating unions and pinning all the blame on their toady in the White House.
President Biden has been repeatedly underestimated. Let’s hope he’s being underestimated again. A strike would have a bigger impact on the American economy than the Russian invasion of Ukraine.
Mr. X is an investment analyst working in the Washington DC area who specializes in the intersection of business and public policy. After fifteen years working in politics, he writes on a classified basis for RogueInvesting.com to bring you news on what those with power are debating, planning, and doing.
