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    Railroad Workers Point to Punishing Schedules as Cause of Strike

    Employees say the inflexibility of scheduling upended their personal lives. The companies say they maintained service while using fewer resources.To defuse a labor dispute that brought the nation to the brink of a potentially catastrophic railroad strike, negotiators had to resolve a key issue: schedules that workers say were punishing, upending their personal lives and driving colleagues from the industry.Workers, industry analysts and customers say the practices emanate from a business model that focuses relentlessly on holding down expenses, including labor costs. They say this leaves rail networks with little capacity to work around a disruption, whether it be a personal issue for an employee or a natural disaster like a hurricane — or, for that matter, a pandemic.Negotiations in which the Biden administration took an active role produced a tentative contract deal announced early Thursday. The agreement included a significant pay increase for the workers, whose base wages typically start around $50,000 and top out around $100,000, excluding overtime and benefits. But scheduling was the sticking point.Unions complained that to manage a shortfall of employees, the carriers effectively forced their members to remain on call for days and sometimes weeks at a time, partly through the use of strict attendance policies that could lead to disciplinary action or even firing. They said the policies pushed workers to the limits of their physical and mental health.“Every facet of your life is dictated by this job,” said Gabe Christenson, who until this year worked as a conductor for a large freight rail carrier. “There’s no way to get away from it.” Carriers said employees could take time off through paid vacation, income replacement for sick workers or removal of themselves from the list of available workers.“Railroads provide multiple ways for employees to take time to care for themselves and their families,” the Association of American Railroads, an industry group, said in a statement earlier this week.By Sunday, leaders of 10 of the 12 unions in the talks had agreed to contract terms. But two unions representing conductors and engineers — about half the 115,000 freight rail workers involved in the dispute — held out for a concession on scheduling, like the ability to see a doctor or attend to a personal matter without risking disciplinary action.President Biden in the Oval Office on Thursday with representatives of the railroads and the unions as well as Labor Department officials.Doug Mills/The New York Times“It would not harm their operations to treat employees like humans and let them take care of medical issues,” Dennis Pierce, president of the Brotherhood of Locomotive Engineers and Trainmen, one of the two unions, said in an interview on Monday. “It’s the primary outstanding issue, one we won’t budge on — the request that they stop firing people who get sick.”After the tentative deal was announced, the two unions said it included “contract language exempting time off for certain medical events from carrier attendance policies.” The agreement will require ratification by union members, a process that could take a few weeks.In some respects, the freight rail industry is similar to other swaths of the economy, such as retail and food service, where employers have imposed increasingly lean staffing in recent decades.Rick Paterson, a longtime industry analyst with the investment bank Loop Capital, said the staffing trend for railroads became more pronounced in the early 2000s when, after years of consolidation, carriers and their investors began to recognize that they had pricing power.As a result, the dominant business model in the industry shifted from one in which the carriers sought larger volumes of traffic to one in which they sought to increase profits by raising prices and lowering expenses like labor costs.“They realized that if growing pricing is good for margins, then keeping costs low is even better,” said Mr. Paterson, who has referred to this thinking as “the cult of the operating ratio,” after the ratio of operating expenses to revenue.A freight train yard near the Port of Los Angeles on Thursday. A strike by freight rail workers would have been economically damaging.Alex Welsh for The New York TimesThe side effect, however, was to gradually eliminate any cushion in staffing levels.Unlike many workers, the conductors and engineers who operate trains don’t get weekends or other consistent days off.Instead, said Mr. Pierce, the president of the locomotive engineers union, workers go to the bottom of a list of available crews when they return home from a trip that can last days. The fewer the workers, the shorter the list, and the less time it takes for them to be summoned into action again.