Dividends and US railways, unions avert damaging shutdown, but proposed agreement faces difficult path

Every disagreement has both known and easily seen reasons and some underlying which are simmer below the surface. Often times we heard about the easily seen reasons because they are the easy fruit to harvest. The issues under the surface are harder to negotiate because they tend to be feelings that people have – some based on facts, some based on myths but feelings nevertheless which need to be dealt with.

In an article by Lisa Baertlein of Reuters, the unions and the railways were set to strike in mid-September and that would not be good for the economy. Railways move freight and the government is worried the economy could go into recession and they have elections in November. The government mediated an agreement with the unions which includes a higher pay raise. Often times while a pay raise is front and center, the issues of attendance, sick time and scheduling are the underlying issues which workers deal with daily. With many tech advances, these issues are tracked closely, and people can feel the company is working against them rather than with them.

The agreement with the railways involved 115,000 workers and 12 unions which all have to have votes to agree to the terms of the government and railways. In most combinations there are some unions which have an easier sell than others, just because of what members want or how they perceived how they are treated. There will be some who saw railways continuing to make profits, pay dividends and very little went to the workers.

Linking to dividend paying stocks, the railways when they are operating are similar to utility stocks which tend to be highly regulated and there is competition, but not necessarily between other railroads. The competition is between trucks and ships and the movement of goods, not necessarily between 2 railroads. This important movement of goods allows the railways to earn profits to pay dividends and shareholders are reasonably satisfied.

There are more questions than answers, till the next time – to raising questions.


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