United Parcel Service workers have authorized their union, the International Brotherhood of Teamsters, to go on strike as soon as Aug. 1, when the current contract expires, the Teamsters announced Friday.
The Teamsters represent more than 325,000 UPS employees in the United States, where the company has a total of nearly 450,000 employees. The union said 97 percent voted yes permission to strike.
Many unions hold such votes to create leverage at the bargaining table, but a much smaller percentage end up quitting. “The results do not indicate that a strike is imminent and will not affect our current business operations in any way,” UPS said in a statement, adding that it “is confident that we will reach an agreement.”
A UPS strike could have a significant economic impact. According to the Pitney Bowes Parcel Shipping Index, the company handles about one-quarter of the tens of millions of parcels shipped each day in the United States. And while UPS’s competition has grown in recent years, competitors would be hard-pressed to replace lost capacity quickly, leaving some customers in the lurch and others facing higher costs.
“What happens when you try to cram 25 percent more food into a stomach that’s 90 percent full?” said Alan Amling, a member of the Global Supply Chain Institute at the University of Tennessee and a former UPS executive.
Since they began negotiating a national contract in April, the two sides have reached tentative agreements on a number of issues, most recently on thermal safety, including air conditioning requirement in new trucks starting in January and additional fans and ventilation for existing trucks.
But negotiators have yet to deal with the wage increase, which the Teamsters say has been delayed because of the company’s strong performance during the pandemic. The company’s adjusted net income rose more than 70 percent from 2019 to last year.
The unions also focused on re-evaluating the pay gap for the category of drivers who usually work on weekends.
This was said recently by UPS CEO Carol Tomé, who took up the position in 2020 earnings call that UPS was aligned with the union on “several key issues.” She added that outsiders should not put too much emphasis on the “big noise” that is likely to occur during the negotiations.
Looming over the talks is the political status of Teamsters leader Sean O’Brien, who is running his campaign for the union presidency in 2021, he repeatedly accused his predecessor James P. Hoffa of being too condescending to employers.
Mr. O’Brien he complained that Mr. Hoffa essentially forced a concession agreement on UPS workers in 2018 after union members voted down the deal. He criticized his opponent for the presidency, a candidate involved with Hoffa, for being unlikely to strike.
“You’ve already admitted you’ve only struck out six times in your 25-year career, so UPS knows you’re not going on strike,” Mr O’Brien said candidate debate.
Mr. O’Brien has largely maintained his aggressive stance on UPS since taking over as president last year. Speaking in October to activists from Teamsters for a Democratic Union, the reform group that backed his candidacy, Mr. O’Brien promised that “this UPS deal will be a defining moment in organized labor.”
Compensation for UPS drivers is generally higher than that of the company’s competitors. UPS said the average full-time driver with four years’ experience earns $42 an hour, and that part-time workers who sort packages earn an average of $20 an hour after 30 days.
The groups receive the same benefits package, which includes health care and pension contributions and is worth about $50,000 a year for a full-time driver, the company says.
In addition to overall pay levels, the union said it wants to eliminate the driver category created under the 2018 contract.
The company said the category was for hybrid workers who performed jobs such as parcel sorting on some days while driving on other days, particularly on Saturdays, to respond to increasing demand for weekend delivery.
But the Teamsters said those workers never followed a hybrid arrangement and simply drove full-time Tuesday through Saturday for less pay than other full-time drivers. The company says weekend drivers earn about 87 percent of the base pay of regular full-time drivers and that some employees worked in hybrid arrangements.
In the event of a strike, supplies to consumers, such as e-commerce orders, would likely be among the first to be disrupted. But according to experts, the supply chain could also suffer. Some suppliers would have difficulty quickly shipping goods such as auto parts to manufacturers, which could cause production to slow down.
Even a short strike could take a toll on UPS. Many customers had long relied solely on the company, but that began to change after the Teamsters last went on strike in 1997, Mr. Amling said. After this strike, which lasted just over two weeks, more customers began working with more carriers. The consequences were masked by gains from the rise of e-commerce and fewer competitors to choose from, but the company may not be so lucky today.
Niraj Chokshi contributed reporting.