“It can go on indefinitely, till they interrupt the cycle by taking paid time off, which the companies routinely reject,” Mr. Pierce said.Major U.S. freight rail carriers began to accelerate the staffing cuts in recent years as they switched to a system known as precision scheduled railroading, or P.S.R., which focuses on scaling back excess equipment and employees and streamlining the shipping process. The industry has said P.S.R. enables carriers to run more efficiently and provide more reliable service, while also improving profits. Freight rail customers and employees say it has resulted in deteriorating working conditions and customer service and little resilience in dealing with unforeseen circumstances, like weather emergencies. The Surface Transportation Board, a federal regulatory agency, estimates that the carriers have 30 percent fewer employees today than six years ago.Reducing labor to match this operating model may have been sound in principle, said Mr. Paterson, the industry analyst. But he said the carriers appeared to have cut back too much to allow them to handle potential disruptions, of which the pandemic was an epic example.“When you do P.S.R., you can drop your head count by 30 percent, but why don’t you drop it 28 percent and build in a crew reserve?” he asked. “That didn’t happen.”With little margin for error, carriers found themselves with too few workers to operate their rail networks once business began to recover in the second half of 2020, putting more and more stress on their workers, and making it even harder for them to take time off.Freight rail workers on train tracks in Atlanta on Thursday.Dustin Chambers for The New York TimesWhen Mr. Christenson, the longtime conductor, who is also a co-chair of the industrywide group Railroad Workers United, began feeling run-down last year, he was reluctant to see a doctor. Under his company’s attendance policy, taking an unplanned day off could lead to disciplinary action, and “I worried about triggering an investigation,” he said.So he waited until he could get an appointment on a scheduled day off a few months later, at which point he got bad news: He had an infection that might have been easily resolved with medication but now required surgery.“They had to cut infected tissue out in my leg,” Mr. Christenson said.Railroad workers and their families, many of whom asked to remain anonymous for fear of reprisals, said similar attendance policies, which are partly intended to manage the industry’s labor shortfall, had resulted in workers’ missing important life events.This year, for example, BNSF Railway introduced a new point system for some employees, according to a February memo obtained by The New York Times. Under the policy, workers were awarded 30 points to start with and would lose points — from two to 10 — for scheduling a day off for a variety of reasons, including a family emergency, sickness or fatigue. They lose even more points for being unavailable at the last minute.When workers run out of points, they face escalating penalties, starting with a 10-day suspension, followed by a 20-day suspension and ending with possible firing. Workers can earn back points by being available for two weeks straight. BNSF said on Thursday that the policy was “designed to improve the consistency of crews being available for their shifts” and to give employees more “predictability and transparency” regarding their schedules. It said that the program was achieving those goals but that revisions had been made to give employees more flexibility. One railroad worker said the fast turnaround time between shifts had forced him to skip doctor’s appointments to address his symptoms of long Covid. Railroad workers’ family members said they rarely celebrated birthdays or holidays together even before the pandemic.Workers say that while they have paid vacation and days allotted for personal leave, the constraints that employers impose — like requiring vacation to be taken in limited windows that are far oversubscribed, or simply rejecting a proposed personal day — severely limit their options as a practical matter.Shippers have grown frustrated, too.Rail cars full of grain sat at production facilities in the Midwest for weeks at a time earlier this year, far longer than typical, said Max Fisher, the chief economist and treasurer for the National Grain and Feed Association.Chemical manufacturers, which rely on freight rail to move their products, have grown increasingly frustrated with the carriers since December, according to three surveys by the American Chemistry Council, an industry association. The latest, conducted in July, found that 46 percent of the companies felt that rail service was getting worse, while only 7 percent said it was improving.“Freight rail has been a constant thorn in our side and been a significant challenge for our members for quite some time,” said Chris Jahn, the organization’s chief executive.While the labor agreement announced on Thursday may avert a strike, it is unlikely to resolve the deeper issues that have put unions and rail carriers on a collision course. Even if carriers wanted to turn back the clock on efforts to increase efficiency, they would have shareholders to answer to.After Bill Ackman, the activist investor, won a proxy battle over the freight carrier Canadian Pacific a decade ago, the company hired Hunter Harrison, who pioneered P.S.R., as its chief executive. Mr. Harrison imposed the system there and then at CSX after joining that company in 2017, prompting investors to pressure other carriers to follow suit to eke out similar efficiencies.“Lurking in the background is the constant threat of shareholder activism if any of the railroads’ operating ratios become outliers on the high side,” Mr. Paterson said in testimony to the Surface Transportation Board this spring. More

