This is Dominic Pino again, filling in. Jim Geraghty will be back on Monday. In observance of Good Friday and the holiday weekend, there will be no Morning Jolt tomorrow.
On the menu today: The next potential transportation problem that could shake up the U.S. economy is a Teamsters strike at UPS.
A Rare Private-Sector Union Stronghold
Union membership in the U.S. overall has been declining for decades. This is almost uniformly true in the private sector, although there are exceptions. The largest exception is UPS, with roughly 350,000 warehouse workers and drivers unionized by the Teamsters. Negotiations between UPS and the Teamsters over a new labor contract begin on April 17, and the current contract expires on July 31.
Teamsters president Sean O’Brien has made it clear where he stands. In a speech in Boston on Sunday, he referred to UPS as a “white-collar-crime syndicate” and said that the Teamsters are “not going to take and accept what UPS gives us.” He said, “July 31st, when Big Brown is shut down, you’re going to see supply-chain solutions come to a halt. And you know what? We’re not afraid to do it.”
The union has touted its strike fund, which sets aside a portion of members’ dues to pay them if they walk out. “We have over $300 million in our strike fund, and we will spend every penny of it to make sure that UPS employees get what they want in this contract,” said Teamsters general secretary-treasurer Fred Zuckerman.
UPS’s relationship with the Teamsters goes back roughly 100 years. That relationship has remained strong despite economy-wide trends away from unionization. Most truck drivers in the United States are not unionized, and many are independent contractors. But UPS has expanded significantly, adding to the Teamsters’ membership rolls.
The last time the Teamsters struck against UPS was 1997. That strike lasted 15 days and included about 180,000 workers. Though UPS was smaller then than it is now, the industry also looked very different than it does today. Mark Solomon of FreightWaves explains:
In 1997, UPS controlled more than 80% of the U.S. ground parcel market, according to estimates from consultancy ShipMatrix. Its two main competitors in the business-to-business segment — how most parcel traffic moved — were Airborne Express, with limited services compared to UPS, and Roadway Package System Inc. (RPS), a small but fast-growing company. FedEx Corp. had no dedicated ground delivery network. The U.S. Postal Service focused on the business-to-consumer market, which was a fraction of what it is today because e-commerce didn’t exist.
Nowadays, UPS competes with FedEx, the Postal Service, DHL, and other smaller firms in the parcel-delivery market. In addition to those, Amazon runs its own fast-growing delivery service that handles parts of its e-commerce business. But Amazon is also UPS’s largest customer, and it would have to adjust its business in the event of a strike as well.
What are the Teamsters upset about? CNBC described the union’s demands:
At the bargaining table, the Teamsters are looking to secure higher wages, more manageable work shifts and improved safety conditions. It wants to tone down employee surveillance practices like, for instance, getting rid of the ring cameras installed in most trucks.
Plus, after a slew of heatwaves, the Teamsters are calling for improved safety measures inside the company’s trademark brown trucks and warehouses. Over the summer, UPS drivers took to social media to post thermometer reads from inside their trucks, which often neared 120 degrees. . . .
Teamsters also want to eliminate the “22.4” employee classification, which refers to workers who often work full-time hours but are officially considered hybrid and, as a result, are paid less. In general, the union is aiming to expand the number of full-time positions and put an end to subcontracting
The union agenda also includes more manageable worker schedules after the Covid-era shipping spike forced many to have to work a sixth day on the weekend – what the union has coined “the sixth-day punch.”
Wages and scheduling are always big issues to be resolved in bargaining. UPS has said it is already dealing with the air-conditioning problem. As to workload, the Teamsters should be careful what they wish for. The Covid-era shipping spike was an anomaly, and cutting costs is the name of the game in the industry right now as demand plummets. Some “22.4” drivers were already laid off in February.
FedEx is currently pursuing a massive corporate restructuring to save $6 billion in operating costs by 2027. It is combining its Ground and Express divisions to reduce redundancy in its truck-delivery network. It is also seeking to rely more on rail for its surface-transportation needs. If UPS feels it needs to go a similar direction in response to market conditions, an expensive contract with the Teamsters could damage its ability to compete. With the exception of its pilots (who voted to authorize a strike in February), FedEx’s workers are not unionized, which can give the company a competitive advantage over UPS when it comes to flexibility.
Left-wing media have been drooling over the possibility of a UPS strike. It would seem to provide some evidence for the media-hyped “union renaissance” that isn’t really happening. Jacobin tells the story of Teamsters president O’Brien building his campaign to lead the union around opposition to the 2018 deal with UPS struck by previous president James P. Hoffa (son of that James Hoffa). It portrays the 1997 strike as something to emulate. The New Yorker did a piece painting the Teamsters’ efforts against UPS as a fight for middle-class jobs in general.
CNN did a story on O’Brien over a year ago, when he was first sworn in as Teamsters president. “You might not know Sean O’Brien. But he is poised to shake up the US economy in a way no one else has in recent memory,” it opens. Another CNN story from September is headlined, “One of the biggest strikes in US history is brewing at UPS.”
Predictions vary widely on whether a strike will happen and what the effects will be. Negotiations will take place behind closed doors, and inside information is scarce. Shipping-industry consultant Satish Jindel told FreightWaves that he believes the two sides will reach a deal before June 30, a month before the strike deadline. Rutgers labor-relations professor Todd Vachon told CNN a strike is almost certain.
On one hand, unions have had the upper hand in the transportation sector around the world since the spike in traffic during the pandemic, and the militant language from Teamsters leadership is concerning. Unlike the freight-rail labor dispute that consumed national attention at the end of last year, the Teamsters negotiations are governed by the National Labor Relations Act, rather than the Railway Labor Act.
The Railway Labor Act allows Congress to adopt a deal to protect interstate commerce, an option it took for freight rail after a few unions held out and prevented a deal. No such option exists under the NLRA. The Taft-Hartley Act, which amended the NLRA, gives the president power to step in and halt a strike if it is deemed to be too economically destructive. President Clinton did not believe the 1997 strike rose to that level. In addition to President Biden being more pro-union than Clinton, UPS is also less economically significant today than it was in 1997, so Taft-Hartley remedies would be unlikely.
On the other hand, UPS’s competitive situation means it could lose many customers if a strike occurred, and it may wish to avoid one at all costs. FedEx has already been trying to lure UPS customers as strike threats mount. “Don’t wait until it’s too late,” a FedEx letter to UPS customers said in early March, in which the company promised them priority service if they moved their business to FedEx by March 31. The Postal Service could pick up some of the slack, as Postmaster General Louis DeJoy has pursued a long-term strategy to expand its parcel capabilities. A strike could also encourage Amazon to bring more deliveries in-house, leaving UPS behind.
Despite their chest-beating, the Teamsters have had a mixed record as of late. Teamsters-represented workers have gone on strike at two food-industry facilities, but workers at a different food facility voted to decertify the union as their bargaining agent. After getting the National Labor Relations Board to reclassify independent-contractor drivers in California as employees, those drivers resoundingly rejected the Teamsters in a unionization vote. The Teamsters are far from invincible, and a failed strike would damage them even more.
The Teamsters have talked a big game so far, and the leadership are bullies, but it would be a stark reversal of the general trend against unions in the American workforce to see a 350,000-worker strike against UPS, a company that, in general, provides good jobs with solid benefits — something that FedEx has been able to do without the Teamsters’ assistance.
ADDENDUM: Today is Maundy Thursday, the only day of the year that anyone uses the word “maundy.” It’s a noun and comes from the Latin word mandatum, meaning “command.” It refers to Jesus’s words at the Last Supper: “A new command I give you: Love one another.”