US Railroad Strike Could Trigger Soaring Food Prices

Key US Railroad Takeaways:

• Over 100,000 US railroad workers could strike next week without a new contract.
• A strike would raise US food prices and increase the risk of famines internationally. 
• The US economy would be hit with $2 billion daily losses.

As soon as next week, over 100,000 US railroad workers could leave if they do not reach a new contract with the companies. If a walkout occurs, 20 percent of all grain shipments will be disrupted, devastatingly affecting food prices across the country.

US freight railroad services also carry fertilizer for farmers. If farmers do not receive fertilizer, the results will be fewer crops, higher food prices, and more inflation.

US railroad unions say they want to avoid a strike to keep rail workers employed and avoid hurting the economy. Congress can block a strike, but it is too early in negotiations for intervention until at least next week, if at all.

If a strike occurs, millions of Americans will, to some extent, suffer higher prices to feed themselves and their families. The US Labor Department reports that grocery prices have risen over 13% up to July this year; that is the largest annual increase in four years.

International Effects of US Railroad strike

A work stoppage by US railroad workers would also cut America’s food shipments to foreign nations. Right now, the US is helping to reduce the risks of famines that areas in the Middle East face due to the war between Russia and Ukraine; East Africa is additionally an area of concern for famine.

The United Nations estimates that 345 million people worldwide face food shortages; of that number, 50 million people in 45 countries are close to famine. 

US Elections Two Months Away

Important midterm elections are around the corner.

In November, all US House and Senate Seats are on the ballet. The Biden administration is eager to avoid economic disruptions before these important elections. Although the government is avoiding intervening, they are pushing all parties involved to come to a quick resolution.

Odds Of An Agreement

With the US railroad union negotiations, things can change “on a dime” – at a moment’s notice.

But now, it appears like a walkout is more of a possibility. During negotiations, unions have agreed with railroads to raise pay by 24% over a five-year period. A large gap remains regarding excessive work hours and limited time off.

With work hours, for example, rail workers can be called on only 90 minutes before a shift that can last upwards of 60 hours.

If rail workers vote to strike, Congress will likely block it. A strike would cost the US economy nearly $2 billion daily, affecting multiple parts of the economy, such as agricultural, industrial, retail, and wholesale.