In 2023, a number of companies faced employee strikes or shutdowns due to concerns about working conditions and compensation. These events highlight the importance of addressing employee concerns in a timely and effective manner. The Yellow and UPS strikes, in particular, underscore the challenges within the trucking industry. Yellow Corporation shut down this year due to financial difficulties. Issues that resurfaced were compensation rates they were promised when they signed on, working overtime without being compensated, as well as poor working conditions; something that is increasingly brought up as trucking industry problems.
UPS also engaged in new contract agreements which brought up many pain points for the employees.
The events of 2023 have shown that working conditions can have a significant impact on a company’s bottom line. To understand why a company may shut down or go on strike, it’s important to consider various contributing factors.
The UPS Strike
On July 31st, 2023, the contract between UPS and the Teamsters Union expired, resulting in a major argument between the company and its workers over unfair work conditions and total compensation. The strike, which would have been one of the largest single-employer strikes in U.S. history, could have cost UPS billions of dollars each day and would’ve majorly impacted the economy.
After nearly three weeks of negotiations, UPS and the Teamsters reached a tentative agreement on a five-year contract. The deal includes increased wages for all workers, eliminating lower-paid delivery drivers, and improved health care benefits and safety measures.
The agreement between UPS and the Teamsters is a victory for workers, but it’s only the first step. How did it reach this point, and what led to the agreement?
Teamsters Information
The Teamsters are a large union of workers in various trades related to the trucking industries. The Teamsters represent more than half of the company’s workforce, and the contract is the largest private-sector collective bargaining agreement in the country.
Following the meeting on June 27th, 2023, The Teamsters gave UPS a one-week notice to be responsible and exchange a stronger economic proposal for more than 340,000 full and part-time workers.
The Ripple Effect
According to economists, if the strike had taken place, it would have caused significant harm not only to UPS and other companies but also to the overall economy. UPS has several significant customers, such as Amazon, whose annual revenue is $12.8 billion. Customers like Amazon would incur losses of more than $4 billion if the strike had gone forward.
It is important to note that UPS employees are responsible for transporting almost 6% of the nation’s Gross Domestic Product (GDP). A potential walkout would have had severe consequences. To give perspective, around 340,000 workers would have been forced to take leave, leading to over $1 billion in lost wages.
Worker Compensation & Benefits
Wages were a massive point for these strikes. Allegedly, UPS took advantage of the loophole of paying part-time workers to avoid hiring full-time drivers. But with the part-time workers working overtime, they weren’t being compensated for their work.
Full-time drivers make about 145,000 annually, with benefits and compensation equivalent to $70 an hour. Rather than paying for more full-time workers, UPS designated 50% of its employees as part-time workers who are only paid $16 an hour, or $34,000 a year, the minimum wage for federal contractors.
Present | Wages & Benefits
For weeks, wages and benefits for part-time workers remained unresolved for days until a possible strike. Under the tentative five-year agreement, part-time and full-time UPS Teamsters will earn $2.75 more per hour and $7.50 more per hour over their contract.
Existing part-time workers will be raised to at least $21 per hour immediately. New hires at UPS will also start at $21 per hour and have the potential to advance to $23 per hour. The contract includes improved health care benefits and a commitment to hire more women and marginalized groups.
Working Conditions
In addition to wages for part-time employees, the union wanted to eliminate a contract provision that created two separate hierarchies of workers with different pay scales, hours, and benefits. Teamsters also put on the table driver safety, particularly the lack of air conditioning in delivery trucks.
Delivery drivers are at risk during extreme weather conditions such as hotter summers and colder winters. It is common for drivers to feel pressure to meet productivity goals regardless of the weather. To ensure the safety and well-being of delivery drivers, it is crucial to provide air-conditioned vans.
UPS Agreement
Tentative agreements were made on several issues during the contract discussion. The Teamsters represented 340,000 workers at the agreement and are estimated at $30 billion to provide wage increases, more paid holidays, and air conditioning in the delivery trucks.
While UPS claims they had no fear about settling a deal with the Teamsters, the agreement will benefit many parties, including UPS employees, customers, and the economy.
The Downfall of Yellow
In February 2023, Yellow Corporation, a less-than-truckload (LTL) company, declared bankruptcy. The company had been facing significant challenges for some time, which ultimately led to its financial downfall.
In August 2023, Yellow Corporation officially signed paperwork and filed for Chapter 11 bankruptcy, estimating assets of $2.15 billion and liabilities of $2.59 as the company enters a DIP financing agreement to liquidate assets so it can pay wages and creditors.
With the rise of eCommerce, traditional trucking businesses such as Yellow struggled to keep up. Unfortunately, Yellow failed to invest in new technologies, which put it at a disadvantage compared to other companies. As a result of the bankruptcy, the company’s assets were liquidated, and thousands of employees lost their jobs.
We’re Here to Help
While uncertainties within the industry will always be there, it is important to know about other options and to be proactive. KCH Transportation is here to help you navigate these situations by providing LTL and FTL solutions for your business needs.
