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Negotiations for UPS Agreement Reach Deadline as Potential Strike Threatens

Barely a week before the contract for more than 325,000 United Parcel Service workers expires, union and company negotiators have yet to reach an agreement to avert a strike that could disrupt the American economy.

UPS and the union, the International Brotherhood of Teamsters, have resolved various issues but are at odds over pay for part-time workers, who make up more than half of the union’s workforce at UPS.

A strike, which could occur on Aug. 1, would have significant consequences for UPS, the e-commerce industry, and the supply chain.

According to the Pitney Bowes Parcel Shipping Index, UPS handles about one-quarter of the daily packages shipped in the United States. Competitors do not have the capacity to seamlessly replace that lost capability.

The Teamsters believe that their members deserve large raises for their role in generating UPS’s strong performance during the pandemic. UPS’s adjusted net income increased by over 70% between 2019 and 2020, reaching over $11 billion.

The contract talks broke down on July 5, with the two sides set to resume negotiations in the coming days. However, time is running out to reach an agreement before the current contract expires.

According to the union, UPS’s latest offer would not adequately address the concerns of part-time workers, who often earn near-minimum wage. UPS argues that it relies on part-time workers to handle fluctuations in demand and has proposed significant wage increases.

The union has emphasized the challenges faced by part-time workers and has received support from other unions and politicians, including Representative Alexandria Ocasio-Cortez.

UPS has stated that it is willing to increase pay and benefits but is also concerned about its long-term competitiveness. The cost of increasing wages by $5 an hour for all part-time employees represented by the Teamsters is estimated to be $850 million per year.

The company has delayed reporting its second-quarter earnings until after the strike deadline, stating that the timing is within the required reporting window. The union announced in mid-June that its members had voted to authorize a strike with a 97% majority.

Although progress has been made on certain issues, the union’s president, Sean O’Brien, may face challenges in persuading members to approve a deal that falls short of their expectations. O’Brien has set high goals for the new contract and has been preparing members for a possible strike.

Despite O’Brien’s pugilistic statements, he appears to prefer reaching a deal rather than going on strike. He has urged the White House not to intervene in the negotiation process. The union members appear to be more unified under O’Brien’s leadership compared to the Teamsters’ previous strike in 1997.

Negotiations for the UPS agreement resemble the circumstances of the 1997 strike, where UPS was also profitable and had a growing part-time workforce. However, O’Brien’s leadership faces less internal opposition compared to previous union leaders.

While the negotiations are ongoing and progress has been made on certain issues, the potential for a strike still looms as the contract deadline approaches.

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