United Parcel Service announced Tuesday that it has reached a tentative agreement on a five-year contract with the union representing its more than 325,000 US workers, a key step in preventing a possible strike when the current agreement expires on August 1.
“Together we reached a win-win agreement on issues that matter to Teamsters leadership, our employees, and to UPS and our customers,” company chief executive Carol Toomey said in a statement. “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 remain competitive.”
The union, the International Brotherhood of Teamsters, reported in June that its UPS members voted to authorize the strike, with 97 percent of those polled supporting the move. The tentative agreement will now go before the membership for ratification.
Teamsters President Sean M. O’Brien said, “We asked for the best contract in UPS history and we got it.” said in a statement, “UPS has placed $30 billion in new funding on the table as a direct result of these negotiations.”
UPS handles about one-quarter of the millions of packages shipped daily in the United States, and the strike could impact economic activity, particularly the e-commerce industry.
The union had cited the company’s strong pandemic-era performance, with net adjusted earnings up more than 70 percent last year from 2019, as a reason why employees were entitled to substantial pay increases.
It particularly emphasized the need for pay improvements for part-time workers, who account for more than half of the American workforce represented by the Teamsters, and who are unionized. Said Earn “near-minimum wage” in many fields.
Talks had broken down in early July, mainly over the issue of part-time pay, before resuming on Tuesday morning.
Teamsters Said Under the temporary agreement, current full- and part-time UPS employees represented by the union will receive a raise of $2.75 an hour this year, and an increase of $7.50 an hour over the course of the contract.
The minimum wage for part-timers will increase to $21 an hour – well above the current minimum starting wage of $16.20 – and the top rate for full-time delivery drivers will increase to $49 an hour. Full-time drivers currently earn an average of $42 an hour after four years.
The company has also pledged to create 7,500 new full-time union jobs and fill 22,500 vacancies for which part-time workers would be eligible. The company said part-time employees are necessary to operate activities during the day and during busy months of the year, and many part-time employees graduate to full-time jobs.
A settlement appeared to be on the way a few weeks ago when the two sides settled perhaps their most contentious issue, the creation of a new class of workers under the previous contract.
UPS said the arrangement was intended to allow workers to perform a dual role, such as sorting packages some days and driving on other days, especially Saturdays, in order to meet the increased demand for weekend deliveries.
But the Teamsters said the hybrid idea was never actually implemented, and in practice the new category of workers drove full time from Tuesday to Saturday, only for less pay than other drivers. The company said that, under the previous contract, Saturday drivers earned about 87 percent of the base-pay of other drivers, and some employees worked in a dual role.
Under the temporary agreement, the low-wage category of drivers will be eliminated, and workers who drive Tuesday through Saturday will be converted to regular full-time drivers.
The agreement also stated that no driver would be required to work an unscheduled sixth day of the week, which many drivers were forced to do under existing contracts to meet Saturday demand.
The two sides also agreed on a number of key non-economic issues such as heat protection. New trucks under proposed deal must have air conditioningThe G will debut in January, while existing trucks will be fitted with additional wings and venting.
Whether it succeeds will be partly a political test for Mr. O’Brien, who was elected to lead the Teamsters in 2021 while regularly criticizing his predecessor, James P. Hoffa, for being too lenient toward employers, and UPS in particular.
Mr. O’Brien argued that Mr. Hoffa had effectively forced UPS employees to accept a grossly flawed contract in 2018, even though they had rejected it, and accused his Hoffa-backed rival Reluctance to go on strike against the company.
Since taking over as president last year, he has often said the union will be aggressive in pressuring UPS and has suggested on several occasions that a strike is a possibility.
Days before the agreement on eliminating the hybrid employee position, Mr. O’Brien said in a statement that the Teamsters were walking off the table on a “catastrophic counteroffer” and that a strike “now appears inevitable.”
The company tried to reassure customers and the public that the deal would be completed, despite the sometimes fiery announcements.
on one earnings call In April, Ms Toomey, the UPS chief executive, said the two sides had agreed on a number of key issues and that outsiders should not be distracted by the “massive noise” that was likely to be generated ahead of a deal.
The deal removed a potentially serious threat to the US economy. Economists say the UPS workers’ strike would have made it harder for businesses to ship goods on time, and the resulting restrictions in supply chains would likely have fueled inflation, as indicated by a shortfall.
“Given the size and scale of UPS, it would have been disastrous for the economy,” said Mike Scordales, head of US economics at Truist Advisory Services. “You can’t exit such a big player without causing disruption and raising prices.”
The 10-day UPS strike will cost the US economy about $7 billion, according to a guess From Anderson Economic Group.
Small businesses were most at risk from the strike because UPS may be their sole or primary shipping provider, meaning they would struggle for options. Larger retailers tend to have more diverse delivery providers and are more likely to have contingency plans in place to cushion the blow.
Mr. O’Brien explicitly asked President Biden, who has called himself “the most union president,” not to engage in negotiations. A group of more than two dozen Democratic senators also promised not to interfere,
The Biden administration helped broker a deal that led to the freight rail strike last year. Many union members involved in that dispute saw the deal as tilting too heavily in favor of the major rail carriers.
In 1997, approximately 185,000 UPS workers went on strike for 15 days. At the time, the company reported that it had lost more than $600 million due to the strike. But the last strike happened when e-commerce was in its infancy. UPS has benefited from the e-commerce boom: it projects over $100 billion in revenue in 2022, up from $31 billion in 2002.
J. Edward Moreno And Peter Avis Contributed reporting.