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    Biden Maneuvers to Try to Avoid Devastating Rail Strike

    The Biden administration is considering executive action to try to avoid a shutdown of the nation’s rail network that would harm the economy ahead of the midterm elections.WASHINGTON — President Biden, desperate to avert a damaging freight rail strike that could exacerbate rapid inflation, is pushing rail companies and unions to reach an agreement ahead of a Friday deadline, while exploring whether he can do anything unilaterally to assuage workers’ concerns.Mr. Biden and his economic team have been inserting themselves into final-hour negotiations between rail unions and large rail companies, which are at loggerheads over scheduling and sick time. Labor groups have insisted that employees be able to take unpaid time off for physician appointments, a request railroad companies have been unwilling to grant.On Wednesday, in anticipation of a strike, Amtrak said it would cancel all long-distance passenger trains beginning on Thursday in order to avoid possibly stranding people given that many of its trains run on tracks operated and maintained by freight carriers.Also on Wednesday, members of a small rail union, whose leaders had reached a tentative deal with freight companies, voted down the agreement, signaling more difficulty in negotiations to come. And Mr. Biden’s labor secretary gathered union and company leaders in Washington to try to resolve the impasse, with little progress.The looming strike has plunged Mr. Biden into a difficult position at a critical moment, with midterm elections that will determine whether Democrats retain control of Congress rapidly approaching and rampant inflation chipping away at the president’s support. Mr. Biden, a longtime champion of labor leaders and union employees, is caught between his long-running push to reduce the pandemic-era supply chain snarls that have helped fuel inflation and his efforts to continue to win the enthusiastic support of labor unions.As a result, Mr. Biden is attempting to walk a careful line, taking pains to tell both unions and companies that they have an obligation to the public to keep rail service moving. While he has pushed to elevate the power of organized labor throughout his time in office, he is wary of hurting American consumers and the economy, which could experience shortages and price spikes from even a brief strike.President Biden and his economic team have been inserting themselves into final-hour negotiations between the rail unions and large rail companies.Erin Schaff/The New York TimesOn Monday, Mr. Biden phoned leaders on both sides of the table to urge a deal, stressing the same message to both sides, according to people familiar with the discussions: A strike will hurt rail customers and a broad swath of people and businesses across the country, and a negotiated agreement is the best way to avoid one.Martin J. Walsh, the labor secretary, and White House officials hosted union and company leaders in Washington on Wednesday in an attempt to broker a deal before Friday, when a federally imposed “cooling off period” for negotiations expires. Workers could go on strike immediately, though they will not automatically do so.Inflation F.A.Q.Card 1 of 5What is inflation? More

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    Strike Threat on Freight Railroads Is New Supply Chain Worry

