The threat of a UPS strike is testing the strength of the labor market

The threat of a strike from 340,000 United Parcel Service (UPS) workers offers a new test of the union’s recent surge in power. It will also answer some questions about the strength of the larger US labor market.

UPS’s unionized workforce was a big advantage for the package carrier early in the pandemic as demand for deliveries surged and rivals lacking a steady labor supply struggled to find enough available. workers.

But now that job gains are slowing and demand is cooling in some parts of the economy, it’s less clear how long labor will hold the upper hand, either at UPS or in the economy at large.

New data released Friday by the Bureau of Labor Statistics show that the labor market is still tight, as the U.S. economy added 209,000 jobs in June. That was the 30th consecutive month that the US economy has created jobs. Hourly wages also increased by 4.4% in the same month last year, while the unemployment rate decreased to 3.6%.

But the data also shows some softening. Friday’s report marked the first in 15 months that job creation fell below Wall Street economists’ expectations, showing a slowdown from the previous month.

In the part of the economy in which UPS operates — transportation and warehousing — employment actually fell by 7,000 jobs in June.

The labor market has cooled from “overheated to tepid,” Nancy Vanden Houten, chief U.S. economist at Oxford Economics, said in a note on Friday.

The direction of the labor market is important to the Federal Reserve because it decides whether to continue raising interest rates as a way to lower inflation. Central bank officials are watching for signs that companies are cutting back on hiring and wages.

New wave of union activism

Pay is still a major issue for the International Brotherhood of Teamsters, which is pressuring UPS to meet its demands for a new five-year collective bargaining agreement. It wants higher wages for the carrier’s part-time workers, among other benefits.

The story continues

“We need to raise starting pay rates,” Sean O’Brien, general president of the International Brotherhood of Teamsters, said. said this week on CNN.

UPS says it already offers industry-leading pay, with delivery drivers earning up to $42 an hour after four years on the job.

On Wednesday, the Teamsters said the company failed to come to the table with an acceptable offer. The workers have authorized a strike to begin on August 1 if no agreement is reached.

The Teamsters’ approach is the latest sign of a new wave of union activism that has taken hold during the pandemic as demand for labor has surged.

Last week, Teamsters workers expanded strikes against Amazon for delivery drivers in California and New York.

The union is also pushing Yellow, the nation’s third-largest trucking company, to stick to the contract it negotiated for 22,000 union workers despite the company’s request to change the deal in an effort to avoid another one. bankruptcy.

Amazon (AMZN), which runs its own delivery service, Amazon Logistics, is facing unionization efforts from its warehouse workers in several states, while Apple (APPL) and Starbuck (SBUX) countered union pressure from retail workers.

Is it ‘a temporary or fundamental change’?

Strikes that could shock the nation’s supply chains are economic risks that the Biden administration has proven unprepared for.

Last year, the administration intervened in a dispute between West Coast Ports and the Dockworkers Union, and tapped Congress to settle differences between the railroad companies and a dozen unions that back the conductors. on the railway. It also oversees talks between the auto companies and the United Auto Workers.

“All of a sudden we find ourselves in a situation that we haven’t experienced in a long time,” labor and employment expert and Penn State University law professor Paul Clark told Yahoo Finance.

“The big question is whether this is a temporary or fundamental change between unions and employers. We’re trying to answer that right now, and it’s hard to say.”

Wayne State University labor law professor Michael Oswalt said even small disruptions in transportation, shipping and warehousing can damage many industries. However, he said, without changes to labor law, which governs union campaigns and elections, unions are unlikely to regain the power they once had.

“So now what may matter more than the size of a union is how close it is to a company’s choke-point — and especially its willingness to strike,” Oswalt said. “The UPS Teamsters know the value they bring to the company, to the broader economy, and they have a history of pulling off successful strikes. That trifecta equates to a lot of union power today.”

In January, the BLS reported that 10.1% of wage and salary workers will belong to unions in 2022, up from 10.3% in 2021. Over the same period, the number of wage and salary workers who belong to unions has increased and 1.9% or 273,000 workers. The total number of workers who belonged to unions in 1983, according to the BLS was about 20.1%, almost double what it is today.

Acting US Labor Secretary Julie Su told Yahoo Finance on Friday that the White House does not plan to intervene in the UPS situation.

“I have faith that the parties will find a way and continue to try things,” he said on Friday.

Jennifer Schonberger, Josh Shafer and Jared Mitovich contributed to this report.

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