Strike Threat from UPS Workers Tests Union Power and Labor Market Strength
The threat of a strike from 340,000 United Parcel Service (UPS) workers is providing a new challenge to the current surge in union power and raising questions about the strength of the larger US labor market.
During the pandemic, the unionized workforce at UPS gave the package carrier a significant advantage as demand for deliveries skyrocketed and competitors struggled to find available workers. However, as job gains slow and demand cools in certain sectors of the economy, the influence of labor is becoming less certain, both at UPS and in the overall economy.
Recent data from the Bureau of Labor Statistics shows that the labor market remains tight. In June, the US economy added 209,000 jobs, marking the 30th consecutive month of job creation. Hourly wages also increased by 4.4% compared to the same month last year, while the unemployment rate fell to 3.6%. However, the report also revealed some weakening, as it was the first time in 15 months that job creation fell below Wall Street economists’ expectations, indicating a slowdown compared to the previous month. Furthermore, employment in transportation and warehousing, the sector in which UPS operates, actually decreased by 7,000 jobs in June.
Nancy Vanden Houten, lead US economist at Oxford Economics, described the labor market as transitioning “from overheated to lukewarm” in a note on Friday.
The direction of the labor market carries significant implications for the Federal Reserve’s decision-making regarding interest rates and inflation control. Federal Reserve officials are closely monitoring hiring and wage trends to determine if companies are reducing their workforce and wages.
Pay remains a critical issue for the International Brotherhood of Teamsters, which is pushing UPS to meet its demands for a new five-year collective bargaining agreement. The union is seeking higher wages for part-time workers and other benefits.
Sean O’Brien, general president of the International Brotherhood of Teamsters, emphasized the need to increase starting pay rates during an interview on CNN. UPS, on the other hand, contends that it already offers industry-leading compensation, with delivery drivers earning up to $42 per hour after four years of employment.
As negotiations continue, the Teamsters have stated that workers have authorized a strike to commence on August 1 if an agreement is not reached. This development is part of a broader wave of union activism that emerged during the pandemic, fueled by increased labor demand.
Over the past week, Teamsters workers have expanded strikes against Amazon for delivery drivers in California and New York. Additionally, the union is challenging Yellow, the third-largest trucking company in the US, to honor the negotiated contract for its 22,000 union employees despite the company’s request for modifications to avoid bankruptcy.
Other major companies, such as Amazon, Apple, and Starbucks, have also faced unionization efforts and union pressure from their workers.
It remains to be seen whether this current wave of union activism represents a temporary or fundamental change in employer-union dynamics. Labor and employment experts are grappling with answering this question, given the complexities of the issue.
Disruptions in transportation, shipping, and warehousing can have severe repercussions across multiple industries. However, without changes to labor laws, unions are unlikely to regain the power they once held. The proximity of a union to a company’s choke-point and their willingness to strike are factors that can determine their influence and power.
According to recent data from the Bureau of Labor Statistics, 10.1% of wage and salary workers belonged to unions in 2022, a slight decrease from 10.3% in 2021. However, the number of workers belonging to unions increased by 1.9% or 273,000 workers. In 1983, the total number of workers belonging to unions was around 20.1%, almost double the current figure.
The Biden administration has shown reluctance to take economic risks that could disrupt the nation’s supply chains. Interventions in various labor disputes, such as those between West Coast Ports and the Dockworkers Union or railroad companies and multiple unions backing railway conductors, demonstrate the administration’s approach. However, Acting US Labor Secretary Julie Su stated that the White House does not plan to intervene in the UPS negotiations.
The outcome of the UPS situation will shed light on the balance of power between unions and employers and provide insights into the strength of the US labor market.