Roughly 115,000 railroad workers have been laboring without a contract for the past 3 years amid a standoff with the powerful carriers that dominate the U.S. rail industry. If the two sides don’t reach a new agreement by September 16, rail unions are allowed to authorize a national railroad strike, and carriers can launch a worker lock-out. Either action would likely paralyze the country’s already-burdened supply chain.

A Presidential Emergency Board (PEB) was appointed last month to draft a compromise proposal. With rail carriers reaping record profits, unions came to the bargaining table asking for wage and benefit increases that would reflect the sacrifice rail workers made to keep goods flowing during the pandemic, as well as high inflation that strained workers who have been without raises for nearly 3 years.

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Workers also sought expanded health care benefits, including coverage for family members in need of autism services, and expanded coverage for hearing loss treatment. While the PEB recommended the carriers meet those demands, they also proposed lifting the current 15% cap on the percentage of income workers could have to pay toward health care. Labor advocates noted that lifting this cap will likely eat into the proposed wage increases and open the door for carriers to shift the burden of health care costs to workers.

The last-minute deal avoids massive disruptions to the flow of key goods and commodities around the country. About 40% of the nation’s long-distance trade is moved by rail. If the unions had gone on strike, more than 7,000 trains would have been idled, costing up to an estimated $2 billion per day.

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The new contracts provide rail employees with a 24% wage increase during the five-year period from 2020 through 2024, including immediate average payouts of $11,000 upon ratification, according to the Association of American Railroads. All tentative agreements are subject to ratification by the unions’ membership.

Tentative agreements have been reached with the Brotherhood of Locomotive Engineers and Trainmen Division of the International Brotherhood of Teamsters, the International Association of Sheet Metal, Air, Rail and Transportation Workers – Transportation Division, and the Brotherhood of Railroad Signalmen, which collectively represent approximately 60,000 employees, the Association of American Railroads said in a press release.