Hundreds of thousands of UPS workers are threatening to go on a nationwide strike once their union’s 5-year employment contract with UPS expires at the end of the month unless their demands for fair compensation and better labor conditions are met. On July 5th, UPS workers, who are represented by the Teamsters Union, and UPS management abruptly ended contract negotiations after the two parties could not come to an agreement on wage increases for full and part-time employees in light of UPS revenue surpassing $100 billion in 2022. In a recent interview with National Public Radio, Teamster Union President Sean O’Brien said the workers deserve a greater share of the company’s revenue after UPS earned record profits during the COVID-19 Pandemic.
In a statement of their own, UPS accused the Teamsters of walking away from the negotiation table “despite historic proposals that build on [UPS’] industry-leading pay,” and insinuated the Teamsters are irresponsible for discontinuing negotiations in light of the disruption a strike would cause the company and the U.S. domestic economy. The immense impact a Teamsters strike against UPS would have on the domestic economy cannot be understated. UPS handles roughly 25% of all packages shipped in the U.S. everyday which amounts to UPS handling 5.2 billion parcels and 6% of U.S. GDP in 2022. On the other hand, better pay and benefits have been at the center of UPS labor disputes in the past and the Teamsters says UPS workers have waited long enough for fair compensation as manyof workers are living in poverty because some of the benefits UPS touts are inaccessible to most part-time employees.
How’d we get here?
These workers’ demands are similar to thelast time the Teamsters struck UPS in August 1997, which lasted only 15 days but cost UPS more than $850 million. According to the Teamsters for a Democratic Union, the 1997 strike was a result of “contract givebacks and go-along, get-along labor relations” characterized by the members’ low faith in union leadership and certain interests of UPS management. At the time, UPS had been chipping away at workers’ pay and benefits for years by attempting to replace pensions with 401ks and transitioning most of their workforce to part-time status because Union leadership agreed to a cut of part-time wages to $8 per hour with UPS in 1982. Contract negotiations soured when UPS refused to compromise on their interests of pension reform and part-time jobs, so the strike began on August 4th. As time progressed, the economic burden of the strike and public support for the Teamsters’ anti-part-time job stance caused UPS to eventually cave on both of their contract goals after 15 days.
Better pay and benefits remain central to today’s labor negotiations between UPS management and the Teamsters, however the Teamsters have more negotiating leverage than 1997 primarily due to 3 things: the implementation of Just-in-Time (JIT) inventory policies, increased competition in the sector, and the cohesion of union members in their demands for better wages. JIT inventory practices, or a shortened supply chain meant to reduce storage costs where materials and products are transported only when they are needed, has given the Teamsters more leverage as shipping timelines have become more compressed and therefore vulnerable to worker delays and strikes. Unlike in 1997, UPS is particularly vulnerable to labor organizations because of the proliferation of e-commerce, package delivery expectations, and competition in the industry. A UPS workers’ strike would create an influx of demand for competitors like Amazon, FedEx, and the United States Postal Service (USPS), as well as third-party distributors. Some competitors may delight at the new business opportunities while others might find it difficult to absorb the sudden influx of business. Potentially more so than the international logistic issues experienced during the COVID-19 Pandemic, a strike against UPS may drive the cost of these competitors’ logistic services up and place pressure on small business owners and retailers. Many UPS workers recognize the leverage in negotiations this situation lends them and feel very confident in the likelihood of their success. In a recent vote, 97% of Teamsters members voted to strike UPS once their contract expired.
Why is this important?
