Potential 10-Day UPS Strike Could Result in $7.1 Billion Loss for US Economy
According to an estimate from Anderson Economic Group, a Michigan-based economic research firm, a 10-day strike by UPS workers could potentially cost the US economy a staggering $7.1 billion. If this were to occur, it would become the most expensive work stoppage in US history, causing significant and lasting harm to small businesses, household workers, sole practitioners, and online retailers across the country.
The estimate from Anderson Economic Group includes various costs. It predicts a hit of $4.6 billion to businesses and consumers, with direct losses at UPS reaching $816 million. Additionally, the 340,000 members of the Teamsters union at UPS would reportedly lose approximately $1.1 billion in wages. The remaining costs would be shared by UPS suppliers and would result in lost tax revenue.
The Teamsters union has announced that it will proceed with the strike on August 1 if a new contract agreement is not reached. Negotiations broke off recently, with both sides accusing each other of leaving the negotiating table.
At present, the Teamsters union has not provided an immediate comment on the study. However, it has previously stated that any strike would be the fault of the company for failing to meet the economic demands put forth by the union, despite UPS’s earnings nearly doubling during the current five-year contract period.
UPS, on the other hand, declined to comment on third-party research and remains hopeful that an agreement can be reached to avert a strike. The company’s spokesman, Glenn Zaccara, stated, “Our focus is on negotiations rather than speculation. We remain confident that we will reach an agreement that is a win for our employees, our company and customers, and the union.”
To prepare for the potential strike, UPS has initiated training programs for its nonunion employees, including managers, to ensure that the company can maintain at least some level of operations. As of the end of last year, UPS had nearly 100,000 nonunion employees in the United States.
While UPS handled an average of 20.8 million packages per day in the US last year, it would only be able to handle a fraction of that volume during a strike, according to Satish Jindel, president of ShipMatrix, a software provider that collaborates with the parcel shipper. Jindel mentioned that UPS would focus on delivering international shipments and high-value expedited shipments.
Although it remains uncertain if nonunion employees have been instructed to refrain from scheduling vacations starting August 1, Zaccara stated that management employees have been asked to be prepared for potential operational needs.
It is worth noting that UPS has experienced only one national strike in its history, a 16-day strike by the Teamsters in 1997. During that strike, the company temporarily shut down all US operations and did not make any deliveries. At that time, UPS had approximately 180,000 Teamster-represented employees, slightly more than half of its current workforce. The company’s significance to the US economy was also comparatively lower back then, as stated by Patrick Anderson, president of Anderson Economic Group.
Anderson added that estimates of the cost of earlier strikes date back only 100 years, and this potential strike would be the most expensive he found within that timeframe. The estimated $7.1 billion cost would nearly double the economic impact of the most expensive recent strike, the 2019 strike at General Motors, which lasted six weeks rather than just 10 days.
He further emphasized that the cost of the strike would escalate rapidly if it extended beyond a couple of days, as the damage would accumulate over time.
