- 2 H. R. 7200 is the product of the recent National Agreement between virtually all of the Nation's major railroads and some 15 organizations representing the employees on these railroads. The agreement provides for an additional 18 months of labor peace beginning July 1, 1973, when the current moratoriums in various existing agreements expire. The agreement, in part, called for the parties to jointly sponsor certain amendments to the Railroad Retirement system, including the assumption on October 1, 1973 by employers of that portion of the Railroad Retirement taxes paid by railroad employees in excess of Social Security taxes. In effect, the assumption of this tax burden by employers amounts to a wage increase for the employees equivalent to the amount of taxes so assumed. None of the railroads listed on the attached Appendix were parties to the National Agreement. * All of them have labor agreements covering about 9,000 employees with moratoriums extending beyond June 30, 1973, as well as their own private pension plans. Neither the railroads nor the employees desired to follow the National Railroad Pattern and in fact followed a different pattern altogether. these roads would be required by H. R. 7200 to assume a provision of a private agreement to which they were not a party at an additional cost to them of more than $5 million per year. In addition, because these carriers had previously entered into collective bargaining agreements with moratoriums extending beyond June 30, 1973, they would have no opportunity to negotiate an offset to the $5 million additional annual cost. Without the language in Section 108 (b), *Some organizations on the first five railroads listed in the Appendix were parties to the National Agreement and are not involved in this discussion. 3 H. R. 7200, excluding the provisions of Section 108 (b), would result not only in an inequitable pyramiding of costs but also in a similarly inequitable pyramiding of benefits. By reason of this legislation, the employees of the railroads for whom I speak would receive the equivalent of an hourly wage increase of 24. 5¢ per hour effective October 1, 1973, increased to 27. 4¢ per hour on January 1, 1974. These wage increases would be over and above all negotiated wage increases which they will receive under existing contracts. In addition, such a windfall would distort historical wage relationships. In the National Agreement the parties themselves recognized the inequity that their proposed tax shift would have upon the so-called "steel railroads" which have private pension plans and collective bargaining agreements extending beyond June 30, 1973. Accordingly, the parties to the National Agreement agreed that further consideration must be given to such situation. At the time the National Agreement was reached, the parties were of the view that this inequity could be corrected through joint collective bargaining between the affected railroads and the organizations. However, after lengthy discussions, all the parties recognized that this problem did not lend itself to correction through agreement. Rather, a legislative amendment was necessary providing that with respect to railroads having wage moratoriums that extended beyond June 30, 1973, the effective date for the assumption of the employees' Railroad Retirement taxes in excess of Social Security taxes should be postponed until the expiration date of such moratoriums. This would then give these railroads 4. the opportunity in free collective bargaining to reach agreement for an appropriate quid pro quo in return for the assumption of these additional taxes. Section 108 (b) accomplishes the intent of the National Agreement and avoids an inequitable double barreling of the railroads whom I represent. It also authorizes such railroads to agree through collective bargaining to assume the additional Railroad Retirement taxes for their employees at a date earlier than the expiration of the applicable moratorium. Pursuant to this latter proviso, certain of the railroads on the attached Appendix have made such an agreement with the United Steelworkers of America in return for an appropriate quid pro quo contingent on H. R. 7200 becoming law containing Section 108 (b) in the form in which it was reported out of Committee. These same railroads have offered to enter into similar agreements with other involved organizations in accordance with this same proviso. For the reasons outlined above, the railroads for whom I speak urge the adoption of Section 108 (b) as both necessary and vital to the equitable application of H. R. 7200 and support the bill provided such provision is embodied therein. Union Railroad Lake Terminal Railroad Newburgh & South Shore Railway McKeesport Connecting Railroad Youngstown & Northern Railroad Pittsburgh & Conneaut Dock Co. Cambria and Indiana Railroad Patapsco & Back Rivers Railroad Philadelphia, Bethlehem & New England Railroad South Buffalo Railway Steelton & Highspire Railroad Conemaugh & Black Lick Railroad Upper Merion & Plymouth Railroad River Terminal Railway Cuyahoga Valley Railway Monongahela Connecting Railroad Aliquippa & Southern Railroad Pittsburgh & Ohio Valley Railway APPENDIX American Farm Bureau Federation June 1, 1973 Senator William D. Hathaway, Chairman Railroad Retirement Subcommittee Senate Committee on Labor and Public Welfare Washington, D.C. 20510 Dear Senator Hathaway: Please find enclosed a statement relating to H. R. 7200 and similiar proposals to revise existing statutes relating to the railroad retirement system. It will be appreciated if you will include this statement in the hearing record on this matter. Very Sincerely, Maped MM 2tu Clifford G. McIntire, WASHIN |