Logistics giant UPS has announced lower profits than anticipated for this year, a development that will be further affected by a significant pay increase for its unionised workforce.
Through a deal finalized in July, UPS drivers will earn $25,000 more than the current $145,000 per year, raising the average annual salary for full-time drivers to $170,000, inclusive of healthcare and other benefits.
The previous average comprised a basic annual salary of $95,000 plus $50,000 in benefits.
The new deal also offers $21 per hour for part-time workers, with improved working conditions, including air conditioning in new vehicles, reported Bloomberg.
The deal’s announcement has led to a 50 percent increase in job applications after a union effort to secure $30 million materialized for drivers on a five-year contract.
“We have seen strong interest in UPS jobs as a result of media coverage of the tentative agreement with the Teamsters,” Jim Mayer, a UPS spokesperson, told Bloomberg in a statement.
Cost of Living
The pay rise comes amid cost of living and inflation concerns, with overall prices rising by 3 percent from June 2022 until June 2023 and hitting close to 10 percent the year before, the BBC reported.
The strain on the economy and personal finances has reportedly prompted many unionisation campaigns in companies.
To mitigate potential strike action by the Teamsters union, UPS announced the pay increase after it lost $200 million in sales, as customers turned to rival companies this year.
The deal is set to be approved by a workers’ vote later this month. However, the company told investors to brace themselves for a consequential profit drop. Operating margins forecasted in May are expected to drop by 1 percent to just under 12 percent.
A weakened economy has also affected shipments.
Largest Unionised Workforce
Known for offering relatively attractive compensation packages, UPS has the largest unionised workforce of any company in the United States.
The UPS driver role offers better pay than its competitors, including FedEx and Amazon.
The recent new deal subsequently prompted employees at other companies to push for pay increases.
Becoming a UPS driver is not straightforward, with many new employees starting in other roles, such as package sorting and loading. These are often part-time positions at much lesser pay, although they offer the same benefits as other roles in the company.
The process of being promoted to become a UPS driver can take several years.
In the initial stages, the role of driver involves working outside of the 8-5 routine and often comprises a heavy workload with many drops.
The pay rise will not follow with mass hirings, as the company has reported a drop in shipping volume for several consecutive quarters, with demand plummeting after the pandemic.
