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News Summaries
UPS TEAMSTERS STRIKE
August 20, 1997
On August 4, 1997, the 185,000 Teamsters
employed by United Parcel Service, UPS, began a 15-day strike.
The Teamsters demanded the creation of 10,000 new full-time
jobs over the next 4 years, the conversion of another 10,000 part-time
jobs to full time status, pay increases for both part-time and
full-time workers, and UPS' continued participation in the Teamsters'
pension fund. With about 57% of UPS employees working part time
and receiving lower wages and benefits, the creation of full-time
jobs was the most critical issue for the Teamsters. Many of
these workers are now working more than a total of 40 hours per
week, but at several part-time jobs at UPS. For example, some
workers may be employed as part-time package loaders and then
again as part-time drivers, thus receiving a lower wage, approximately
$11 per hour versus $20 per hour for full-time workers. UPS wanted
to establish its own pension system for its employees, rather
than continue to contribute to a pension fund operated by the
Teamsters, as they are currently doing.
After fifteen days, the workers and UPS reached
an agreement. The new five-year contract called for the creation
of 10,000 full-time jobs by combining existing part-time jobs.
UPS agreed to develop another 10,000 full-time jobs over the
next five years. The current pension system is to be retained.
Part-time workers will receive a $4.10 raise over the next five
years; full-time workers, a $3.10 raise in the same time period.
UPS, whose annual revenue is approximately
$22 billion, estimates that it lost revenue of more than $600
million during the strike. In addition, the new contract will
add $500 million to annual costs. The company predicts that as
many as 15,000 workers may be laid off as an immediate result
of the lost business.
The impact of the strike on American economic
history, however, may extend well beyond its immediate effect
on UPS, its workers, and customers. First, the favorable outcome
for labor may signal a rebirth of the American labor movement,
whose membership has decreased to only 14% of American workers.
Labor's recent decline has been attributed to a series of embarrassing
defeats in the 1980s and early 1990s, which include Ronald Reagan's
defeat of the air controllers, the UAW strike against Caterpillar,
and the still unsettled strike against The Detroit Free Press
and Detroit News. Second, the wage increases of 3%
for full-time workers and 7% for part-time workers, which are
occurring during a time of tight labor markets, could possibly
be inflationary.
Questions
- In this instance, did the union
cause unemployment or did it improve the workers' standards of
living?
- Compare the market power of UPS
to the market power of the Teamsters Union.
- What is collective bargaining?
Do you think that the UPS-Teamsters settlement represents collective
bargaining "at its best," as one economist stated?
Why or why not?
Keywords:
labor unions, collective bargaining, strikes, part-time workers,
market power
Sources:
Blackmon, Douglas, Brannigan, Martha,
Burkins, Glenn, and Jereski, Laura. "UPS Faces Huge Rise
in Annual Labor Costs." Wall Street Journal. August
20, 1997, pA3.
Schlesinger, Jacob and Wysocki, Bernard. "UPS
Pact Fails to Shift Balance of Power Back Toward U.S. Workers."
Wall Street Journal. August, 20, 1997, pA1.
COAL MINERS SEEK NEW JOBS
(03/97)
For more than 20 years Douglas Sanders
worked deep in the underground coal mines of northern Alabama.
Like his father and two brothers, Sanders would ride the mine
elevator Monday through Saturday almost one mile below the earth's
surface. In this area of the southern Appalachians coal has been
the primary fuel for nearly one hundred years. However, as finite
reserves are emptied, mines close and workers face unemployment.
In the past, as one mine closed, another eventually opened a
few miles down the road. Drummond Company, the largest coal producer
in Alabama, closed two of its largest mines in January, without
offering plans for opening any in the future. The reasons were
largely economic: the cost of obtaining deep-mined coal is much
greater than the cost to strip-mine coal in the western United
States. Drummond can no longer compete with the coal produced
in the west and remain profitable. Given this, Alabama coal
miners face little hope for future employment in the industry
in which many have been for more than twenty years.
To ensure that the unemployment
rate doesn't escalate, state and federal funds are providing retraining
for many of the displaced workers at a local community college.
The coal miners are taught how to be electricians, welders,
and fill other skilled positions. Although learning these new
job skills offers hope for employment in the area, the salaries
are far below the average $45,000 that most miners made in a year.
Questions
1. Which reason described in the
text best explains why these Alabama coal miners experienced
some unemployment?
2. If the world price of coal was
to rise sharply, would this affect the coal miners? How?
3. What are "sectoral shifts"?
Is this relevant here?
4. Does search unemployment always
exist?
5. Your author states that the federal
government now spends over $4 billion each year on job training
programs. Is this a wise use of funds?
6. If there are coal mining jobs
in Colorado, should the Alabama miners be encouraged to relocate
or risk losing unemployment benefits?
Keywords: unemployment,
profitable, government spending, unemployment rate, search unemployment
Source:
"As Alabama Coal Mines Fade, Workers Hunt For Jobs,"
The Anniston Star (reprinted from The New York Times),
Mar1997, p.13A.
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