According to Yahoo Finance, UPS leads the industry in market share with 37% while FedEx lags slightly behind at 33% and USPS and Amazon account for 16% and 12% respectively. Should the teamsters win this labor dispute, UPS’ market share is likely to shift, but is the rest of the industry prepared to handle the sudden increase of customers? Even if a company exclusively ships with FedEx or the USPS, if UPS workers decide to strike, the entire supply chain will be immediately impacted and delivery times and prices will increase. UPS handles 18.7 million domestic packages and 24.3 million global packages a day and not every competitor feels they are able to absorb this scale. In light of the looming UPS strike, FedEx is telling those looking to transition away from UPS’ services to make the move quick because they only have a limited capacity to absorb so much of UPS’ operation. USPS, on the other hand, launched a coast to coast 2–5-day shipping option in an attempt to capitalize on the ongoing UPS labor dispute and increase their market share.
If UPS wins by waiting out the Teamsters, then the greater labor movement across the U.S. may lose steam as the Teamsters dispute with UPS represents one of the strongest negotiating positions any union has had in a long time. The labor movement has gained momentum since the COVID-19 Pandemic and demonstrations began when various rail workers’ unions attempted to go on strike following labor disputes in 2022. The rail workers, similarlyto UPS workers, claimed the pay was meager and working conditions too unfavorable when you consider the impact they have on the working order of the domestic supply chain. It looked as though the rail workers would be successful after “a coalition of 10 rail unions in negotiations” voted to authorize a strike by more than 99%. However, the economic impacts of a rail workers’ strike would be too great, and Congress took action to prevent the strike by utilizing “the Constitution’s commerce clause, which allows [Congress] to regulate interstate commerce.” To the U.S. labor movement, the government’s intervention in the rail workers’ strike is a fresh wound and they fear that similar action taken against a UPS strike would strike a blow to the movement and place the nation’s workers in a desperate and nihilistic position. Other companies and industries are watching carefully to see how the UPS labor disputes are resolved. Warehouse workers at Amazon, the Writers’ and Actors’ Guilds in Hollywood, workers in the automotive industry, and even Starbucks are observing the UPS labor dispute for indicators of how their own labor disputes may end.
Suggestions for Further Reading
Coleman, B. Jay, and Kenneth M. Jennings. “The UPS strike: Lessons for just-in-timers.” Production and Inventory Management Journal 39.4 (1998): 63.
Deliso, Meredith. “What to Know about the Potential UPS Teamsters Strike.” ABC News, abcnews.go.com/Business/potential-ups-teamsters-strike/story?id=100793059. Accessed 12 July 2023.
Holman, Jordyn, and J. Edward Moreno. “Looming Ups Strike Spurs Some Companies to Rethink Supply Chains.” The New York Times, 7 July 2023, www.nytimes.com/2023/07/07/business/ups-strike-retail-shippers.html.
Mueller, Julia. “5 Things to Know about Ups Strike as Teamsters Contract Talks Fail.” The Hill, 10 July 2023, thehill.com/business/4089565-five-things-to-know-about-ups-strike-as-teamsters-contract-talks-fail/.
“News on the 2023 UPS Labor Negotiations.” About UPS-US, about.ups.com/us/en/newsroom/negotiations/news-on-the-2023-ups-labor-negotiations.html. Accessed 12 July 2023.
Posted on July 19, 2013, et al. “Forty Years of Struggle at UPS.” Teamsters for a Democratic Union, www.tdu.org/media_forty-years-struggle-ups. Accessed 12 July 2023.
Schwab, Kristin. “What Happens If UPS Workers Go on Strike?” Marketplace, 10 July 2023, www.marketplace.org/2023/07/10/what-happens-if-ups-workers-go-on-strike/.
“Teamster Strike Benefits.” UPS Teamsters United (New), www.upsteamstersunited.org/teamster_strike_benefits. Accessed 12 July 2023.
“UPS Customers Weigh Backup Plans as Threatened Strike Date Approaches.” NBCNews.Com, 7 July 2023, www.nbcnews.com/business/business-news/ups-customers-weigh-backup-plans-threatened-strike-date-approaches-rcna93044.
“UPS Workers Threaten a Strike after Contract Talks Break Down.” NPR, 7 July 2023, www.npr.org/2023/07/07/1186338446/ups-workers-threaten-a-strike-after-contract-talks-break-down.