The threat of a strike by 340,000 United Parcel Service (UPS) workers represents a new test of the recent surge in union power. It may also answer some questions about the strength of the larger US job market.
The unionized workforce at UPS was a major asset for the parcel service early in the pandemic as demand for deliveries soared and competitors who lacked a steady supply of labor struggled to find enough workers.
But now, with job growth slowing and demand cooling in some parts of the economy, it’s less clear how long labor will prevail, either at UPS or in the economy as a whole.
New data released on Friday by the Bureau of Labor Statistics showed the job market is still tight as the US economy added 209,000 jobs in June. This was the 30th straight month that the US economy has created jobs. Hourly wages also increased by 4.4% compared to the same month last year, while the unemployment rate fell to 3.6%.
However, the data also showed some moderation. Friday’s report was the first time in 15 months that job creation fell short of Wall Street economists’ expectations, reflecting a month-on-month slowdown.
In the part of the economy that UPS operates — transportation and warehousing — employment actually fell by 7,000 jobs in June.
The labor market is cooling from “overheated to lukewarm,” said Nancy Vanden Houten, senior US economist at Oxford Economics, in a statement on Friday.
The development of the labor market is important for the Federal Reserve, as it decides whether to raise interest rates further in order to bring down inflation. Central bank officials are watching for signs companies are cutting hiring and wages.
New wave of union activism
Pay remains a major issue for the International Brotherhood of Teamsters, which is urging UPS to honor its demands for a new five-year labor agreement. Among other things, she is demanding higher wages for the part-time employees of the transport company.
The story goes on
“We need to raise starting wages,” said Sean O’Brien, president general of the International Brotherhood of Teamsters. said this week on CNN.
UPS says it already offers industry-leading pay, with delivery drivers earning up to $42 an hour after four years with the company.
On Wednesday, the Teamsters said the company failed to come up with an acceptable offer. Workers have authorized a strike to begin August 1 if no agreement is reached.
Sean O’Brien, President General of the International Brotherhood of Teamsters. Portal/Aude Guerrucci
The Teamsters’ action is the latest sign of a new wave of union activism that has taken hold during the pandemic, when demand for labor has soared.
Over the past week, Teamsters workers have expanded strikes against Amazon for delivery drivers in California and New York.
The union is also investigating whether Yellow, the country’s third-largest trucking company, is sticking to the contract it negotiated for its 22,000 union workers, despite requests by the company to change the agreement to avoid another bankruptcy.
Amazon (AMZN), which operates its own shipping service Amazon Logistics, has faced union pressure from its warehouse workers in several states, while Apple (APPL) and Starbuck (SBUX) have faced union pressure from retail workers.
Is this a “temporary or substantial change”?
Strikes, which can shake up the country’s supply chains, are economic risks that the Biden administration has been shown to be unwilling to take.
Last year the government intervened in the dispute between West Coast Ports and the Dockworkers Union, mandated Congress to settle differences between railroad companies and a dozen unions that support railroad conductors. She also oversees talks between the auto companies and the United Auto Workers.
Julie Su, acting Secretary of Labor, said the White House has no plans to interfere in the UPS talks. (AP Photo/Alex Brandon, file)
“Suddenly we’re in a situation that we haven’t been in a long time,” Paul Clark, labor and employment expert and law professor at Penn State University, told Yahoo Finance.
“The big question is whether this is a temporary or fundamental change between unions and employers. We’re currently trying to find an answer to that and it’s quite difficult to say.”
Michael Oswalt, a professor of labor law at Wayne State University, said even small disruptions in transportation, shipping and warehousing could have devastating consequences in many industries. However, without changes in the labor laws that govern union campaigns and elections, unions are unlikely to regain the power they once had, he said.
“So what can be more important today than a union’s size is its proximity to a company’s bottleneck — and particularly its willingness to strike,” Oswalt said. “UPS teamsters understand the value they bring to the company and the wider economy, and they have a track record of strike action. That trio means a lot of union power right now.”
In January, the BLS reported that in 2022 10.1% of wage earners were union members, up from 10.3% in 2021. Over the same period, the number of wage earners who were union members increased by 1, 9% or 273,000 workers. According to the BLS, total union membership was around 20.1% in 1983, almost double what it is today.
Acting US Secretary of Labor Julie Su told Yahoo Finance on Friday that the White House has no plans to intervene in the UPS situation.
“I am confident that the parties will find a way and will continue to try to work things out,” she said on Friday.
Jennifer Schonberger, Josh Shafer, and Jared Mitovich contributed to this report.
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