Michigan businesses relieved as UPS averts strike with its union

• UPS and the Teamsters union agreed on a tentative contract for 340,000 workers at the national shipping  company 
• Raises are planned for all workers, while base pay for part-timers will climb to $20 per hour
• The union president is calling the deal historic, and President Biden expressed relief

UPS union workers nationwide will vote in August on a new contract after their Teamsters union and the shipping company negotiated a tentative agreement announced on Tuesday.

The deal halts the threat of a strike next week that could have stalled shipments of 24 million packages that UPS ships on an average day, representing 25 percent of all parcels in the U.S. and about 6 percent of the nation’s Gross Domestic Product.

The deal also averts what could have been the largest strike in U.S. history against a single employer. About 340,000 union workers are employed at the logistics company, with about 5,900 of them in Michigan.

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The tentative contract announcement came shortly after the two sides relaunched negotiations on Tuesday. 

Teamsters General President Sean M. O’Brien said in a statement that UPS “put $30 billion in new money on the table as a direct result of these negotiations.”

“We’ve changed the game,” he continued, calling the deal “historic.”

Carol Tomé, CEO of Atlanta-based UPS [NYSE:UPS}, said the tentative deal also is a win for the company, which is valued at $159 billion.

“(It will) reward UPS’s full- and part-time employees with industry-leading pay and benefits while retaining the flexibility we need to stay competitive,” she said in a statement.  The company will be establishing 7,500 new full-time union positions, and hiring up to three times that to fill part-time positions as it needs.

The tentative agreement calls for a total of $7.50 per hour in raises over the five-year contract.  Starting pay for part-time workers — a key sticking point in the bargaining — will climb immediately after ratification to $21 per hour from $16.20, according to The Associated Press. 

“This contract sets a new standard in the labor movement and raises the bar for all workers,” he said.

A shutdown could have occurred as soon as Aug. 1, after the union in June authorized the strike in what it said was a 97 percent approval vote by its members.

The contract deal ahead of the strike deadline is what Michigan-based businesses had hoped for, said William J. Hallan, president and CEO of the Michigan Retailers Association. 

Even so, businesses had been urged to start preparing for a strike, Hallan said. Suggestions that the retailers’ group sent to members included ordering early, buying nearby to reduce the possibility of shipping delays and making plans to notify customers of what to expect from a strike.

The timing of the potential strike for retailers had the potential — ahead of the back-to-school shopping season — to once again curtail sales for a sector of the economy that’s weathered many challenges in recent years, he added.

“Retail has faced a perfect storm over the last few years, between the challenges of COVID and the impact it had on the supply chain, to the ups and down of inflation,” Hallan said in a statement.

President Joe Biden praised the tentative deal on Tuesday.

“Today’s announcement moves us closer to a better deal for workers that will also add to our economic momentum,” Biden said in a statement.

Nationally, the loss of a major shipping service for even 10 days could cost as much as $7 billion nationally, according to a study by East Lansing-based consultancy Anderson Economic Group (AEG). Estimates included a loss of $1.1 billion in wages for striking workers while UPS itself would lose an estimated $816 million. Businesses and consumers would have experienced $4.6 billion in losses while other industries experienced $2.4 billion in losses, AEG said.

Electronic voting on the contract begins August 3 and concludes August 22.