UPS contract talks go to the wire as a possible strike looms
Barely a week before contracts for more than 325,000 United Parcel Service workers expire, union and corporate negotiators have yet to reach an agreement to stave off a strike that could throw the US economy off track.
UPS and the union, the International Brotherhood of Teamsters, have resolved several thorny issues, including heat safety and forced overtime. But they remain locked in on pay for part-time workers, who account for more than half of unionized workers at UPS.
A strike, which could come as early as August 1, could have significant consequences for the company, the e-commerce industry and the supply chain.
UPS handles about a quarter of the tens of millions of packages shipped every day in the United States, according to the Pitney Bowes Parcel Shipping Index. Experts have said competitors don’t have the scale to seamlessly replace that lost capacity.
The Teamsters have cited the risks its members have taken to help generate the company’s strong performance during the pandemic as a reason they deserve large pay raises. UPS’s adjusted net income increased more than 70 percent from 2019 to last year to more than $11 billion.
Contract talks broke down in swear words on July 5. The two sides will resume negotiations in the coming days, but the chance of an agreement before the current five-year contract expires is slim.
In a Facebook message this month, the union said the company’s latest offer would have “left behind” many part-time workers whose jobs include sorting packages and loading trucks. The post said part-timers were “earning close to minimum wage” in many parts of the country.
UPS, which it says relies heavily on part-time workers to navigate the bursts of activity over the course of a day and ramp up its workforce during busier months, said it had proposed significant pay increases before the talks broke down. According to the company, part-timers currently earn an average of about $20 per hour after 30 days, as well as paid time off, health care and retirement benefits. The company noted that many part-timers graduated to full-time driver jobs, which pay an average of $42 an hour after four years.
The union has made every effort to highlight the challenges faced by part-time workers. In television interviews and at rallies, Teamsters president Sean O’Brien has emphasized what the union calls “part-time poverty” jobs. He has often been joined by leaders of other labor unions and politicians, including Representative Alexandria Ocasio-Cortez, the New York Democrat.
UPS said Wednesday it was “prepared to raise our industry-leading wages and benefits.” But it is unclear whether the company will comply with the union’s demands.
“UPS certainly wants to reach an agreement, but not at the expense of its ability to compete in the long run,” said Alan Amling, a former UPS executive and fellow at the University of Tennessee’s Global Supply Chain Institute.
Professor Amling estimated that it would cost the company $850 million a year to increase wages $5 per hour for all part-time employees represented by the Teamsters.
The company, that reports normally its second-quarter results at the end of July delayed this year’s report beyond the strike deadline. UPS said the timing was within the required window for reporting its earnings and it had never published a date other than August 8 for its forthcoming release.
The sometimes volatile negotiations began in April, and the Teamsters announced in mid-June that their UPS members had voted by a 97 percent majority to approve a strike.
Less than two weeks later, the union said it was walking away from the table over a “terrible counterproposal” from the company over wage increases and cost-of-living adjustments and that a strike “now seems inevitable”.
The two sides resumed talks the week before July 4 and quickly resolved what was perhaps their most contentious issue: a class of workers created under the existing contract.
UPS said the arrangement was designed to allow employees to take on dual roles, sorting packages on some days and driving on others – especially Saturdays – to keep up with the growing demand for weekend deliveries.
But the Teamsters said the hybrid idea hadn’t materialized and that the new class of workers were in practice driving full-time Tuesday through Saturday, only for less pay than other drivers. (The company said some employees worked under the hybrid scheme.)
Under the agreement reached this month, the low-wage category would be eliminated and workers who drove Tuesday through Saturday would be converted to regular full-time drivers.
That agreement also stipulated that no driver would be required to work an unscheduled sixth day in a week, which drivers sometimes had to do to meet Saturday demand.
Despite progress on these points, Mr. O’Brien could pass a delicate test of persuading members to approve a deal if it falls short of the lofty expectations he helped create. He won the union’s top spot in 2021 while regularly criticizing his immediate predecessor, James P. Hoffa, for being too lenient with employers.
Mr O’Brien argued that Mr Hoffa effectively forced UPS employees to accept a deeply flawed contract in 2018, even after they voted it down, and accused his rival in the race to succeed Mr Hoffa as he was unwilling to attack the company.
He began drawing members’ attention to the contract and a possible strike even before he formally became president in March last year, and has spoken in superlatives about the union’s goals for a new contract.
“This UPS deal will be the defining moment in organized labor,” he said last fall in a speech to activists from Teamsters for a Democratic Union, a group that supported his candidacy.
The union under Mr O’Brien has held training sessions for strike leaders and contract-action team members in recent months, who convene colleagues to pressure the company.
And he has strongly urged the White House not to interfere in the contract negotiations. Growing up in Boston, “if two people disagreed, and you had nothing to do with it, you just walked on,” he said at a recent webinar with members. “We repeated that repeatedly in the White House.” (Administrators have said they are in contact with both sides.)
In some ways, the context for this year’s negotiations resembles the circumstances of the nationwide Teamsters strike at UPS in 1997. UPS was also in the middle of the several profitable yearsand the rapid growth of the part-time workforce loomed large.
But while a reformist president, Ron Carey, had mobilized the union for a fight, the ranks seemed to be divided between his supporters and those of Mr. Hoffa, who had narrowly lost an election for the union presidency the previous year. The union may have more clout this time around because its members seem much more united under Mr. O’Brien.
Barry Eidlin, a sociologist at McGill University in Montreal who studies labor and closely follows the Teamsters, said that while the lead-up to the current contract battle has lagged in some parts of the country, where more conservative local officials are less enthusiastic, Mr O’Brien faced no serious opposition within the union.
“Not everyone is a fan of O’Brien, but they don’t actively organize to undermine him like people did with Ron Carey in the ’90s,” said Dr. Eidlin. “It’s a huge, huge difference.”
Still, Mr. O’Brien, for all his pugnacious pronouncements, an establishment figure who seems to prefer to strike a deal rather than strike, and has acted subtly to make a deal less likely.
Earlier in the negotiations, Mr O’Brien had said that UPS employees would not work after August 1 without a ratified contract, and that the two sides should reach a deal before July 5 to give members a chance to approve it in time. But over the weekend, he said UPS employees would continue to work on Aug. 1 as long as the two sides reached a tentative deal.
“This is not a shift,” a Teamsters spokeswoman said by email Friday. “That’s how you get a contract. Our pressure and deadline on UPS forced them to move in ways they hadn’t done before.”
Niraj Chokshi reporting contributed.