UPS Workers Vote to Strike - What that Means to Americans
UPS and the Teamsters Union walked away from the negotiating table this week inching closer to a possible strike. The last time UPS Teamsters went on strike was in 1997 and that 15-day strike was devastating for the company and created significant disruptions across the country. A strike now at UPS is even more of a threat to American supply chains and our economy. It carries 6% of America’s gross domestic product (GDP) and 3% of global GDP in its trucks. UPS carried an average of 20.8 million US packages a day through 2022. While that number is down slightly so far this year, it’s nearly double the 11.4 billion it carried, on average, throughout 1998, the first year after the last strike. It plays a critical role in the movement of goods the US economy depends upon. It will impact our supply chains just getting back to normal from disruptions that have driven up prices and inflation over the last several years since the Covid Pandemic.
That’s why there is so much at stake in contract negotiations between UPS and the Teamsters Union. Without a deal, 340,000 Teamsters at UPS out of its 443,000 US employees are preparing to go on strike at the nation’s largest trucking company starting August 1.
The sheer number of workers involved and the importance of UPS deliveries in all parts of America makes the threat of this strike very serious. The degree to which the U.S. economy has become dependent on fast delivery of small items that can be carried by UPS hasn’t really been tested.
UPS said it remains confident there won’t be a strike this time. The two sides have come to agreements before on a number of non-economic issues, including air conditioning in delivery vehicles. As a result, the company will equip all newly-purchased vans with air conditioning starting in January 2024, but pay remains a sticking point.
UPS workers’ pay starts around $15.50 an hour and negotiators are working to get it to $20.00. Teamsters President Sean O’Brien said about part-time pay, “Trucks don't go out unless they are loaded and our part-timers are the unsung heroes. They are working for poverty wages and we need to drive up those starting rates of pay."
However, if a strike does come, it would be the largest strike against a single employer in American history. UPS is the largest unionized employer in the private sector and is crucial to the economy.
It is also interesting to note that Teamster’s strike fund of $346 million is estimated to deplete within the first three weeks of the strike starting.
Potential Consequences for Industry
In an economy that depends heavily on the logistics and shipping industries, a UPS strike could have more far-reaching consequences than slower deliveries. Prices on products and shipping will increase, which could potentially trigger yet another breakdown of the modern-day supply chain.
If the strike does happen, UPS may struggle to get back volumes they will lose to rival delivery services. With this being the largest collective bargaining agreement in any private sector union, it could have an impact across all labor contract negotiations by all private sector unions not just in the transportation space.
The team at Constitution Partners is paying close attention to these negotiations and will keep our clients apprised of any potential threats to their business.