UPS worker going up stairs with packages in his arms
Photo: Unsplash

It’s no secret that a Teamsters UPS strike would have staggeringly harmed the U.S. economy’s current fragile situation. Fortunately, it appears that this particular scenario has been avoided.

The Wall Street Journal reports that the UPS Teamsters have successfully attained a five-year labor deal that covers “roughly 330,000 package-delivery drivers and package sorters” and makes history as being the “largest collective-bargaining agreement involving a private employer in North America.”

Valued in the ballpark of at least $30 billion overall, this contract comes as a monumental victory for workers, with the agreement just needing to be ratified by employees to seal the deal. 

A vital component of the agreement stated that part-time workers would see an increase in their hourly wages to $21 an hour. “Currently, starting part-time hourly wages are $16.20 and could be higher in places where there is more competition for labor. Existing workers would get a raise of $7.50 an hour over the life of the contract, including a $2.75-an-hour pay bump this year,” according to the WSJ.

The Competitive Enterprise Institute (CEI) points out that the increase in part-timers’ pay occurred because “the Teamsters had sought to limit their use. Raising their pay so they become less economical for UPS to use them was the apparent compromise.”

From UPS Chief Executive Carol Tomé, “This agreement continues to reward UPS’s full- and part-time employees with industry-leading pay and benefits while retaining the flexibility we need to stay competitive, serve our customers and keep our business strong.”

According to the article, the Teamsters General President Sean O’Brien said, “This contract sets a new standard in the labor movement and raises the bar for all workers.” After such a significant victory, other unions and employees might become inspired and more confident in organizing and striking in order to meet better working conditions and increased pay.

Furthermore, CEI speculates that since the Teamsters got “what they wanted from the transportation company,” this is only the beginning, and “other unions will think, why not us? Hollywood writers and actors are already trying it in their sector.”

This might be the beginning of a continued campaign, as Bloomberg reports that “the brash head of the largest private-sector US union is turning attention to Amazon.com Inc. Sean O’Brien, president of the International Brotherhood of Teamsters, told Bloomberg TV Wednesday that the internet retail giant is now a ‘target’ as labor leaders attempt to organize warehouse workers.”

Sean O’Brien also stated that the UPS contract is “a template to show the Amazon workers what they will receive when they join the team.”

This announcement has the ability to directly affect the Amazon Prime delivery service since Amazon has a stake in UPS truck drivers. According to ZDNet and “a Morgan Stanley transportation analysis, which was cited in a 2022 report from shipping data firm FreightWaves, Amazon accounted for 11% of UPS’ annual revenue prior to 2022. Morgan Stanley estimated that at that time Amazon accounted for 35-40% of UPS’ domestic shipping volume.”

That’s not all. For over a year, Amazon warehouse employees have started complaining about less-than-ideal working conditions, and the U.S. Department of Labor shared a news release that explains how “Amazon exposed workers to unsafe conditions” and “ergonomic hazards at three more warehouses” in Colorado, Idaho, and New York.

Yet, regardless of warehouse employee safety, Amazon has invested heavily in both time and money to squash union organizations within its companies, as reported by the Guardian. But many experts are pointing out that the future of work depends on helping protect the rights of Amazon’s workforce, and shareholders and policymakers need to put an end to Amazon’s union busting, according to the Economic Policy Institute. 

When ZDNet reached out to Amazon about the Teamsters victory, the retailer’s PR team responded with the opening statement, “While we’re watching what is happening, we don’t expect a significant impact on customer deliveries.”

BrainTrust

“The UPS agreement will definitely have ripple effects throughout retail. It brings UPS wages closer to Amazon’s, who have good reason to be afraid of this movement.”

Ken Morris

Managing Partner Cambridge Retail Advisors


“The UPS settlement is a big win for all workers. For the last four decades, salary and benefits have gone to the executive suite while labor has been left in the dust.”

Gene Detroyer

Professor, International Business, Guizhou University of Finance & Economics and University of Sanya, China.


“All businesses that have large employee bases should be mindful of unions and the impact on their operations.”

Mark Ryski

Founder, CEO & Author, HeadCount Corporation

Discussion Questions

DISCUSSION QUESTIONS: Should Amazon be worried about the Teamsters victory with UPS? In what ways can companies ensure their employees are paid fair wages and operate in the safest possible working conditions?

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Do you think the Teamsters victory over UPS will have more rippling effects?