    Administration officials are pushing for a settlement to head off a walkout by tens of thousands of workers on Friday.Biden administration officials are racing to prevent a strike by tens of thousands of freight railroad workers that could further disrupt an already strained supply chain and cause billions of dollars in economic damage.The industry failed to reach a contract agreement with two unions representing much of the work force, and a federally mandated 30-day “cooling off” period ends on Friday, opening a door to strikes and lockouts. Some freight companies have started to limit services, and Amtrak, which carries many travelers on lines operated by freight railroads, said it would cancel some passenger service starting on Tuesday.Labor Secretary Martin J. Walsh pressured both sides over the weekend to reach an agreement, and administration officials have held dozens of calls with the industry and the unions, according to the Labor Department.“All parties need to stay at the table, bargain in good faith to resolve outstanding issues and come to an agreement,” the department said in a statement. “The fact that we are already seeing some impacts of contingency planning by railways again demonstrates that a shutdown of our freight rail system is an unacceptable outcome for our economy and the American people, and all parties must work to avoid that.”The deadlock puts President Biden in a complicated position. His administration has taken pains to restore and fortify the supply chain, which was deeply disrupted by the coronavirus pandemic. It has also worked hard to protect and endorse union rights.“A strike doesn’t help anybody,” Mr. Walsh said in an interview late last month. “A strike doesn’t help the workers. A strike doesn’t help the general public. A strike certainly doesn’t help the supply chain.”In July, Mr. Biden established an emergency board to help mediate the dispute between the industry, which includes six of the largest freight rail carriers, and about a dozen unions. Last month, that board recommended a resolution with a cumulative raise of 24 percent from 2020 through 2024, including an immediate 14 percent wage increase covering the first three years.Most of the unions agreed to the proposal, pending a vote of their membership. But two major unions are holding out for improvements to working conditions, which they say have steadily worsened in recent years as rail carriers have cut staffing.The Brotherhood of Locomotive Engineers and Trainmen and the SMART Transportation Division, which represent engineers and conductors, say workers must often stay on call for several days at a time, working 12-hour shifts with little notice, and are penalized for calling in sick.“Our unions remain at the bargaining table and have given the rail carriers a proposal that we would be willing to submit to our members for ratification, but it is the rail carriers that refuse to reach an acceptable agreement,” they said in a joint statement. “In fact, it was abundantly clear from our negotiations over the past few days that the railroads show no intentions of reaching an agreement with our unions.”Inflation F.A.Q.Card 1 of 5What is inflation? More

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    Labor Board Proposes to Increase Legal Exposure for Franchised Chains

    Federal labor regulators on Tuesday proposed a rule that would make more companies legally liable for labor law violations committed by their contractors or franchisees.Under the proposal, which governs when a company is considered a so-called joint employer, the National Labor Relations Board could hold a company like McDonald’s liable if one of its franchisees fired workers who tried to unionize, even if the parent company exercised only indirect control over the workers. Indirect control can include requiring the franchisee to use software that locks in certain scheduling practices and setting limits on what the workers can be paid.Under the current approach, adopted in 2020, when the board had a majority of Republican appointees, the parent company could be held liable for such labor law violations only if it exerted direct control over the franchisee’s employees — such as directly determining their schedules and pay.The joint-employer rule also determines whether the parent company must bargain with employees of a contractor or franchisee if those employees unionize.Employees and unions generally prefer to bargain with the parent company and to hold it accountable for labor law violations because the parent typically has more power than the contractor or franchisee to change workplace policies and make concessions.“In an economy where employment relationships are increasingly complex, the board must ensure that its legal rules for deciding which employers should engage in collective bargaining serve the goals of the National Labor Relations Act,” Lauren McFerran, the chairwoman of the board, which has a Democratic majority, said in a statement.The legal threshold for triggering a joint-employer relationship under labor law has changed frequently in recent years, depending on the political composition of the labor board. In 2015, a board led by Democrats changed the standard from “direct and immediate” control to indirect control.As a result of that shift, parent companies could also be considered joint employers of workers hired by a contractor or franchisee if the parent had the right to control certain working conditions — like firing or disciplining workers — even if it didn’t act on that right.Under President Donald J. Trump, the board moved to undo that change. The Republican-led board not only restored the standard of direct and immediate control, it also required that the control exercised by the parent be “substantial,” making it even more difficult to deem a parent company a joint employer.The franchise business model has faced rising pressure. On Monday, Gov. Gavin Newsom of California said he had signed a bill creating a council to regulate labor practices in the fast food industry. The council has the power to raise the minimum wage for the industry in California to $22 an hour next year, compared with a statewide minimum of $15.50, and to issue health and safety standards to protect workers.The fast food industry strongly opposed the measure, arguing that it would raise costs for employers and prices for consumers. More

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    Starbucks Illegally Denied Raises to Union Members, Labor Board Says

