In a historic move, members of the International Brotherhood of Teamsters have given an affirmative nod to a new five-year collective bargaining agreement with United Parcel Service (UPS). This monumental agreement, which covers more than 300,000 employees, will result in a significant wage increase for UPS delivery and warehouse workers, effectively averting what could have been the largest single strike against a company in US history, potentially causing an estimated $7 billion blow to the US economy.

The Teamsters union, whose previous contract with the delivery behemoth expired on August 1, had warned of a possible walk-off by drivers in the absence of a deal. However, the new agreement, which union officials value at a staggering $30 billion, has been hailed as the "most lucrative agreement the Teamsters have ever negotiated" with UPS. The deal saw an overwhelming 86% of workers voting in favor, according to a statement released by the union on Tuesday. Despite this, a minor hurdle remains as one of the 44 supplemental agreements, covering 174 workers in Florida, awaits ratification.

UPS Workers Approve New Five-Year Collective Bargaining Agreement

The International Brotherhood of Teamsters, a prominent labor union in the US, recently announced that its rank-and-file members voted overwhelmingly in favor of a new five-year collective bargaining agreement. The agreement, which covers over 300,000 UPS delivery and warehouse workers, successfully averted what could have been the largest single strike against a company in US history, saving the US economy an estimated $7 billion hit.

A Historic Agreement

The union’s previous contract with UPS expired on August 1st, and the Teamsters had warned that without a new agreement in place, drivers were ready to walk off the job. However, the potential crisis was averted in July when a new agreement was reached. According to a statement by the Teamsters, 86% of workers voted in favor of the deal, which has been described as the "most lucrative agreement the Teamsters have ever negotiated" with the company. UPS echoed this sentiment in its own statement, stating that its Teamsters-represented employees voted "overwhelmingly" to ratify the new agreement.

A Few Remaining Hurdles

Despite the overwhelming approval of the agreement, there remains one final obstacle. One of the 44 supplemental agreements, which covers 174 workers in Florida, was not ratified. The Teamsters have said that the national master agreement will go into effect "as soon as this supplement is renegotiated and ratified."

Setting New Standards in The Industry

The new contract, valued at $30 billion, is expected to significantly lift wages for UPS workers. Veteran full-time drivers at UPS will make $49 per hour by the end of the contract, potentially earning roughly $175,000 per year. Part-time drivers will start at $21 per hour. The union is viewing this as a new benchmark in the industry, and they have warned that they now plan to go after other companies in the shipping world, specifically Amazon. Teamsters general president Sean O’Brien said, "This is the template for how workers should be paid and protected nationwide, and nonunion companies like Amazon better pay attention."

Impact on UPS Financials

While the contract is being hailed as a win for workers, it has already had some impact on UPS’s financial performance. The company reported a sharp drop in revenue and profit during the second quarter and revised its annual revenue outlook and operating margin, citing the costs associated with the new labor agreement. Despite these challenges, UPS CEO Carol Tomé has described the new contract as a "win-win" for both parties.

Takeaways

This agreement signifies a major victory for the Teamsters and could potentially set a new standard for wages and working conditions in the package delivery industry. However, it also highlights the financial strain that increased wages can put on a company’s bottom line. As labor disputes continue to make headlines in various industries, it will be interesting to see how other companies navigate these challenges while maintaining their financial health.