According to a study conducted by Michigan economic research firm Anderson Economic Group, a 10-day strike by UPS could have severe repercussions on the US economy, amounting to an estimated cost of $7.1 billion.
This potential strike would make it the most expensive work stoppage in the history of the United States.
The economic estimate breaks down the impact into various categories. Businesses and consumers would face a direct hit of $4.6 billion, causing significant and lasting harm to small businesses, household workers, sole practitioners, and online retailers nationwide.
In addition, UPS would experience estimated direct losses of $816 million, and the 340,000 members of the Teamsters union at the company would lose an estimated $1.1 billion in wages. The remaining costs would be shared by UPS suppliers and result in lost tax revenue.
The Teamsters Union has stated that it will proceed with the strike starting August 1 if a new contract agreement is not reached.
Recent negotiations between the union and UPS ended with both sides accusing each other of walking away from the bargaining table.
The Teamsters Union did not provide an immediate comment on the study. However, the union has previously placed the responsibility for a potential strike on the company, claiming that UPS failed to meet the economic package demands despite nearly doubling its earnings during the current five-year contract period.
UPS spokesperson Glenn Zaccara declined to comment on the third-party research but expressed hope for reaching an agreement with the union to avoid a strike.
Zaccara emphasized that negotiations were the primary focus for UPS and stated, “We remain confident that we will reach an agreement that is a win for our employees, our company and customers, and the union.”
In preparation for a strike, UPS has initiated training for its nonunion US workers, including managers, to ensure the continuation of at least some of the company’s operations. As of the end of last year, UPS employed nearly 100,000 nonunion workers in the United States.
Although UPS handles an average of 20.8 million US packages per day, a strike would severely impact its operations. Satish Jindel, president of software provider ShipMatrix, stated that UPS would only be able to handle a fraction of its usual volume.
However, the company intends to prioritize international shipments and high-value expedited shipments. Regarding nonunion employees, Zaccara stated that management employees were being asked to be prepared and that vacation scheduling might be affected.
Notably, UPS has experienced only one national strike in its history, which occurred in 1997 and lasted for 16 days. During that strike, UPS ceased all US operations and did not attempt deliveries.
At that time, the company had approximately 180,000 Teamster-represented employees, slightly more than half of its current workforce.
The impact of a strike today would be far more substantial, given the significant role UPS plays in the tech-centric economy built around small package delivery.
Patrick Anderson, president of Anderson Economic Group, noted that cost estimates for strikes are available only for the past 100 years, and this potential UPS strike could be the most expensive within that timeframe.
The projected cost of $7.1 billion would nearly double the economic impact of the most costly recent strike, the 2019 General Motors strike, which lasted six weeks.
Anderson emphasized that if the strike is limited to just a couple of days, the damage would be contained. However, the costs would escalate rapidly with each passing day.