    Federal labor regulators have accused Starbucks of illegally discriminating against unionized employees by denying them wage and benefit increases that the company put in place for nonunion employees.In a complaint on Wednesday, a regional office of the National Labor Relations Board accused the company of breaking the law when its chief executive, Howard Schultz, “promised increased wages and benefits at U.S. stores if its employees rejected the union as their bargaining representative,” and when it withheld raises and benefits from unionized workers.The labor board is seeking, among other things, that affected employees be made whole for the denial of benefits and wage increases. It is also asking that Mr. Schultz read a notice to all employees informing them that some had been unlawfully denied benefits and pay increases and explaining their rights under federal labor law. Alternatively, a board official could read this material to employees in Mr. Schultz’s presence.The labor board’s case is scheduled for a hearing on Oct. 25 before an administrative law judge, unless Starbucks settles with the agency beforehand. Starbucks could appeal any ruling by an administrative judge to the full board.In a statement, Starbucks said that it was required under federal law to negotiate changes in wages and benefits with the union and that it was therefore not allowed to make such changes unilaterally, as it can in nonunion stores. “Wage and benefits are ‘mandatory’ subjects of the collective bargaining process,” the statement said.Workers United, the union representing the company’s newly organized workers, said the complaint affirmed its contention that Starbucks was discouraging union activity.“He claims to run a ‘different kind of company,’ yet in reality, Howard Schultz is simply a billionaire bully who is doing everything he can to crush workers’ rights,” Maggie Carter, a worker who helped unionize her store in Knoxville, Tenn., said in a statement.More than 225 out of roughly 9,000 corporate-owned Starbucks locations in the United States have voted to unionize since last fall.Mr. Schultz began indicating that the company would roll out new benefits, but only for nonunion workers, shortly after he began his third tour as the company’s chief executive in April.The next month, the company announced a series of new benefits — including additional career development opportunities, better tipping options and more sick time — but only for stores that hadn’t unionized or weren’t in the process of unionizing. The benefits were to begin in the coming months.The company unveiled wage increases as well, some of which had already been announced and which the company said would apply to all workers. But other increases were new and would apply only to nonunion workers.For example, according to Reggie Borges, a Starbucks spokesman, all employees stood to benefit from a companywide $15-an-hour minimum wage, but nonunion workers hired by May 2 would get a 3 percent raise if that proved higher than $15.The wage policy appears to have sown confusion, with some employees briefly receiving a pay increase that was then withdrawn. Colin Cochran, a worker at a store near Buffalo that initially voted to unionize and then voted against the union in a rerun election decided this month, provided pay stubs showing that his $16.28 hourly wage had increased to $16.77 the first week of August, when Starbucks began the pay increases nationwide. But Mr. Cochran’s pay stub for the second week of August showed his hourly pay dropping back to $16.28. (The union is challenging the election loss at this store.)Mr. Borges said that the reversion to the previous wage had resulted from an inadvertent error and that unionized stores would get wage increases in September.Workers involved in union campaigns at other Starbucks locations said the denial of pay and benefit increases to unionized stores had slowed their organizing efforts.Kylah Clay, a Starbucks worker in Boston who helped organize several stores in the area, said inquiries from employees at other stores who were interested in unionizing had dropped off substantially not long after the company’s pay and benefits announcement in May. But they picked up recently after the pay and many benefit changes took effect, she said. More

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    Trader Joe’s Workers Vote to Unionize at a Second Store

