UPS
1224904~ups Feeder Truck

UPS, union avoid strike that could have cost billions with ‘historic’ new deal

July 25, 2023
Gloom-and-doom predictions for the cost to the U.S. economy can end as the Teamsters trumpet higher wages, job increases, more equal pay, air conditioning for delivery vans, part-timer rewards, and MLK Day as a holiday at the No. 2 FleetOwner 500 carrier.

Though UPS, the No. 2 FleetOwner for-hire 500 carrier, and its 340,000 unionized employees came within days of a strike that could have cost the company billions and slowed the supply chain and the U.S. economy, all doomsday predictions can now be set aside as the International Brotherhood of Teamsters and UPS announced today that they’d reached a tentative deal on a new contract.

A work stoppage could have begun as soon as Aug. 1, but the union first announced details of the tentative deal on July 25the first day of restarted negotiations with the parcel-delivery giant, which handles more than a quarter of the daily U.S. package volume (19 million parcels daily). The company put out a short statement shortly after the union.

What does the UPS-Teamsters tentative agreement include?

  • Wage increases for full- and part-time workers that the union called “historic”: Existing full- and part-time UPS Teamsters receive $2.75 more per hour in 2023 and $7.50 more per hour over the length of the contract. Existing part-timers will receive no less than $21 per hour immediately. New part-time hires would start at $21 per hour and advance to $23.
  • General wage increases for part-time workers: They will be double the amount obtained in the previous UPS Teamsters contract. Existing part-time workers will receive a 48% average total wage increase over the next five years.
  • Wage increases for full-timers: They will keep UPS Teamsters the highest-paid delivery drivers in the nation, improving their average top rate to $49 per hour, according to the Teamsters.
  • Current UPS Teamsters working part-time: Under the new tentative deal, they receive longevity wage increases of up to $1.50 per hour on top of new hourly raises, compounding their earnings.
  • All UPS Teamster drivers are classified as 22.4s, meaning they would be reclassified immediately to regular package car drivers and placed into seniority, “ending the unfair two-tier wage system at UPS,” according to the union statement.
  • Safety and health protections, including vehicle air conditioning and cargo ventilation: UPS will equip in-cab air conditioning in all larger delivery vehicles, sprinter vans, and package cars purchased after Jan. 1, 2024. All cars will get two fans and air induction vents in the cargo compartments.
  • All UPS Teamsters would receive Martin Luther King Jr. Day as a full holiday for the first time.
  • Teamster drivers will not be forced to work overtime on their days off.
  • UPS Teamster part-timers will have priority to perform all seasonal support work using their own vehicles with a locked-in eight-hour guarantee. For the first time, seasonal work will be contained to five weeks only from November-December.
  • The creation of 7,500 new full-time Teamster jobs at UPS and the filling of 22,500 open positions at the parcel company, establishing more opportunities through the life of the agreement for part-timers to transition to full-time work.

The tentative five-year deal covers U.S. Teamsters-represented employees in small-package roles and is subject to voting and ratification by union members, the company said in a statement. The 176 UPS Teamster locals in the U.S. and Puerto Rico will meet on July 31 to review and recommend the agreement, the union said its own statement. Member voting begins Aug. 3 and concludes Aug. 22, the Teamster said.

“Together, we reached a win-win-win agreement on the issues that are important to Teamsters leadership, our employees, and to UPS and our customers,” UPS CEO Carol Tomé said in the company's brief negotiations update. “This agreement continues to reward UPS’s full- and part-time employees with industry-leading pay and benefits while retaining the flexibility we need to stay competitive, serve our customers and keep our business strong.”

“Rank-and-file UPS Teamsters sacrificed everything to get this country through a pandemic and enabled UPS to reap record-setting profits. The union went into this fight committed to winning for our members. We demanded the best contract in the history of UPS, and we got it,” Teamsters General President Sean M. O’Brien said in the union’s statement. “UPS has put $30 billion in new money on the table as a direct result of these negotiations. This contract sets a new standard in the labor movement and raises the bar for all workers.”

Chances of a deal to avoid a strike were high

Despite the earlier gloom-and-doom predictions, analysts pegged the chances of a settlement high and a strike low. By the time the union and UPS restarted negotiations on July 25, UPS had met some demands of the union already. The parcel giant had ended a two-tier pay system in which part-time workers were paid $5 less per hour than full-timers. UPS also included MLK Day as a work holiday and agreed to end mandatory overtime on drivers’ days off.

And just last month, the company decided to equip more trucks with air conditioning equipment starting Jan. 1. Existing vehicles will receive other additions like fans and air vents. The issue has been a sticking point for the union since last summer when reports surfaced in the news of UPS workers hospitalized for heat exhaustion. This remains an issue with the record-breaking heat this summer.

However, had a work stoppage occurred, Michigan-based think tank Anderson Economic Group had estimated that potential losses of a 10-day strike at UPS could have topped $7 billion, including losses by customers of the parcel carrier totaling $4 billion. Both numbers dwarf the losses through the 1997 work stoppage, which cost the company $850 million. The group also estimated that the forfeiture of direct wages could have exceeded $1 billion.

Added Teamsters General Secretary-Treasurer Fred Zuckerman: “UPS came dangerously close to putting itself on strike, but we kept firm on our demands. In my more than 40 years in Louisville representing members at Worldport—the largest UPS hub in the country—I have never seen a national contract that levels the playing field for workers so dramatically as this one.”

About the Author

Scott Achelpohl | Managing Editor

I'm back to the trucking and transportation track of my career after some time away freelancing and working to cover the branches of the U.S. military, specifically the U.S. Navy, U.S. Marine Corps, and the U.S. Coast Guard. I'm a graduate of the University of Kansas and the William Allen White School of Journalism there with several years of experience inside and outside business-to-business journalism. I'm a wordsmith by nature, and I edit FleetOwner magazine and our website as well as report and write all kinds of news that affects trucking and transportation.

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