UPS is on the brink of a strike. A 10-day work disruption would be the costliest in modern history.
Timothy A. Clary/AFP via Getty Images
- A 10-day UPS strike could cost the US economy over $7 billion, according to a new report.
- Customers could face losses of a combined $4.6 billion, which would make the strike the costliest in a century.
- UPS and the Teamsters union representing 340,000 UPS employees have until July 31 to negotiate a new contract.
UPS workers could head to the picket lines in less than two weeks, and their absence would rock the US economy.
A 10-day strike could cost the US economy more than $7 billion, with customers themselves losing roughly $4.6 billion, according to a new report from the Anderson Economic Group, a research firm that studies labor trends. That would make it the costliest work disruption in 100 years, and the largest strike against a single employer in US history, the firm found.
Further, workers would lose a combined $1.1 billion in wages, based on the average salary of $90,000, said the report, which also forecasted a $2.4 billion hit for the shipping and logistics industry.
The scenario would be in play starting on July 31, which is the expiration date for the current contract. If UPS and the Teamsters union representing 340,000 employees don't agree to a new contract by then, the strike could commence.
The direct impact on businesses
Given UPS's position as a logistics behemoth, a strike would impact broader supply chains. It would push shipping costs elsewhere higher, and have an outsized negative impact on more rural and inaccessible areas.
Interrupted supply chains may include vehicles or medical gear, and customers may also have a more difficult time with product returns during and after the strike. Retailers around the country have already started the preemptive step of warning customers of delays ahead of time.
It's also possible that brick-and-mortar locations — which have been under constant threat from online shopping over the past two-plus decades — will get a boost, as a potential delivery slowdown leads to a shift towards in-store shopping or pickup.
While FedEx, USPS, and other carriers could step in to ease the blow, that would only be for a fraction of the affected cargo. For context, UPS handles around 28% of packages delivered in the US, and estimates that it transports 6% of US GDP on a daily basis.
How we got here
97% of union members have voted to authorize a strike come August 1. The union has aimed to establish a "liveable starting wage" for those working less than 40 hours a week, as the current part-time minimum wage is $16.20 and average part-time pay is $20 an hour. The union also advocates for raising the amount of full-time positions and get rid of excessive overtime.
Both sides have recently accused the other of walking away from the bargaining table. UPS has stated the Teamsters stopped negotiating on July 7 "despite strong proposals from the company that build on our industry-leading pay and benefits for our full-time and part-time employees." The company said July 14 it is "ready to get back to the negotiating table and finalize a deal."
In preparation for a strike, UPS has been training their more than 100,000 non-union employees to take over some work.
"While we have made great progress and are close to reaching an agreement, we have a responsibility as an essential service provider to take steps to help ensure we can deliver our customers' packages if the Teamsters choose to strike," UPS said in a statement on Friday.