    Workers at a Trader Joe’s in Minneapolis voted on Friday to unionize, adding a second unionized store to the more than 500 locations of the supermarket chain.Employees at a Trader Joe’s in Massachusetts voted to unionize last month, part of a trend of recent union victories involving service workers at companies like Starbucks, Apple and Amazon.The Minneapolis vote was 55 to 5, according to the National Labor Relations Board, which held the election.The Minneapolis workers voted to join Trader Joe’s United, the same independent union that represents workers in Hadley, Mass. Workers at a third Trader Joe’s store, in Colorado, have filed for a union election, but the labor board has not yet authorized a vote or set an election date.In a statement referring to the election results in Minneapolis, a Trader Joe’s spokeswoman, Nakia Rohde, said, “While we are concerned about how this new rigid legal relationship will impact Trader Joe’s culture, we are prepared to immediately begin discussions with their collective bargaining representative to negotiate a contract.”Sarah Beth Ryther, a Trader Joe’s worker in Minneapolis who was involved in the organizing campaign, said her co-workers had been motivated in part by dissatisfaction with pay and benefits, issues that helped prompt the union campaign in Massachusetts. Workers have complained that the company has made its benefits less generous in recent years, though some benefits have improved more recently.But Ms. Ryther said she and her colleagues were also concerned that the store, which is in an area where some residents struggle with drug dependency and mental health challenges, appeared not to have protocols or systems in place to handle certain emergencies. She cited a person who came into the store last fall with what appeared to be a gunshot wound and collapsed into her arms.Police officers arrived quickly, Ms. Ryther said, but Trader Joe’s did little to address the aftermath, such as explaining to workers what had happened. Several days passed before she was told that she could collect workers’ compensation while taking time off to deal with the trauma, she said.Trader Joe’s did not respond to a request for comment on Ms. Ryther’s account of the workers’ complaints and the store’s conditions, but, in her statement, Ms. Rohde said the company was “committed to responding quickly when circumstances change to ensure we are doing the right thing to support our crew.”In March 2020, the company’s chief executive, Dan Bane, sent a letter to employees referring to “the current barrage of union activity that has been directed at Trader Joe’s” and asserting that union advocates “clearly believe that now is a moment when they can create some sort of wedge in our company through which they can drive discontent.” More

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    Chipotle Closes Maine Store Looking to Unionize, Workers Say

    Workers who filed for a union election at a Chipotle in Augusta, Maine, are accusing the company of seeking to undermine their campaign by closing the restaurant.The company notified employees of the closing on Tuesday morning, hours before the two sides were scheduled to take part in a hearing before the National Labor Relations Board about the possible election.“We have been unable to adequately staff this remote restaurant,” Laurie Schalow, the company’s chief corporate affairs officer, said in a statement. Ms. Schalow added that “because of these ongoing staffing challenges, there is no probability of reopening in the foreseeable future, so we’ve made the decision to permanently close the restaurant.”A lawyer representing the workers filed a charge with the labor board contending that the closing was an illegal act of retaliation.