UPS drivers to get higher pay, air conditioning in trucks under new deal reached with union

A strike, which could have started in August, could have been a big deal in the U.S. UPS delivers about a quarter of the nation’s packages every day.

WASHINGTON — UPS has reached an interim contractual agreement with its 340,000-strong union, potentially averting a strike that threatened to disrupt logistics nationwide for both businesses and households.

The deal was announced Tuesday, the first day UPS and the Teamsters returned to the table after litigation talks stalled earlier this month, to talk about remaining sticking points in the largest private sector contract in North America. Negotiators had already reached tentative agreements on a number of issues, but continued to clash over the pay of part-time workers who make up more than half of the union-represented UPS employees.

The Teamsters called the deal “historic”.

Under the interim agreement, full-time and part-time UPS union workers will receive $2.75 more per hour in 2023 and $7.50 more per hour over the five-year contract term. The agreement also provides for an increase in the starting salary for part-time workers, who the union had defined as the most at risk of exploitation among the company’s workforce. Starting pay for part-time workers will be $21 an hour, he said, up from $16.20 today. The average pay for part-timers was $20, according to the company.

Teamsters general president Sean M. O’Brien said UPS has put $30 billion of new money on the table as a result of the negotiations.

“This contract sets a new standard in the union movement and raises the bar for all workers,” he said in a statement.

The two sides had already tentatively agreed to make Martin Luther King Jr. Day a full holiday and to end forced overtime on drivers’ days off. Interim deals have also been reached on safety issues, including equipping more trucks with air conditioning.

UPS also agreed to eliminate a category of lower-paid drivers who work shifts that include weekends and convert them into regular full-time drivers. The company will also create 7,500 full-time jobs and fill 22,500 open positions, which could allow more part-timers to transition into full-time jobs.

“Together, we have reached a win-win agreement on issues that are important to Teamsters’ leadership, our employees, and to UPS and our customers,” UPS CEO Carol Tomé said in a written statement. “This agreement continues to reward full-time and part-time UPS employees with industry-leading compensation and benefits, while maintaining the flexibility we need to stay competitive, serve our customers and keep our business strong.”

Voting on the new contract begins on August 3 and ends on August 22.

In Washington, President Joe Biden applauded the two sides for reaching an agreement.

“This settlement is a testament to the power of employers and employees coming together to resolve their differences at the negotiating table in a way that helps companies succeed by helping workers secure the pay and benefits on which they can raise families and retire with dignity and respect,” Biden said in a statement.

Union members, angered by a contract they say was forced upon them five years ago by union leadership, have clashed with UPS over pay as profits for the delivery company have soared in recent years. The union’s leadership was upended last year with the election of Sean O’Brien, a vocal critic of the union president who signed that contract, James Hoffa, the son of the famous Teamsters firebrand.

UPS profits have grown more than 140% since the last contract was signed as the arrival of a deadly pandemic dramatically transformed how Americans get what they need.

The unionized workers argued that they were the ones who took charge of the growth of the Atlanta company and seemed determined to fix what they saw as a bad contract.

The 24 million packages UPS ships on an average day amount to about a quarter of all US package volume, according to global shipping and logistics company Pitney Bowes. As UPS puts it, this is the equivalent of about 6% of the nation’s gross domestic product.

The latest breakdown in union talks a quarter century ago led to a 15-day strike by 185,000 UPS workers that paralyzed the company. A strike would have far-reaching implications this time with millions of Americans now accustomed to online shopping and fast delivery.

Consulting firm Anderson Economic Group said a 10-day UPS strike could cost the US economy more than $7 billion and cause “significant and lasting damage” to small businesses, home workers and online retailers across the country.

Logistics experts had warned that all other shipping companies combined would not have the capacity to handle the packages that would make their way through any UPS business disruption, and that shipping and freight prices would eventually rise. Customers shopping online could have faced higher shipping costs and longer waits.

Over the past few weeks, businesses large and small have been working to create contingency plans in the event of a UPS strike.

Joseph Debicella, a small business owner who runs an online site that sells bridesmaid gifts, said his company ships about 50 percent of its orders via UPS. He’s never used FedEx before, but he set up an account with the company two weeks ago when rumors of a strike escalated. He also heard about the negotiations from his UPS driver, who told him his deliveries were getting lighter as the July 31 deadline for a new contract approached.

Debicella, who lives in Charlotte, North Carolina, says he’s concerned about costs since he’s offering free shipping to customers who spend more than $99 on the site.

Macy’s CEO Jeff Gennette told the Associated Press that the department store chain was reviewing strike contingency plans and that the department store’s supply chain team was mapping out what a strike would look like and how it would affect shipping.

The deal could avoid a major logistics disruption just as retailers grappled with the back-to-school shopping season, the second-largest sales period after the winter holidays.

The Retail Industry Leaders Association, a national retail group that counts retailers such as Best Buy, CVS Health and Kohl’s as members, called the interim pact “a huge relief for retailers, who have been navigating the possibility of a strike and associated uncertainty for weeks.”

“Over the past few years, we have learned all too well the impact supply chain disruptions can have,” the group said in a statement. “We are grateful that this challenge, which would have cost billions of dollars and a long recovery track, was avoided.”

Labor experts see the showdown as a demonstration of the workforce at a time of low union membership in the US union, however, they have become very active this summer after a series of organized union drives at big companies like Starbucks.

Hollywood actors and screenwriters are picketing salary issues. United Auto Workers also talks about a potential strike.

“Here’s how it’s done!” Flight Attendant Association-CWA president Sara Nelson said in a statement congratulating the Teamsters on the deal. “And this summer of union solidarity just got stronger.”

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