A UPS driver unloads packages for delivery in San Francisco. (David Paul Morris/Bloomberg)

Local union leaders voted in favor of a tentative labor agreement that UPS Inc. and the International Brotherhood of Teamsters reached on July 25, an important step forward in finalizing a five-year deal that covers about 340,000 full- and part-time workers at the Atlanta-based parcel carrier.

The local unions on July 31 voted 160-1 in favor of the pact, and recommended it to the full membership for a vote later this month. It is expected that rank-and-file members will begin voting on the contract Aug. 3 and conclude Aug. 22.

“The entire UPS Teamsters National Negotiating Committee stands behind this historic contract and our UPS local unions have resoundingly voted to endorse it,” Teamsters General President Sean O’Brien said. “Our tentative agreement is richer, stronger and more far-reaching than any settlement ever negotiated in the history of American organized labor. The Teamsters are immensely proud of reaching agreement with UPS to improve the lives of our members, their families and working people across the country.”

UPS did not have a formal reaction to the vote, but pointed to an earlier statement issued when the tentative agreement was finalized.

 
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“Together we reached a win-win-win agreement on the issues that are important to Teamsters leadership, our employees and to UPS and our customers,” UPS CEO Carol Tomé said at that time. “This agreement continues to reward UPS’ full- and part-time employees with industry-leading pay and benefits while retaining the flexibility we need to stay competitive, serve our customers and keep our business strong.”

The Teamsters said the five-year agreement is valued at $30 billion in added wages and benefits for the delivery drivers, package handlers and others covered under the contract.

Per the union, the new contract includes a pay raise for existing full- and part-time workers of $2.75 per hour in 2023 and $7.50 more per hour over the length of the contract. Existing part-timers will see pay increased to no less than $21 per hour immediately. Current part-time workers will receive longevity wage increases of up to $1.50 per hour on top of new hourly rates, while new part-time hires would start at $21 per hour and eventually advance to $23 per hour. Other senior-level part-timers earning more under a market rate adjustment will receive general wage increases, the union said.

Pay increases for full-timers will keep UPS drivers in the union as the nation’s highest-paid delivery drivers, the Teamsters said, with an average top rate of $49 per hour or $101,920 a year for a 40-hour work week.

The deal also put an end to a two-tier wage system for weekend delivery drivers who were added to the company’s ranks when UPS added weekend and seven-day-a-week service beginning Jan. 1, 2020. Part-time workers will get catch-up raises. The contract also adds Martin Luther King Jr. Day as a paid day off, and puts an end to forced overtime.

The deal also includes the creation of 7,500 new full-time union jobs and fulfillment of 22,500 open positions, establishing opportunities over the length of the contract for part-timers to transition to full-time work.

The company and union also agreed to equip new vehicles with air conditioning, and to install it in older trucks still on the road.

UPS unionized workers voted to strike if a contract was not reached by July 31.

Industry groups and customers that rely on UPS to move an estimated 25 million packages a day, totaling 6% of the nation’s gross domestic product, said they were pleased with the deal, and reaction to the deal has been positive.

“The timing of this agreement is critical for consumers and families during the peak back-to-school shopping season,” National Retail Federation President Matthew Shay said in a statement. “Retailers rely on stability within their supply chains, and this agreement will bring long-term stability as well as assurance to the millions of businesses and employees who rely on smooth and efficient last-mile delivery.”

Michigan State University business professor Jason Miller told Transport Topics that this agreement is a significant win for the company, the union and the country, since a strike threatened to derail the supply chain.

“Everyone wins in this contract,” Miller said. “You’re seeing increases in starting pay for part-time workers. That’s pretty nice. You have better escalator clauses over the length of the contract. This is a very solid deal for the Teamsters, and for UPS, they do not have a strike. That is the biggest thing for them — there is no strike.”

UPS Inc. ranks No. 1 on the Transport Topics Top 100 list of the largest for-hire companies in North America.