The UPS-Teamsters settlement could have vast implications for Wisconsin and the world

Tuesday’s tentative deal could drive major shifts in wages and economic policy.

At noon on July 25, less than a week before the International Brotherhood of Teamsters (IBT) was set to strike, IBT announced they had reached a tentative agreement with the United Parcel Service (UPS). 

“We’ve changed the game,” the IBT stated. 

Four thousand Wisconsin Teamsters working for UPS were ready to strike if the company and their union couldn’t agree on a new labor contract by July 31. IBT members had been holding practice picket lines at distribution centers around the state, including in Middleton, Madison, and Janesville. 

On July 19, UPS contacted the union with an offer to resume negotiations the following week, the final full week before the current contract expires. International IBT President Sean O’Brien repeatedly said that workers would not work without a contract. He has also said any tentative agreement would need to be endorsed by the union’s national committee before being disseminated and voted on by membership. The parties exchanged contract proposals for the first time on May 8, and the current contract is still in force until July 31.

The union repeatedly asked UPS to make an acceptable proposal early in the process so as to avoid dramatic last-minute settlements, which often come down to a limited number of union leaders accepting the terms of the settlement on behalf of the membership, before the membership can even see the contract. O’Brien and his team opposed this inherently undemocratic method.

On Tuesday July 25th the UPS national negotiating committee unanimously endorsed the tentative five-year agreement. The announcement of a tentative agreement was greeted with a sign of relief by the industry, the Biden administration, and by shippers.

Now it is up to the members to decide whether or not they feel the same way. Voting will take place during the first three weeks of August.

How we got here

In order to facilitate negotiations, the union and the company adopted a new means of dealing with the huge and complex organization that makes up the UPS. The parties chose to deal with regional issues first and early in June the union and UPS announced that all regions had reached agreement on all issues. Thus all that was left were “economic” issues—primarily wages. 

(IBT Local 344 indicated that they could not discuss regional issues until the membership reviewed them.)

By the end of June, the union and UPS reached agreement on other national issues. Prior to Tuesday’s announcement, the tentative agreement included:

• All UPS Teamster drivers who are currently classified as 22.4s (full-time hybrid workers who work indoors and as drivers) would be reclassified immediately as Regular Package Car Drivers and placed into seniority, ending an unfair two-tier wage system at UPS.
• Granting workers better safety and health protections, including vehicle air conditioning and cargo ventilation. UPS will equip in-cab A/C in all larger delivery vehicles, sprinter vans, and package cars purchased after Jan. 1, 2024. All cars get two fans and air induction vents in the cargo compartments.
• All UPS Teamsters would receive Martin Luther King Day as a full holiday for the first time.
• No more forced overtime on Teamster drivers’ days off. Drivers would keep one of two workweek schedules and could not be forced into overtime on scheduled off-days.

Thus as June ended, it appeared that UPS and the IBT were moving towards settlement.

That was not the case. In a last offer to the union, the company, in the union’s view, offered nothing substantive for part-timers, regarding either wages or promotions. As the union repeatedly stated, part-timers deserved to be able to live on their wages, not go into poverty and rely on food stamps.

“By ignoring the basic needs of part-timers and all Teamster workers, @UPS appears intent on putting itself on #strike – and 340,000 #Teamsters nationwide are ready to withhold our labor,” the Teamsters tweeted on July 13. 

Nationwide, there are about 340,000 UPS workers who would have participated in a potential strike. Although UPS made almost $100 billion in profit during the pandemic, the company may not be in as good of a tactical position as they were 25 years ago, when the IBT struck and won. Unlike then, UPS has a competitor for small package delivery—FedEx—which is making a concerted effort to take part of UPS’ business.

On July 5, the union reiterated its position that they were ready to meet and work with UPS to achieve a settlement, but that the company had to make a major changes in its treatment of part-time workers. On July 19, UPS reached out to the union to re-start negotiations, which began on July 24. 

Issues of wages for full- and part-timers were still a major issue as this week began. IBT local spokespeople made it clear to Tone Madison that wages were the last remaining issue separating the parties—and that UPS can and should do the right thing. The union was particularly concerned with the treatment of part-time workers. 

“Time and time again, part-timers have been left behind with recent labor agreements and it is time UPS showed part-time employees the respect they deserve,” says Bill Carroll, secretary treasurer of IBT Local 344. 

Wage increases for the current full-time workforce and improvements in the ability of part-timers to advance to full-time positions when available remained an issue as well. 

