Exclusive-Biden's emergency board calls for railroad wage hikes to resolve contract talks

© Reuters. U.S. President Joe Biden walks to Air Force One as he departs for Washington, D.C., from Joint Base Charleston, South Carolina, U.S., August 16, 2022. REUTERS/Joshua Roberts

By David Shepardson and Lisa Baertlein

WASHINGTON/LOS ANGELES (Reuters) -U.S. President Joe Biden's emergency board tasked with helping major freight railroads and unions end a contract negotiation stalemate proposed on Tuesday annual wage increases of between 4% and 7% through 2024, according to a report seen by Reuters.

The board also recommended in its 119-page report set to be made public as early as Wednesday a 3% retroactive increase for 2020 and 3.5% for 2021, when the rail workers did not have a contract, along with five $1,000 annual bonuses and an additional paid day off.

Talks between major freight railroads, including Union Pacific (NYSE:UNP), Berkshire Hathaway-owned BNSF and CSX (NASDAQ:CSX), and unions representing 115,000 workers have dragged out for more than two years.

The proposal represents a 22% nominal wage increase during the five-year period, the report said. The board said it aimed "to act as honest brokers and to recommend terms for an agreement that are fair and reasonable."

Earlier, the White House expressed optimism about reaching a deal.

"The president is optimistic the report will provide a good framework for successful negotiations between the parties over the next 30 days," the official said, adding the recommendations were delivered to the White House and the parties.

Biden appointed the three-member presidential emergency board in July to reduce the risk of a potential strike or lockout that could damage the fragile U.S. economy and choke supplies of food and fuel.

Railroads move everything from Amazon.com Inc (NASDAQ:AMZN) packages to fuel oil and soybeans. Service shutdowns of any kind could send prices for necessities higher and upend battered U.S. supply chains.

Work stoppages are prohibited for 30 days following the issuance of the presidential emergency board (PEB) report to give the two sides time to reach a voluntary settlement. If employers or unions reject the board's recommendations, Congress can intervene.

"To avoid a national rail shutdown, it is in the nation's interest that the parties reach a prompt resolution," the White House official said.

The unions and railroad groups involved in the talks did not immediately respond to requests for comment.

Meanwhile, rail service at major U.S. seaports recently has suffered due to spreading supply-chain snarls and labor and equipment shortages.

"It is in the best interest of all stakeholders for the parties to reach agreements that provide our employees with well-deserved pay increases and prevent rail service disruptions," Union Pacific said in a statement.