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United Parcel Service (UPS) and the International Brotherhood of Teamsters reached a tentative new five-year collective bargaining agreement covering more than 300,000 delivery and warehouse workers.
The agreement, if finalized by a vote of union members, would avert the largest single strike against a company in US history and an estimated $7 billion hit to the US economy.
The union's current contract with the delivery giant expires Aug. 1, and the Teamsters threatened that drivers would walk off the job without a deal.
Talks between the two sides restarted today after stalling earlier in the month. The deal still needs to be ratified by rank-and-file members in a vote that will conclude on Aug. 22.
"The strike threat was real and significant," said John Haber, strategic channel partner at Transportation Insight. "If the strike had gone ahead the repercussions would have been felt across the industry."
Part-time pay
Pay for part-time employees had been a big sticking point between the two sides before today's tentative agreement. The group comprises more than half of the company’s workforce.
Their pay would rise by $2.75 per hour in 2023 and $7.50 per hour over the length of the contract, according to the Teamsters.
Existing part-time workers would earn at least $21 per hour immediately, and new part-time hires will start at that same rate, according to the union. Part-time workers currently make a minimum of $16.20 per hour and average $20 an hour after 30 days on the job.
The deal also increases pay for full-time workers who currently make $42 an hour. They also will get a bump of $2.75 more per hour in 2023 and $7.50 per hour over the length of the contract.
Teamsters general president Sean O’Brien said the union made no concession to reach the accord, which he said is worth $30 billion and covers more than 340,000 workers. The company says the pact covers 330,000 employees.
"This contract sets a new standard in the labor movement and raises the bar for all workers," O'Brien said in a statement.
A UPS spokesperson described the agreement as a "win, win, win" in an email to Yahoo Finance. The company added that it will update its guidance concerning the agreement, including its projected cost, during its second quarter earnings call on Aug. 8.
"This agreement continues to reward UPS’s 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," UPS CEO Carol Tomé said.