A 10-day UPS strike could be the costliest in US history

Jul 14, 2023, 10:56 AM

UPS workers go through a rehearsal of a pending strike at the UPS facility in Longwood, Florida. (J...

UPS workers go through a rehearsal of a pending strike at the UPS facility in Longwood, Florida. (John Raoux/AP via CNN)

(John Raoux/AP via CNN)

New York (CNN) — A 10-day UPS strike could cost the U.S. economy $7.1 billion. That could make it the costliest work stoppage ever in U.S. history, according to an estimate from a Michigan economic research firm that studies the costs of labor disruptions.

The estimate from Anderson Economic Group said the hit to businesses and consumers would be $4.6 billion by itself, causing “significant and lasting harm for small businesses, household workers, sole practitioners, and online retailers across the country.”

Other costs include estimated direct losses at UPS of $816 million, as well as $1.1 billion in lost wages by 340,000 members of the Teamsters union at the company. The remaining costs would be born by UPS suppliers and from lost tax revenue.

The union has said it will go on strike August 1 without an agreement on a new contract. Talks broke off last week with both sides accusing the other of walking away from the table.

The Teamsters union did not have an immediate comment on the study. It has said in the past that if there is a strike it will be the fault of the company for not stepping up and agreeing to the economic package being sought by the union despite having its earnings nearly double during the life of the current five-year contract.

UPS said that it won’t comment on third-party research and that it is still hopeful of reaching an agreement with the union to avoid a strike.

“Our focus is on negotiations rather than speculation,” said UPS spokesman Glenn Zaccara. “We remain confident that we will reach an agreement that is a win for our employees, our company and customers, and the union.”

UPS did say Friday that it has started to train its nonunion U.S. workers, including managers to help continue at least some of the company’s operations if there is a strike. UPS has nearly 100,000 nonunion employees in the United States as of the end of last year.

“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,” said a statement from the company.

UPS handled an average of 20.8 million U.S. packages a day last year. It would only be able to handle a fraction of that volume if there is a strike, said Satish Jindel, president of ShipMatrix, a software provider that works with the parcel shipper. But he said that UPS will concentrate on trying to deliver international shipments and high-value expedited shipments.

Asked if nonunion employees have been told they can’t schedule vacations starting August 1, Zaccara said, “We are asking management employees to be at the ready, should we need them.”

UPS has had only one national strike in its history, a 16-day strike in 1997 by the Teamsters. During that strike it essentially shutdown all U.S. operations and did not try to make deliveries. Back then the company had 180,000 Teamster-represented employees during that strike, slightly more than half the numbers it has now, and it was far less central to the US economy, said Patrick Anderson, president of Anderson Economic Group.

“It wasn’t a tech-centric economy built around small package delivery then,” said Anderson.

Anderson said estimates of the cost of earlier strikes goes back only 100 years, and that this would be the costliest he could find in that time frame. The $7.1 billion cost estimates would nearly double the $4.2 billion total economic hit of the costliest recent strike, the 2019 strike at General Motors. And that strike lasted six weeks, not just 10 days.

He said that the cost of the strike would be limited if it only lasts a couple of days, but would increase rapidly after that.

“The damage clearly grows day by day,” he said.

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A 10-day UPS strike could be the costliest in US history