The settlement announced this week would raise the wages of both full- and part-timers:

• Existing full- and part-time UPS Teamsters would get $2.75 more per hour in 2023, and $7.50 more per hour over the length of the contract.
• Existing part-timers would be raised up to no less than $21 per hour immediately, and part-time seniority workers earning more under a market rate adjustment would still receive all new general wage increases.
• General wage increases for part-time workers would be double the amount obtained in the previous UPS Teamsters contract—and existing part-time workers would receive a 48 percent average total wage increase over the next five years.
• Wage increases for full-timers would keep UPS Teamsters the highest paid delivery drivers in the nation, improving their average top rate to $49 per hour.
• Current UPS Teamsters working part-time would receive longevity wage increases of up to $1.50 per hour on top of new hourly raises, compounding their earnings.
• New part-time hires at UPS would start at $21 per hour and advance to $23 per hour.

Long-term labor implications

Overall the gains won by the IBT are meaningful and reflect a commitment by the IBT leadership to all segments of the union.

But the big news of this contract lies elsewhere. The outcome of the UPS-IBT negotiations will have wide-ranging effects on both the labor movement and the US economy in general. Just as the defeat of organized labor in Wisconsin by then-Governor Scott Walker in 2011 cast a pall over the labor movement, a victory by the IBT over a company the size and scope of UPS demonstrates to workers that unions do matter—and can win. This in turn will increase the already widespread efforts of workers in places like Amazon and Starbucks but also in manufacturing and universities. In other words, we can expect to see the type of mutually supportive organizing activity that occurred in times past.

For the first time in a generation a union did what it is supposed to do: It advanced the standard of living of its members. There is a wage increase that appears to keep up with inflation. There is an improvement—not enough in the view of many—in working conditions and a limitation on the number of hours management can demand of the workforce.

It is important to note that there is new leadership in the Teamsters union elected through the one-person-one-vote system. The previous system had delegates elected by locals’ memberships casting votes on the membership’s behalf. The current system was the result of a long-term fight by members of the IBT, led in large part by Teamsters for a Democratic Union, to democratize the functioning of the union. The result is a new coalition of democratically-elected leaders who have dedicated themselves to the interests of the membership. If this new member-oriented coalition can deliver the goods, it will result in strong moral support for a similarly elected new reform leadership in the United Automobile Workers, and in all likelihood encourage membership-driven reform efforts in many unions—including within the Railroad Brotherhoods. The IBT leadership, with the full-throated support of the members, have made it clear that concessions are off the table and now is the time for workers to regain lost economic power, restore frayed benefit plans, and deal with quality-of-life issues such as scheduling and working conditions. The fact that these issues have been for the most part already agreed to in the UPS-IBT negotiations augurs well for the future.

The IBT mobilized its members, was clear in its objectives, and delivered on its commitment to the membership. This does not appear to be a contract that will be imposed on the members by the union leadership—in sharp contrast to the last contract and to what we have seen in other industries. 

For the economy as a whole, raising the base wages of the lowest-paid UPS workers, and thus making the part-time work more attractive, will put pressure on all the industries and service providers who are low-balling wages. It is clear already that there is a huge challenge facing nursing homes, home health care, the fast food industry, and all kinds of service providers when it comes to providing decent wages. An IBT victory at UPS will put even more pressure on these types of firms to pay employees properly. 

In short, what we have seen with this contract is a return to what labor relations looked like before a generation of concessions driven by an aggressive management, supported by the government and abetted in many cases by a union leadership that (to put it charitably) lost its way. 

There are of course structural remnants of the past. A five year contract is one of them—rather than two- and three-year contracts, which were prevalent a generation ago. And while the leadership emphasized “no contract-no work,” in fact there will be no work stoppage while the contract is being considered by the membership.

But what we have also seen is the power that a united and competently led union can exercise. And we have also seen that other labor unions—including the Independent Pilots Association, which represents UPS pilots—were willing to announce they would not cross any IBT picket line, thus (potentially) essentially putting an end to UPS’ international business.The IBT example of doing what a union should do puts increased pressure on the United Auto Workers (UAW) as they approach their deadline to win a new contract with the “Detroit Three” automakers. UAW members, whether they supported the old guard (mostly defeated) or not, will be looking to the new leadership to deliver an end to concessions. Assuming that the members agree with the leadership, the IBT settlement may also help fuel a new wave of organizing.