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16 responses to “Teamsters UPS Strike Reaches Agreement & Sets a New Precedent”

  1. Neil Saunders Avatar
    Neil Saunders

    There is some concern about the unionization of Amazon warehouse workers. However, one of the saving graces is that Amazon workers are comparatively well paid and receive good benefits compared to others in the industry. This is one of the reasons why, aside from a few victories, unionization efforts at Amazon have largely failed. Of course, anything that pushes up delivery costs means that all retailers are going to have to inject more realism into online shipping prices which are, in many cases, already subsidized through lower margins. And this, in turn, will likely accelerate the drive to automation of the industry. 

  2. Mark Ryski Avatar
    Mark Ryski

    It seems that Labor unions and unionization has gained considerable power over the past years. From Starbucks to Hollywood, workers are standing-up for their rights and what they believe they are worth. All businesses that have large employee bases should be mindful of unions and the impact on their operations. One of the keys to good employee relations is communications. Management must have an accurate read on the tone and temperature of the organization and be proactive in dealing with employee issues, including pay. 

  3. Gene Detroyer Avatar
    Gene Detroyer

    Amazon is already in a position to compete with the UPS settlement. I would recommend that they move quickly, without a union pushing them. Amazon has handled the union challenges well. I expect they will continue to.

    The UPS settlement is a big win for all workers. For the last four decades, salary and benefits have gone to the executive suite while labor has been left in the dust. This is just not bad for the workers, this is bad for the country. The country runs on people spending money, so give more to those who will spend it.

  4. Ken Morris Avatar
    Ken Morris

    The UPS agreement will definitely have ripple effects throughout retail. It brings UPS wages closer to Amazon’s, who have good reason to be afraid of this movement. As the wages get closer to the same, the difference that will play out is in the working conditions. Let’s not forget FedEx and the CDS (Contract Delivery Service) drivers who are fulfilling a growing number last-mile deliveries for small packages for the USPS. They may not have the right to strike, but they can always move to UPS and Fedex if the price is right. Meanwhile, the Teamsters will need to move fast, as automation is happening quickly. It may already be too late. Of course, all of these costs impact retailers’—especially online—bottom lines, and they are some of the most uncontrollable costs. So, online retailers in particular should focus on those costs they can control.

  5. Cathy Hotka Avatar
    Cathy Hotka

    Labor unions have a long history of creating better working environments for union members. If Amazon is delivering on the promise of a positive workspace, they have nothing to fear. If conditions aren’t great, though, they should consider how to move ahead.

  6. Jeff Sward Avatar
    Jeff Sward

    Something tells me that this kind of scenario was very much on Amazons’ radar when they announced modest fees for returns. The expenses of last mile and return logistics are enormous, and only partially offset by membership fees. At a minimum, Amazon faces a more difficult competitive market when hiring workers. And of course, these higher wages and benefits will be passed along to the consumer. I don’t begrudge union members their fair wages and benefits. I was a member of the United Steel Workers union for a short time and I remember the conversations around the lunch table. And I well remember the couple of guys that left the plant at 7:00 in the morning after finishing our graveyard shift so that they could go to their day job. Families to feed and all that.

  7. Scott Norris Avatar
    Scott Norris

    YRC’s collapse this weekend might get blamed on the Teamsters in some circles, but the company was in rough shape even before the pandemic – we had been routing over other carriers more and more in the past two years. COVID aid kept them going but they never solved their internal problems. Ironically, this might provide Amazon an opportunity to pick up national long-haul trucking capability at a fire-sale price (but those drivers will demand union representation.) I’d still rather see Amazon Logistics spun out as they’d evolve to be the competitive balance against the UPS-FedEx duopoly for small package and LTL services.

  8. Mel Kleiman Avatar
    Mel Kleiman

    As Neil said in his comment, yes they should be concerned, but if they take the right action, they don’t need to worry.
    Smart organizations are going to need to change the way that look at talk about employees. They need to quit thinking about employees as assets that can be owned and traded and dealt with like something that they own. They have to start thinking of them as investors and treat them as such. They are investing more than money in the success of the organization.

    1. Gene Detroyer Avatar
      Gene Detroyer

      Mel, your comment about how employers think about employees is so true. Employees are not an expense. They are an asset to the company that generates an ROI.

  9. Doug Garnett Avatar
    Doug Garnett

    This appears a good agreement although the flexibility the company gains in return is not clear. It is good to see living wages and benefits beginning to become standard practice in the service sector.

  10. Richard J. George, Ph.D. Avatar
    Richard J. George, Ph.D.

    I’ve always believed that the companies that unionize do so because they deserved to be unionized, that is, they treated their workers unfairly. That being said, even though Amazon has been seemingly fair to their workers, the UPS contract will up the ante going forward.

  11. Christopher P. Ramey Avatar
    Christopher P. Ramey

    Labor is but another data point Amazon has to manage. It’s easier when it’s transparent. 

