The encyclopedia · Strategy & Leadership · Strategic decision · 1997
UPS built its empire on part-time labour — then 185,000 Teamsters walked out
UPS cut part-time wages to $8 an hour and leaned on part-timers for most of its workforce. The 1997 strike cost it over $600M and 10,000 full-time jobs.
United Parcel Service
HearsayWidely repeated, and we cannot show you a document for it. Read it for the lesson, not as fact.
What it means today
A company that scales on cheap, flexible labour also builds the grievance that can shut it down. UPS's dependence on low-paid part-timers produced the largest US strike, over $600M in losses — and it conceded the jobs.
What happened
UPS built the largest private delivery network in the United States on a particular labour model: workers it could hire part-time, at low pay, with few benefits. Part-time wages were cut to $8 an hour in the 1980s, and by the 1990s almost two in three UPS workers were part-time. The union said the model was a way to shrink full-time jobs and the higher pay that went with them.
Contract negotiations in 1997 broke down over exactly that issue. The Teamsters wanted more full-time jobs created out of part-time positions; UPS wanted to keep its reliance on cheaper part-time labour. On 2 August 1997 the Teamsters voted down UPS's final offer, and on 4 August more than 185,000 drivers and package handlers walked out — the largest strike by worker numbers the country had seen to that point.
The strike shut down the world's largest package delivery company for 15 days. Customers turned elsewhere, backlogs built up, and UPS lost over $600 million. On 19 August the two sides reached a five-year deal: UPS agreed to create 10,000 full-time jobs out of part-time positions, raise part-time starting pay and driver pay, stop subcontracting, and keep the workers in the multi-employer pension plan it had wanted to leave.
Why it happened
- A labour model that worked on paper — cheap, flexible part-time labour — was the very thing that made the strike inevitable, because it shrank the full-time jobs workers depended on
- UPS misread the cost of holding out: it treated part-time jobs as a bargaining chip, yet the strike cost over $600M and the company conceded the jobs anyway
- The company that had grown for decades without a national strike had lost touch with how much its own floor had changed — most of it part-time, underpaid, and ready to walk
The lesson
A cost model built on a class of cheap, replaceable workers stores up a bill that lands all at once. UPS's reliance on part-time labour produced the largest US strike — it conceded the jobs anyway.
Aftermath
The five-year contract ended the strike on 19 August 1997. UPS kept the 10,000 new full-time jobs it had conceded and raised part-time and driver pay, and the company absorbed the more than $600M in losses. The strike did not break UPS — it made clear that the part-time model carried a price that had to be paid in a single, expensive burst rather than spread across the contract.
Sources
- Wikipedia — 1997 United Parcel Service strike
- Labor Notes — The 1997 UPS Strike: Beating Big Business & Business Unionism (185,000 walked out Aug 4 1997; 15-day strike; 10,000 full-time jobs created)
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