A labor dispute board appointed by the Biden administration proposed railroads raise wages by 24% over the course of a five-year contract, a major step toward resolving a negotiation stalemate that carriers say has made it harder to retain workers and address service declines.

The Presidential Emergency Board released its recommendations Wednesday for a proposed contract that would address issues related to wages, healthcare and other benefits. Workers have gone without a raise since 2019 as negotiations have dragged on, and the Board noted that railroads and unions were more than $9 billion apart in their proposals.

Proposed wage increases would span from 4% to 7% annually beginning in 2022 through 2024, and includes thousands of dollars in bonuses plus retroactive raises for the time employees worked without a contract. The Association of American Railroads said in a statement the Board’s proposal would provide an average employee payout of more than $11,000 upon ratification.

Although the Board recommended wage increases higher than railroads’ proposals, carriers are anxious to make a deal to avoid further service disruptions and offset high attrition levels.

“The industry is prepared to propose agreements based on the PEB’s recommendations to provide our employees with long overdue pay increases and avert rail service interruptions,” the AAR said.

Crew shortages have fueled service interruptions in freight rail, with some companies limiting the amount of cargo in their networks to reduce congestion. Railroads have reported high attrition rates and significant levels of potential hires dropping out of training, frustrating efforts to rebuild workforces.

CSX is seeing “a significantly higher attrition rate than what we had ever normally experienced or than what we had anticipated,” particularly among new workers, President and CEO James Foote said on an earnings call last month. The carrier is focusing on “what we can do from a compensation standpoint” to retain employees once they complete training.

Foote added that a Board-mediated resolution could “help with morale and that might help with the retention.”

Norfolk Southern, meanwhile, raised trainee wages to $25 an hour in late July and offered additional bonuses for workers in priority locations. The company reported in a filing to the STB that more people dropped out of training than graduated in June, though the railroad reported lower dropout rates for July.

“We’re taking advantage of every option to get folks where we need them,” COO Cindy Sanborn said in an earnings call last month.

Workers say that issues with railroads go beyond pay, and that company attendance policies and efforts to fast-track new recruits have led to unsafe situations. At a virtual town hall Aug. 1 organized by the Transportation Trades Department of the AFL-CIO, railroad workers reported senior members losing previously established days off to make up for crew shortages. Others noted that many trainees are being let out into the field too early as companies try to quickly staff up.

“So many people are quitting and the ones that stick around are disgruntled and take little pride anymore in their work and that's not who we are as railroaders,” said Deven Mantz, a member of the Brotherhood of Maintenance of Way Employees, said in the town hall. “So we're all demoralized and pushed to where we just don't care anymore.”

The Presidential Emergency Board declined to weigh in on issues regarding attendance and crew sizes, arguing those issues should remain subject to local negotiations. The release of the recommendations triggers a 30-day cooling off period in which union members are prohibited from striking.