    Amazon will ensure that what employees get if they go union is less than what they have now.

  12. Craig Sundstrom Avatar
    Craig Sundstrom

    What a curious discussion: the economy is “fragile”, and apparently, all we’re concerned about is how events impact Amazon. I might have thought instead the question(s) would be along the lines of “will these wage gains carry thru to other companies/industries?” and/or “will this impact inflation and apply pressure to the Fed to continue raising interest rates?” This appears to be a rather substantial increase in compensation – tho left out is when the last contract was negotiated and what its terms were – and it will certainly contribute to ongoing pressures on labor costs. But it’s also somewhat unique, if for no other reason than UPS being heavily unionized. So I would put the impact as somewhere between precedent-setting and a one-off,

    1. Scott Norris Avatar
      Scott Norris

      UPS and FedEx have consistently raised rates at least 5% every year without fail since the 1997 strike. They also manipulate fuel-surcharge fees to their favor whether diesel is up or down. So shippers have already assumed there will be yet another increase – this is a hidden inflationary pressure, like medical insurance, that manufacturers have had to eat for 25 years. As the meme goes, “this is why we can’t have nice things.”

      1. Craig Sundstrom Avatar
        Craig Sundstrom

        Heads we win, tails you lose…eh?? I’ve no doubt what you say is true, but I was hoping the thread could become a little less parochial and discuss wage impacts <i>beyond Amazon</i>. We’ll just have to wait and find out (perhaps applauding the idea of labor’s share of income increasing, yet simultaneously hoping profits don’t decrease…the land of 105%)

  13. Kai Clarke Avatar
    Kai Clarke

    If Amazon pays their employees well, gives them safe working conditions, great benefits, and makes Amazon a place that they are proud to work in (i.e. a great work environment overall), then there will be no need for a Union, union busting, or union forming. This has been the successful equation used at many great companies over time. We need to look no further than the early companies of Microsoft, Google, Oracle, RIM, etc. when they were just forming past their initial startup phase. All of these companies offered their employees great things that made them want to work there (and stay) and made Silicon Valley the place to work and live. This is what Unions want, and companies should always strive for. The successful ones succeed at this, and the ones who do not adapt perish….

16 Comments
oldest
newest
Neil Saunders
Neil Saunders
10 days ago

There is some concern about the unionization of Amazon warehouse workers. However, one of the saving graces is that Amazon workers are comparatively well paid and receive good benefits compared to others in the industry. This is one of the reasons why, aside from a few victories, unionization efforts at Amazon have largely failed. Of course, anything that pushes up delivery costs means that all retailers are going to have to inject more realism into online shipping prices which are, in many cases, already subsidized through lower margins. And this, in turn, will likely accelerate the drive to automation of the industry. 

Mark Ryski
Mark Ryski
10 days ago

It seems that Labor unions and unionization has gained considerable power over the past years. From Starbucks to Hollywood, workers are standing-up for their rights and what they believe they are worth. All businesses that have large employee bases should be mindful of unions and the impact on their operations. One of the keys to good employee relations is communications. Management must have an accurate read on the tone and temperature of the organization and be proactive in dealing with employee issues, including pay. 

Gene Detroyer
Gene Detroyer
10 days ago

Amazon is already in a position to compete with the UPS settlement. I would recommend that they move quickly, without a union pushing them. Amazon has handled the union challenges well. I expect they will continue to.

The UPS settlement is a big win for all workers. For the last four decades, salary and benefits have gone to the executive suite while labor has been left in the dust. This is just not bad for the workers, this is bad for the country. The country runs on people spending money, so give more to those who will spend it.

Ken Morris
Ken Morris
10 days ago

The UPS agreement will definitely have ripple effects throughout retail. It brings UPS wages closer to Amazon’s, who have good reason to be afraid of this movement. As the wages get closer to the same, the difference that will play out is in the working conditions. Let’s not forget FedEx and the CDS (Contract Delivery Service) drivers who are fulfilling a growing number last-mile deliveries for small packages for the USPS. They may not have the right to strike, but they can always move to UPS and Fedex if the price is right. Meanwhile, the Teamsters will need to move fast, as automation is happening quickly. It may already be too late. Of course, all of these costs impact retailers’—especially online—bottom lines, and they are some of the most uncontrollable costs. So, online retailers in particular should focus on those costs they can control.

Cathy Hotka
Cathy Hotka
10 days ago

Labor unions have a long history of creating better working environments for union members. If Amazon is delivering on the promise of a positive workspace, they have nothing to fear. If conditions aren’t great, though, they should consider how to move ahead.

