The Heritage Foundation

Executive Summary #1165es on Jobs, Jobs and Labor Policy

March 20, 1998

March 20, 1998 | Executive Summary on Jobs, Jobs and Labor Policy

BG1165es: The UPS Strike: Labor Tilts at Windmills

The media hailed the summer 1997 strike at United Parcel Service (UPS) as a major victory for the International Brotherhood of Teamsters. In fact, the strike was little more than a brief public relations coup for organized labor, particularly the Teamsters. As the unions' public relations gains evaporate in the course of ongoing investigations, a review of the UPS settlement indicates that workers failed to benefit, and that underlying economic trends presage a continuing deterioration of union power.

A careful review of the settlement garnered by the Teamsters shows that it did not produce gains for UPS employees, even for the part-time laborers who ostensibly had the most at stake. The Teamsters promised the settlement would produce a greater number of better-paying jobs. In contrast, the settlement actually:

  • Cost union members thousands of dollars in lost wages and profit sharing;

  • Will fail to create new full-time positions for part-time UPS workers;

  • Will not change the ratio of full-time to part-time workers at UPS; and

  • Resulted in a pension plan that is significantly less generous than the plan offered by the corporation prior to the strike.

The Teamsters' claim that the terms and conditions of employment at UPS necessitated the strike belies the strike's real origins: Teamster President Ron Carey's now-discredited 1996 reelection. Having barely won the election against James P. Hoffa, Jr., Carey sought to use a strike at UPS to solidify his control of the union. Carey's plan failed when federal monitors overturned his election and barred him from participating in future elections because of an illegal campaign funding effort. The scandal implicated not just Carey, but prominent members of other unions and a Clinton-Gore campaign fundraiser in an elaborate scheme to funnel illegal contributions to Carey's reelection campaign.

The politics of the strike went beyond machinations by officials of organized labor. President Bill Clinton's decision not to invoke the Taft-Hartley Act to interrupt the strike constituted a significant departure from precedents established by Clinton himself and by his predecessors.

Organized labor as a whole supported the strike in order to fulfill optimistic proclamations of a union resurgence under the new president of the American Federation of Labor-Congress of Industrial Organizations, John J. Sweeney. An objective assessment of unionization trends, however, indicates that the UPS strike would have been insufficient to cause a genuine resurgence even if Carey's misdeeds had remained secret. Globalization and increasing economic competition have made, and will continue to make, unions less significant economically. Changes in the labor force, from industry to services and from blue- to white-collar occupations within traditional industries, are making unions less relevant to American workers.

To prevent the types of abuses that led to the Carey campaign scandal and, in turn, the pointless strike against UPS, Congress should:

  • Reform the law on collectively bargained pensions to provide union members with security, choice, and maximum return on investment;

  • Require unions to make more thorough disclosure of receipts and expenditures, including dues money and funds spent for non-collective bargaining purposes, especially politics;

  • Enact paycheck protection legislation so that union leaders do not spend dues money on politics without annual written consent from union members; and

  • Increase federal oversight of labor unions.

Leo Troy is Distinguished Professor of Economics at Rutgers University in Newark, New Jersey.

About the Author