Every intense relationship has frictions, and the one between the Teamsters union and United Parcel Service is no exception. Negotiations have broken down in the final stage of talks on a five-year contract, with the Teamsters vowing to strike if a new contract isn’t ratified by the time the current one expires on July 31. Each side has accused the other of walking away from the bargaining table.
Behind the bluster, though, the two sides have a long history of working together productively, recognizing that each needs the other. A third of a million Teamsters work for UPS, making the contract between them the nation’s biggest between a company and a labor union. Most of the time, and for the most part, their relationship has been a role model for interactions between business and organized labor.
It’s also increasingly out of the ordinary: As the chart shows, the rate of union membership in the private sector has fallen nearly two-thirds since 1983. UPS is the only major parcel delivery company that is largely unionized.
A UPS strike would harm the company, the union and customers. It might also tip more business to UPS’s nonunionized competitors, which is in neither side’s interest. If a strike occurs, it will most likely be the result of misjudgments by management, labor or both.
The Teamsters and UPS go back a long way. The International Brotherhood of Teamsters was formed through a merger in 1903. UPS was founded four years later by a couple of teenagers as the American Messenger Company. The Teamsters became for a time the nation’s biggest private-sector labor union, and UPS became the world’s biggest package delivery company. There were ups and downs along the way. In 1967 the Teamsters’ president, Jimmy Hoffa, was sent to federal prison after being convicted of jury tampering, mail and wire fraud and conspiracy. In 1997 there was a 15-day strike that “largely crippled” UPS, as The Times reported at the time.
Today UPS is the biggest employer of Teamsters, with a third of the union’s members. According to the company, full-time package truck drivers earn $42 an hour, on average, after four years on the job, and part-time employees earn $20 an hour, on average, after a month on the job. All employees represented by the Teamsters get zero-premium health care benefits and a pension plan.
To be clear: I’m not taking sides. It’s impossible for outsiders to judge who’s right and wrong in the current impasse over hourly pay and other money matters, because neither party has publicly revealed its bargaining positions. What we do know is that a lot of contentious issues have already been resolved, including, as The Times has reported, a requirement for air-conditioning in new trucks beginning in January and additional fans and venting for existing trucks. Last Saturday the Teamsters tweeted about three big wins: the elimination of a lower tier of pay for some drivers, the establishment of Martin Luther King’s Birthday as a full holiday and the ending of forced overtime on drivers’ days off.
Earlier in the negotiations the Teamsters put me in touch with a couple of UPS drivers so I could get a sense of the rank and file’s perspective. Jason Dube, a package truck driver from Poland, Maine, told me, “We get worked like rented mules,” and complained that “when any petty red flag goes up, we’re treated like criminals.” He said he was prepared to go on strike “to be shown some appreciation, respect.” On the positive side, he said he would much rather work for UPS than FedEx. (He said there are no Amazon drivers in his area.) “The safety, the training, the professionalism, everything we do is with a purpose and with a thought. That’s why we have consistently been the best service provider in the industry.”
Steve Law of Watertown, Conn., said he grew so close to some of his customers as a package truck driver for 35 years that he attended a family wedding of one of them. But, he said, “some of the unrealistic expectations that management would place on me, that was the downfall of the job.” He added, “I see that happening to the younger folks now, and it’s difficult to watch.” He switched to being a car washer — an easier job — about four years ago.
The world is watching what happens at the UPS-Teamsters negotiating table because a strike would cause real problems. The company says it transports more than 3 percent of global gross domestic product and about 6 percent of U.S. G.D.P. daily. Other carriers could pick up some of the slack but not fully and not right away. Americans have largely forgotten how disruptive strikes can be because they’re so rare — no matter what you may have heard about a resurgence in labor activism in recent years. This chart tells the story.
FedEx sees the threat of a strike at UPS as an opportunity to get new customers. “What I can tell you is that this has opened a lot of doors,” Brie Carere, the chief customer officer and an executive vice president at FedEx, told analysts on an earnings call on June 20, according to a FactSet transcript. For Amazon, a strike would be a problem because it still relies on UPS to deliver some of its packages. (By mutual agreement, UPS is gradually handling fewer Amazon packages as it tries to shift to higher-margin business.)
By earning solid profits with a largely unionized work force, UPS has proved that opposing unions isn’t the only path to financial success. Yet its two main competitors, FedEx and Amazon, have striven to remain almost entirely nonunionized. While UPS is governed by the National Labor Relations Act, FedEx’s overnight delivery business, FedEx Express, is covered by the Railway Labor Act. That act, which was enacted to discourage strikes and avoid interruptions to interstate commerce, sets a higher bar for organizing a union.
As for Amazon, the company has sought to discourage its workers from unionizing. Andy Jassy, the company’s chief executive, told CNBC last year that employees are better off not joining a union. In January an administrative law judge ruled that an Amazon supervisor illegally threatened to withhold wage and benefit increases from employees at two warehouses in Staten Island if they voted to unionize. Amazon doesn’t employ unionized drivers because it doesn’t employ drivers at all: Those drivers you see wearing Amazon shirts and driving Amazon trucks? They’re employed by subcontractors.
If UPS and the Teamsters can reach an amicable settlement of their differences, it will be good for them, their customers and the principle that strong unions make for a strong economy.
The Readers Write
You must know that Social Security is a pay-as-you-go system. The term “trust fund” has caused great confusion and political angst about the “fund” going bankrupt. The use of the term “bust” really makes my teeth itch. The political issue has been, is and will be whether the U.S. Treasury (and political establishment) ever breaks the promise of the “contract” between workers and retirees. I seriously doubt the federal government would actually reduce the checks paid to beneficiaries.
How about if we start charging Social Security taxes on every dollar earned? That seems like a start to me. Especially if we get realistic about income to include more than wages and salaries.
Your article on the removal of the Sun Triangle, designed by Athelstan Spilhaus, awakened a memory of a meeting with him in 1976. I was a graduating senior in landscape architecture at Texas A&M, and I attended a conference at which he was the featured speaker. He was completely encouraging of our potential, feeding our aspirations to make a difference. At an engineering and agriculture school like Texas A&M, his insistence on the inventive technical mind’s creative capacities was really refreshing. I was privileged to sit at his table for lunch. He made an impression that your article reminded me of 47 years later.
Thomas M. Woodfin
College Station, Texas
Regarding your newsletter on student loan forgiveness: When I was doing my master’s degree, I was one of two people in my program who worked. The rest of my classmates had taken out loans so they would not have to work. They partied every day and gave me grief for working instead of partying with them. Do I feel like these students should have their loans forgiven? No!
Quote of the Day
“Violent shocks were of paramount importance in disrupting the established order, in compressing the distribution of income and wealth, in narrowing the gap between rich and poor.”
— Walter Scheidel, “The Great Leveler: Violence and the History of Inequality From the Stone Age to the Twenty-First Century” (2017)
Peter Coy has covered business for more than 40 years. Email him at [email protected] or follow him on Twitter. @petercoy
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