Jeff Sward
Jeff Sward
10 days ago

Something tells me that this kind of scenario was very much on Amazons’ radar when they announced modest fees for returns. The expenses of last mile and return logistics are enormous, and only partially offset by membership fees. At a minimum, Amazon faces a more difficult competitive market when hiring workers. And of course, these higher wages and benefits will be passed along to the consumer. I don’t begrudge union members their fair wages and benefits. I was a member of the United Steel Workers union for a short time and I remember the conversations around the lunch table. And I well remember the couple of guys that left the plant at 7:00 in the morning after finishing our graveyard shift so that they could go to their day job. Families to feed and all that.

Scott Norris
Scott Norris
10 days ago

YRC’s collapse this weekend might get blamed on the Teamsters in some circles, but the company was in rough shape even before the pandemic – we had been routing over other carriers more and more in the past two years. COVID aid kept them going but they never solved their internal problems. Ironically, this might provide Amazon an opportunity to pick up national long-haul trucking capability at a fire-sale price (but those drivers will demand union representation.) I’d still rather see Amazon Logistics spun out as they’d evolve to be the competitive balance against the UPS-FedEx duopoly for small package and LTL services.

Mel Kleiman
Mel Kleiman
10 days ago

As Neil said in his comment, yes they should be concerned, but if they take the right action, they don’t need to worry.
Smart organizations are going to need to change the way that look at talk about employees. They need to quit thinking about employees as assets that can be owned and traded and dealt with like something that they own. They have to start thinking of them as investors and treat them as such. They are investing more than money in the success of the organization.

Gene Detroyer
Gene Detroyer
  Mel Kleiman
10 days ago

Mel, your comment about how employers think about employees is so true. Employees are not an expense. They are an asset to the company that generates an ROI.

Doug Garnett
Doug Garnett
10 days ago

This appears a good agreement although the flexibility the company gains in return is not clear. It is good to see living wages and benefits beginning to become standard practice in the service sector.

Richard J. George, Ph.D.
Richard J. George, Ph.D.
10 days ago

I’ve always believed that the companies that unionize do so because they deserved to be unionized, that is, they treated their workers unfairly. That being said, even though Amazon has been seemingly fair to their workers, the UPS contract will up the ante going forward.

Christopher P. Ramey
Christopher P. Ramey
10 days ago

Labor is but another data point Amazon has to manage. It’s easier when it’s transparent. 

Amazon will ensure that what employees get if they go union is less than what they have now.

Craig Sundstrom
Craig Sundstrom
10 days ago

What a curious discussion: the economy is “fragile”, and apparently, all we’re concerned about is how events impact Amazon. I might have thought instead the question(s) would be along the lines of “will these wage gains carry thru to other companies/industries?” and/or “will this impact inflation and apply pressure to the Fed to continue raising interest rates?” This appears to be a rather substantial increase in compensation – tho left out is when the last contract was negotiated and what its terms were – and it will certainly contribute to ongoing pressures on labor costs. But it’s also somewhat unique, if for no other reason than UPS being heavily unionized. So I would put the impact as somewhere between precedent-setting and a one-off,

Scott Norris
Scott Norris
  Craig Sundstrom
10 days ago

UPS and FedEx have consistently raised rates at least 5% every year without fail since the 1997 strike. They also manipulate fuel-surcharge fees to their favor whether diesel is up or down. So shippers have already assumed there will be yet another increase – this is a hidden inflationary pressure, like medical insurance, that manufacturers have had to eat for 25 years. As the meme goes, “this is why we can’t have nice things.”

Craig Sundstrom
Craig Sundstrom
  Scott Norris
10 days ago

Heads we win, tails you lose…eh?? I’ve no doubt what you say is true, but I was hoping the thread could become a little less parochial and discuss wage impacts <i>beyond Amazon</i>. We’ll just have to wait and find out (perhaps applauding the idea of labor’s share of income increasing, yet simultaneously hoping profits don’t decrease…the land of 105%)

Kai Clarke
Kai Clarke
10 days ago

If Amazon pays their employees well, gives them safe working conditions, great benefits, and makes Amazon a place that they are proud to work in (i.e. a great work environment overall), then there will be no need for a Union, union busting, or union forming. This has been the successful equation used at many great companies over time. We need to look no further than the early companies of Microsoft, Google, Oracle, RIM, etc. when they were just forming past their initial startup phase. All of these companies offered their employees great things that made them want to work there (and stay) and made Silicon Valley the place to work and live. This is what Unions want, and companies should always strive for. The successful ones succeed at this, and the ones who do not adapt perish….