“I’m referring to this as Union Busting 101,” said the lawyer, Jeffrey Neil Young, who frequently represents unions in the state. “It’s a classic response — employees decide to organize and the employer says it’s closing the store.”Read More on Organized Labor in the U.S.Apple: Employees at a Baltimore-area Apple store voted to unionize, making it the first of the company’s 270-plus U.S. stores to do so. The result provides a foothold for a budding movement among Apple retail employees.Starbucks: When a Rhodes scholar joined Starbucks in 2020, none of the company’s 9,000 U.S. locations had a union. She hoped to change that by helping to unionize its stores in Buffalo. Improbably, she and her co-workers have far exceeded their goal.Amazon: A little-known independent union scored a stunning victory at an Amazon warehouse on Staten Island. But unlike at Starbucks, where organizing efforts spread in a matter of weeks, unionizing workers at Amazon has been a longer, messier slog.A Shrinking Movement: Although high-profile unionization efforts have dominated headlines recently, union membership has seen a decades-long decline in the United States.The labor board will investigate the charge and issue a formal complaint if it finds merit in the accusation, at which point the case would go before an administrative law judge. The two sides could reach a settlement beforehand.A handful of workers at the store walked off the job in mid-June to protest what they said were unsafe conditions that stemmed from understaffing and insufficient training.“Not being properly trained to prepare food has a lot of risks to both the preparer and the people eating the food,” said Brandi McNease, a worker involved in the walkout and the union campaign. “You worry about knife skills, using equipment that is dangerous — hot, sharp.”Within a few days, the company closed the store to the public while it sought to improve staffing, including retaining two recruiting experts, according to Ms. Schalow. During this time, workers continued to report to the store, where they received some training and helped clean it, but often for fewer hours a week than they previously worked.On June 22, workers filed a petition to hold a union election. The labor board requires at least 30 percent of workers to indicate their support before it will order one.The hearing scheduled for Tuesday was meant to consider arguments from the two sides about the proposed election. Chipotle had asserted in filings that the election should not go forward, partly because the store was understaffed and so the workers eligible to vote would not be fully representative of its eventual work force.Mr. Young, the lawyer representing the workers, said the closing could chill organizing efforts at other stores in the chain, including those underway in Lansing, Mich., where workers have also filed for a union election, and New York City.“By closing the Augusta store, it’s signaling to Chipotle workers elsewhere who are involved in or contemplating nascent organizational drives that if you organize, you might be out of job,” Mr. Young said.Ms. Schalow, the Chipotle official, said in her statement that closing the store “has nothing to do with union activity.” The company said it had closed 13 locations out of about 3,000 because of staffing issues, performance, lease agreements and other business reasons over the past 18 months. Most of the closings appear to have come in the first half of last year.Chipotle has offered the Augusta workers four weeks of severance pay based on their hours over the past two weeks, which have typically been lower than before the restaurant closed to the public. It has not offered to place the workers at other locations in Maine, the nearest of which is roughly an hour away, according to the company.Ms. McNease said she and her co-workers planned to fight to have the store reopened. “No one is bailing now,” she said.Chipotle is among several employers in the service industry whose workers have sought to unionize over the past year. Roughly 200 corporate-owned Starbucks locations have voted to unionize since last fall, as have workers at an Amazon warehouse on Staten Island, an REI store in Manhattan and an Apple store in Maryland.The labor board has formally accused Starbucks of closing certain stores in retaliation for union organizing. The company has denied the accusations.Last week, Starbucks said it was closing 16 additional stores because of safety concerns like crime, which it said have been reflected in incident reports over the past year. The union representing the newly unionized Starbucks workers has filed charges of unfair labor practices, accusing the company of closing the stores to undermine organizing activity or avoid bargaining with unionized workers. More

