With just a week left before the contract between United Parcel Service (UPS) and the International Brotherhood of Teamsters expires, negotiations between both parties are at a standstill. Failure to reach an agreement could potentially lead to a strike that would have significant implications for the US economy, the e-commerce industry, and the supply chain. While several issues have been resolved, such as heat safety and forced overtime, the main point of contention remains the pay for part-time workers, who make up over half of the union’s workforce at UPS.
The importance of UPS in the shipping industry cannot be understated, as the company handles approximately 25% of the millions of packages shipped daily in the United States. Competitors lack the necessary scale to seamlessly replace UPS’s lost capacity. The Teamsters argue that their members played a crucial role in generating UPS’s strong performance during the pandemic and therefore deserve substantial raises. In contrast, UPS claims to have made significant wage increase proposals before the breakdown in talks. The company emphasizes that part-time workers currently earn an average of $20 per hour after 30 days, in addition to receiving paid time off, healthcare, and pension benefits. UPS also highlights that many part-time workers have the opportunity to advance to full-time driver positions, which offer an average hourly wage of $42 after four years.
The union has been vocal about the challenges faced by part-time workers, with Teamsters president Sean O’Brien leading the charge. O’Brien has highlighted what the union calls “part-time poverty” jobs during television interviews and rallies, often joined by other union leaders and politicians, including Representative Alexandria Ocasio-Cortez. While UPS has expressed its willingness to improve pay and benefits, it remains to be seen if the company’s offer will meet the union’s demands.
Alan Amling, a former UPS executive and fellow at the University of Tennessee’s Global Supply Chain Institute, explains that while UPS wants to reach an agreement, it also wants to ensure its long-term competitiveness. Amling estimates that increasing wages by $5 per hour for all part-time employees represented by the Teamsters would cost the company $850 million per year.
Negotiations between UPS and the Teamsters have been ongoing since April, with the union announcing in June that its members had voted overwhelmingly to authorize a strike. After temporarily walking away from the table due to an “appalling counterproposal” from the company, the two sides resumed discussions in early July. Some progress has been made, particularly regarding the elimination of a lower-paid worker category and the prevention of unscheduled six-day workweeks, which were previously required to meet Saturday delivery demands.
However, even if an agreement is reached, the challenge lies in convincing union members to approve it. Teamsters president Sean O’Brien has set high expectations for a new contract and has positioned this negotiation as a defining moment for organized labor. The union has been conducting training sessions for strike captains and contract action team members to mobilize support and pressure the company. O’Brien has also urged the White House to stay out of the negotiations. While tensions are high, the union appears more unified under O’Brien’s leadership compared to previous contract fights.
Overall, the contract negotiation between UPS and the Teamsters is reminiscent of the 1997 nationwide Teamsters strike against UPS. While UPS is currently profitable and the growth of part-time positions is a significant concern, the union seems better positioned this time due to O’Brien’s leadership and lack of internal opposition. However, it is uncertain whether a deal will be reached before the contract expires, and if it falls short of union expectations, approval from union members might be challenging to obtain. Both parties are working against the looming strike deadline, and while there have been shifts in their positions, there is still hope that a tentative agreement can be reached.
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