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UPS and the Teamsters Get Ready to Rumble

It might not be on your radar this week, but I promise you that by next week, if UPS has not settled with the Teamsters Union, you will soon be hearing about little else.

It's shaping up to be the biggest, most consequential face-off between labor and management so far this century, and it comes to a head July 31. If these two whales can't reach a deal on a new contract by that date, the Teamsters have already voted to strike on August 1.

If that happens, a lot of shit will hit a lot of fans. Some people won't get the medicine they need to stay alive. Some won't get their abortion pills until it's too late. Some won't get the parts they need to run a business. Most will experience delays in the delivery of online orders, with consequences that will range from trivial to life-threatening. Tempers will fray, customers will scream, suppliers will sue, and money will be lost all around. Few among us will be unaffected.

I won't get into what's at issue in the negotiations (which you can read about here or here or just about anywhere), except to say that it's not just about wages, and that what the union is asking for is hardly outlandish, especially given the astonishing profits being turned by the company.

But whatever they're fighting about, the real question in front of us all is what sort of havoc a nationwide UPS strike will wreak on our new, post-pandemic economy. This is the economy that has taught us to crave the rapid movement of material goods from anywhere to anywhere else. We've become addicted to the immediate delivery of anything we can click on, and we won't take kindly to going cold turkey.

Fedex, the Postal Service, and Amazon will try to take up the slack, but there's no way they can absorb the full twenty percent of the daily package volume UPS currently accounts for. We can expect major bottlenecks in the movement of virtually everything that isn't digital.

And it's not just about spoiled boomers not getting their gardening supplies and Swiffer refills. It's way more about the tens of thousands of companies whose entire business models are built around UPS services. Cut these companies off from UPS for any length of time, and many will struggle to stay afloat. The effects of such massive disruption will ripple through the economy and quickly start gumming up supply chains. Which is how businesses go out of business.

So nobody wants this rumble. Or maybe they do.

The Teamsters have a lot of the leverage here, just as they did the last time they staged a walkout, back in 1997. They brought UPS to its knees in just fifteen days. The company acceded to most of the union's demands, making it the last great victory of the American labor movement.

But that was a very different world. To say that UPS's business has exploded since then would be epic understatement. They now carry fifteen times the number of parcels they handled then. Their volume famously spiked during the pandemic, when it became clear to the world that package delivery was now an infrastructural imperative, an essential lubricant in the gears of capitalism. And while that pandemic spike has subsided, business remains just dandy. Their profits, while never shabby, have no apparent ceiling.

Which means that, if anything, the Teamsters can exert even more pressure than they did in '97. A ten-day strike will cost UPS roughly $7 billion, which isn't chump change, even for them.

Not that they'll just roll over. They have a deep war chest, a major PR machine, and they've been preparing their customers for over a year. You'll soon be hearing that they're training nonunion workers to take over vital jobs. You'll surely hear appeals to President Biden to issue an injunction against a strike, citing national security concerns.

And you'll hear repeatedly that of all the major delivery companies UPS is the only union shop, and that they're forced to compete with nonunion companies like Amazon and Fedex, whose labor costs are far lower.

Which sounds, on its face, like a reasonable argument. Why should UPS, alone, have to pay a premium for labor?

But having once spent a year as a UPS driver myself, a very long time ago, I know just how disingenuous that argument is. Because UPS knows exactly what it gets for that premium.

UPS was founded by a guy named Jim Casey, who was decades ahead of his time, both in terms of brand management and labor relations. In the early days of the company, which he started in 1919, he made two brilliant business decisions that resonate to this day.

First, he built his brand around his delivery drivers. He put them in brown uniforms and perched them in brown "package cars" — you probably call them "UPS trucks" — which most of us have known since childhood, and he made those drivers the public face of the company. This driver-centric business model has been embedded in the company culture ever since.

Everybody knows the UPS driver. Everybody knows both the uniform and the standard of service it implies. UPS drivers are polite and efficient. Many of their customers see them every day, often for years, which builds the sort of customer loyalty most marketers can only dream of.

Casey's other great innovation was to invite the International Brotherhood of Teamsters to unionize his drivers. This was an unusually heretical, if not unheard-of, decision, even in those considerably more union-friendly times.

But Casey, I think, was on to something. He understood that union jobs were good jobs, jobs people wanted and held onto, often for life. He figured out that the people who wanted those jobs were exactly the people he wanted representing his company, and that they were well worth the extra wages and benefits he was paying them. Neither Fedex nor Amazon — squeezing every dollar they can out of every transaction — can hope to command that sort of employee loyalty under their current systems.

And the Teamsters know this. They are not your father's Teamsters Union. There's nobody named Hoffa on the payroll. There are no more shady mob connections, no more corrupt union bosses. Or so we're told.

The new leader is Sean O'Brien, a feisty career union man, now fronting an organization that understands quite well the leverage it has over UPS. He and his people are happy to use that leverage, not just to get a better deal for UPS workers, but also as part of an ongoing effort — a struggle, actually — to re-ignite a labor movement that has been all but extinguished.

O'Brien has every incentive to call a strike. He and his union know that a strike would give them enormous street cred among the frustrated workers of the "gig economy."

He makes no secret of wanting to organize Amazon and Starbucks, which may or may not be possible. But he also knows that the lessons of a UPS strike — especially if it goes the union's way — will not be lost on the gig workers of Uber, Doordash, Instacart, TaskRabbit and the like. They'll start to understand the leverage that they too could have, if they can only get themselves organized. A strike would make all the fledgling labor movements sit up and take notice.

So it might well be that O'Brien and his Teamsters are determined to strike, no matter what offer UPS puts on the table.

In a summer of cascading natural disasters, a nationwide strike of this kind is surely the last thing we need. But the American middle class was built, in many ways, by organized labor, and the recent decline of both at the same time is no coincidence.

If they are to make a comeback — and it's in everyone's interest that they do — it will start with rumbles like this one. Whether we're ready or not.


Comments

  1. Very true. The decline of unions over the last few decades is a big part of why workers have received a decreasing share of the value they create, with more and more of it being skimmed off by a small parasite class which has accumulated obscene levels of wealth based on the work of others. If strikes like this can get workers a bigger share of what they produce, it's well worth the inconvenience.

    You'll surely hear appeals to President Biden to issue an injunction against a strike, citing national security concerns

    This is a real concern. The Democratic party is no longer the party of workers in any meaningful sense. Even if the government steps in and tries to negotiate with UPS on the workers' behalf, its priorities are not the same, and workers would be reduced to supplicants begging the government for whatever deal it deigns to give them, rather than holding power in their own right. Eventually unions must accept that they'll sometimes need to disregard such injunctions and strike anyway.

    It's way more about the tens of thousands of companies whose entire business models are built around UPS services

    This is an astonishingly foolish business model. A company that sets itself up to fail at the slightest disruption of an external system over which it has no control, really deserves to fail.

    ReplyDelete
    Replies
    1. You make some good points, but the last I'm not so sure about. I for one couldn't make a living without the Internet, and if I were starting a business selling material things, I wouldn't want to deliver them myself. I think that business model is a pretty good one for certain kinds of products, but, as with all business models, it's not without its risks. A UPS strike every 20 years or so is one them.

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