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    Amazon Hub in Newark Is Canceled After Unions and Local Groups Object

    The e-commerce giant planned to build an airport cargo center, hire 1,000 workers and invest hundreds of millions of dollars over 20 years.For the second time, plans by Amazon to substantially expand its presence in the New York area have been abandoned after labor and community groups mobilized in opposition.In 2019, Amazon abruptly canceled plans to build a second headquarters in New York City after facing a barrage of criticism that it did not anticipate. This time, the e-commerce giant was unable to complete a deal for a cargo hub at Newark Liberty International Airport.The project, which hinged on a 20-year lease worth hundreds of millions of dollars, attracted opposition after the Port Authority disclosed it last summer.“Unfortunately, the Port Authority and Amazon have been unable to reach an agreement on final lease terms and mutually concluded that further negotiations will not resolve the outstanding issues,” Huntley Lawrence, the Port Authority’s chief operating officer, said in a statement on Thursday.Advocacy groups and unions involved had said they could not support the lease unless Amazon made a set of concessions that included labor agreements and a zero-emissions benchmark at the facility.“This victory signals that if Amazon wants to continue growing in New Jersey, it’s going to have to do it on our terms,” said Sara Cullinane, director of Make the Road New Jersey, an advocacy group that had questioned the deal.Amazon, which expressed confidence in May that the deal would close, expressed disappointment in a statement, adding that “we’re proud of our robust presence in New Jersey and look forward to continued investments in the state.”Amazon had estimated that the project would create more than 1,000 jobs, though many of those jobs could still be created if the Port Authority awards the lease to another company. Two other companies bid on the project.“The growth of air cargo and the redevelopment of airport facilities in a manner that benefits the region as well as the local community remain a top priority of the Port Authority,” Mr. Lawrence, the chief operating officer, added in his statement.The bigger long-term impact may be on Amazon’s ability to deliver packages efficiently in the Northeast, which it serves with airport hubs near Allentown, Pa.; Hartford, Conn.; and Baltimore. “Newark was the obvious choice,” said Marc Wulfraat, an industry consultant who closely tracks Amazon’s facilities. “It is right there on the doorstep of New York City.”Understand the Unionization Efforts at AmazonBeating the Giant: A homegrown, low-budget push to unionize at a Staten Island warehouse led to a historic labor victory. (Workers at another nearby Amazon facility rejected joining a similar effort shortly after.)Retaliation: Weeks after the landmark win, Amazon fired several managers in Staten Island. Some saw it as retaliation for their involvement in the unionization efforts.Diverging Outcomes: Why has a union campaign at Starbucks spread so much further than at the e-commerce giant?Amazon’s Approach: The company has countered unionization efforts with mandatory “training” sessions that carry clear anti-union messages.Mr. Wulfraat said Amazon could look for other commercial airports in the region, even if their locations were less ideal, to support the growing package volume.It was in part the company’s prominence in the state that attracted opposition to the project. A report produced by groups seeking to block it pointed out that the number of Amazon facilities in New Jersey grew to 49 from one between 2013 and 2020, helping to nearly triple the number of warehouse workers in the state, to about 70,000. Over the same period, the average wage for those workers fell to about $44,000 per year from over $53,000 per year, adjusting for inflation, according to Labor Department data.New Jersey is one of the more unionized states in the country, while Amazon has opposed unionization efforts at its facilities.Amazon said that average starting pay for its hourly workers is more than $18 nationally. The median hourly wage in New Jersey was about $23 last year. The company also cited its benefits, including full health coverage for full-time employees as soon as they start working; a 401(k) plan with a 50 percent company match; and up to 20 weeks of paid parental leave.The Port Authority revealed the proposed lease with Amazon in August, the day its board voted to authorize the deal. The authority said that it expected the lease to take effect on or around Nov. 1, according to minutes of the meeting.“It was something that they were trying to slip in without notifying the community, which was quite unfortunate,” said Kim Gaddy, executive director of the South Ward Environmental Alliance, which focuses on environmental issues affecting Newark residents. Under the proposed deal, Amazon tentatively committed to investing $125 million in renovating two buildings at the airport, and to paying the Port Authority more than $300 million over 20 years — including $150 million up front.Amazon’s plan for the Newark hub involved renovating two buildings at the airport.Bryan Anselm for The New York TimesBy September, the groups led by Ms. Cullinane and Ms. Gaddy, along with other advocacy groups and unions like the Teamsters and the Retail, Wholesale and Department Store Union, began to coordinate their opposition. The groups circulated petitions that collected thousands of signatures from residents and staged public events like rallies and a march.The project appeared to stall after the November timetable for finalizing the lease passed without any announcement.In late March, a spokeswoman for Gov. Phil Murphy, who had initially praised the deal, said in a statement that “the governor encourages anyone doing business in our state to work collaboratively with labor partners in good faith.” (The governor’s office declined to comment on Thursday.) Other politicians in the state appeared to grow skeptical after the Amazon Labor Union’s election victory this year at a Staten Island warehouse, a result Amazon is contesting.Amazon uses an airport facility in Allentown, Pa., to serve the surrounding region, but it has outgrown the capacity.Mark Makela/ReutersAmazon has opened air hubs in recent years to move products through its own logistics network, rather than rely on outside providers. It prefers to fulfill customer orders with local inventory, for cheaper, quicker delivery, but when the product a customer wants is not in a nearby warehouse, it will fly the product to meet its shipping promises.Its operations expansion went into overdrive during the pandemic as e-commerce sales boomed. “We doubled our capacity that we built in the first 25 years of Amazon in just 24 months,” Andy Jassy, the chief executive, told investors in May.But the company has acknowledged that it overbuilt, expanding and hiring more than demand required, and in April it posted its first quarterly loss since 2015. This year Amazon has pulled back from some investments. “We’re trying to defer building activity on properties where we just don’t need the capacity yet, and we’re going let some leases expire as well,” Mr. Jassy said. More