Unions rally for looming UPS worker strike

Jason Flynn loves one aspect of his part-time job as a UPS package sorter: He was able to get it in 15 minutes. 

What he doesn't love, he said, is earning $18 an hour pay to move 70-pound packages every few seconds, the "noxious" air from the exhaust of trucks and the "supervisors yelling at you to keep it moving." Since suffering an injury earlier this year, Flynn said he has been able to work only one or two shifts a week at his Chicago facility, and has to supplement his UPS pay with dog-walking or food-delivery gigs.

"I have to constantly make up the money elsewhere," the 32-year-old told CBS MoneyWatch. "I've been in near-poverty for a long time.... I would bike 40 minutes each way to work instead of taking the train," adding, "I haven't paid my rent yet this month." 

Flynn is among the thousands of part-time employees at UPS pushing for higher pay as the Teamsters union, which represents 340,000 UPS workers, and the delivery giant resume contract negotiations on Tuesday. If no deal is reached by July 31, the union has vowed to walk off the job in what would be America's biggest strike in 60 years.

Here's what to know about the negotiations and the effects of a possible strike.

What are the issues?

The major outstanding issue is pay, particularly for part-time UPS workers, who make up 60% of the company's workforce, according to the Teamsters.

Under the current contract, part-time workers at UPS start at $15.50 an hour. (However, under a recent executive order addressing federal contractors, UPS must pay at least $16.20.) The company notes that part-timers make an average of $20 an hour after 30 days on the job, while enjoying the same health care and pension benefits as full-time workers.

However, many part-timers say that their starting pay is far below what full-time UPS workers make for doing the same job.
While neither the union nor UPS have disclosed the latest pay proposals on the bargaining table, some workers are pushing for starting pay of $25 an hour — the same amount they were making in 1983 when adjusting for inflation.

"I don't think it's asking anything crazy to have equal pay, doing the same jobs as full-timers inside the building," Flynn said. 

Full-time workers at UPS, most of whom are delivery truck drivers, can make $95,000 a year or more, but they represent a minority of the workforce and face their own challenges, such as often brutal heat on the job.

The median UPS employee made $52,000 last year, according to the company's securities filings. CEO Carol Tomé made $18.9 million that year, down from $27 million the year before. 

"We are prepared to increase our industry-leading pay and benefits, but need to work quickly to finalize a fair deal that provides certainty for our customers, our employees and businesses across the country," UPS said in a statement on Wednesday.

The labor talks, while fitful, have succeeded in resolving some issues, including making Martin Luther King, Jr. Day a paid holiday and installing air conditioning and heat shields in delivery trucks, where summer temperatures often shoot above 110 degrees.

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How are workers preparing for a strike?

The Teamsters have been holding practice pickets for months in preparation for a strike and, since last fall, have encouraged members to put money aside so they have a financial cushion in case of a walkout.

Jose Francisco Negrete, a part-time package sorter and 25-year veteran at UPS in Anaheim, California, said he started saving last year, putting away $55 with every paycheck.

"Probably around September, I said, you know what, if I need to take out money for an emergency I will, but I'm not going to touch it," he told CBS MoneyWatch. "I've been telling members to save as well. If we do strike, we need to be prepared."

In the even of a work stoppage, workers would get strike pay totaling five times their union membership dues, Negrete said. For him, that would provide a weekly check of about $350, just under half his usual earnings. Despite the financial risks, he still thinks it's worth pushing for higher pay long-term. 

"This contract is about respect," he said. "Is UPS willing to take $2.8 billion in profit and give it to the part-timers — profit that was generated by us, by the rank and file? We need to exert as much power as we can and fight for as much as we can."

How is UPS preparing for a strike?

UPS is girding for a possible strike by training non-union employees at the company to work in warehouses.

For now, most businesses for which UPS is a vital lifeline still expect a strike to be averted, according to industry observers. AFS Logistics, which tracks the shipping industry, said UPS customers have not switched to other carriers, as might be expected if they were bracing for a work stoppage.

"We've not seen any shift from UPS to FedEx as people get more and more concerned over the potential strike," Micheal McDonagh, president of AFS Logistics' parcel business, told CBS MoneyWatch, an observation that was confirmed by Bill Sullivan, executive vice president for advocacy at the American Trucking Associations.

FedEx executives said in the company's most recent investor call that, while it was "having a lot of great conversations with legacy UPS customers," it has yet to see an influx of new business.

UPS handles roughly 28% of America's shipping, so a strike could chaos for businesses and individual consumers. The company also has a special niche in delivering high-value items; during the pandemic, for example, UPS was one of the two carriers (along with FedEx) chosen to deliver the first doses of the COVID-19 vaccine.

"In the event a strike does happen, practically speaking, the market simply cannot soak up the 20 million parcels UPS handles each day, and a significant backlog of packages would accumulate," McDonagh said in a recent report.

How much would a strike cost?

A 10-day strike at UPS would cost the U.S. economy a total of more than $5 billion, according to a recent estimate from the Anderson Economic Group. Workers would lose about $1.1 billion in wages, while customers would lose around $4 billion, the firm projected.

"The biggest losses are to people who are not striking and not connected to UPS. This is highly unusual for a strike," said Patrick Anderson, the group's principal and CEO.

"With a UPS strike, everyone in America will feel it if it happens," he said. 

The strike would also affect the broader U.S. economy and lead some small businesses to temporarily close, Anderson said. He noted that a United Auto Workers strike against GM in 2019 pushed the state of Michigan, where the automaker is based, into a brief recession.

Will the White House intervene? 

Teamsters President Sean O'Brien has pointedly asked the White House to stay out of any potential strike, saying earlier this month that "We don't need anybody getting involved in this fight."

But some industry experts believe that President Biden — who intervened in December to defuse a threatened railroad workers strike— would also exert pressure to avoid a stoppage that could disrupt a quarter of the nation's cargo.

"The derailment that this would cause to the economy would be enormous. Therefore, I think the administration is unlikely to sit by and let it happen," said AFS Logistics CEO Tom Nightingale. "They would take as active a role they could possibly take, particularly in a Democratic administration."

Still, 200 members of the House and Senate have pledged this week to stay out the fight.

"The Teamsters-UPS contract is the largest private collective bargaining agreement in North America, and given the recent increase in attacks on employees' collective bargaining rights, it is critical that these rights are in no way undermined in the current contract negotiations," they wrote.

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