Ever since the 1970s, unions have accepted all sorts of arrangements they once would have refused, with concessions littering contracts, leaving a trail of working-class decline. For decades, two-tier unions have been central to the attack on workers’ rights.
“Two-tier” refers to contracts that divide a workforce into distinct wage and benefit tiers based on their hiring date. Workers in both tiers are union members, but they toil under separate conditions. Usually, the lower-paid tier comprises workers to be hired after the contract’s negotiation, leaving them little recourse, even as they are forced to accept lesser terms.
The latest two-tier crisis centers on one of the United States’ largest private-sector unionized employers, UPS. If the company gets its way, it will be a signal to employers nationwide: You can’t directly bust your employees’ union, but here’s a way to divide and conquer, undermining them from within and locking in division between workers in the process.
Despite recently posting $1.49 billion in second-quarter net income, a reflection of e-commerce-induced growth, UPS is pushing for two-tier in its negotiations over a five-year contract that will cover 260,000 of its employees. These workers are Teamsters, members of one of the country’s largest unions. They account for approximately 6 percent of U.S. GDP. Should they strike — as they successfully did in 1997, with a majority of the public on their side — they have the power to significantly affect the economy. These are a quarter-million workers in one of the few remaining secure blue-collar jobs; their working conditions matter.
According to the tentative agreement, UPS wants to create a new class of hybrid drivers. Sundays and Saturdays would likely be part of these drivers’ workweeks, a response to pressure from online-ordering giants such as Amazon.com. (Amazon chief executive Jeffrey P. Bezos owns The Washington Post.) According to the draft, these drivers will lack some of the rights current drivers enjoy, such as a say in scheduling. They’ll be paid significantly less than their peers, with a cap on their pay set at $34.79, in contrast to $40 for standard drivers.
It’ll be an underclass, one that would not have means to be represented at the current bargaining table because it hasn’t been created yet. As Tyler Binder, a driver in Wisconsin whose videos on why he’s voting against the contract spread widely among the membership, put it, “Remember, being part of a union means that you’re always thinking, ‘How would I feel in this position?’ … Anyone who’s about to walk into this position is counting on me, and counting on you, to make sure that this contract is acceptable for them.”
Binder is right to worry. As Michael Hiltzik wrote in the Los Angeles Times, “From the employers' standpoint, the two-tier system offers the added dividend of weakening the union by driving a wedge into worker solidarity.” The better-off tier, either all current workers at the time of contract negotiation or a subset of the more senior workers, retains the benefits the company has long afforded them. Meanwhile, the second tier, either less senior workers or some number who will be hired after the contract is approved, receives lesser wages and/or benefits. In an environment where building ties between workers is crucial, two-tier is a split down the middle, a material cause for resentment, mistrust and weakness between workers within a shop. Bosses fully understand this — that’s why they are so eager to institute two-tier.
To understand how much harm that can do, one need only look at the history of two-tier workplaces, especially after the system was temporarily implemented by the U.S. auto industry in the 1970s. Facing competition from abroad and recession at home, Chrysler, Ford and General Motors approached the then-strong United Auto Workers, pleading poverty. Fearing job losses, the UAW accepted terms that created a lower tier for a worker’s first 90 days, after which they caught up to the standard. It reflected the companies’ desire to hire for slightly cheaper than full pay and the union’s desire not to give the companies reason to stop hiring.
While that shift wasn’t immediately disastrous for workers, the bosses were playing the long game, and it ultimately succeeded in rolling back autoworkers' living standards, opening the door for many more such concessions in the years to come. Other employers were watching closely, as the auto industry was a central node in the U.S. economy and a strategic center for union power. As went the auto industry, so went the nation. And when employers saw that the UAW could be forced into accepting two-tier contracts, they got the message: Labor was weak, so it was time to pounce.
In 1987, the New York Times reported that “scores of companies, employing hundreds of thousands of workers,” had adopted two-tier wage systems. Airlines adopted it, as did supermarket chains. Management insisted that its hands were tied — the economy was tight, international competition was strong, nonunion competitors were undercutting the profits, and so on. In 2005, the introduction of a two-tier pension system for members of New York City’s Transport Workers Union was one item that ultimately motivated the union to strike, an action that led to the union local’s president, Roger Toussaint, being sentenced to jail time.
By 2007, with the auto industry on the verge of collapse, two-tier was reinstated. The concession did more than impoverish workers in Detroit: As Dave Jamieson wrote in HuffPost, it “became an anti-union talking point in the UAW’s failed bids to unionize Volkswagen and Nissan plants in the South.” It was hard to convince workers that a union was of and for all of them with such recent evidence to the contrary. Ultimately, however, the UAW managed to eliminate two-tier in 2015.
Before that change, the practice had become increasingly common. In 2012, University of Illinois labor relations professor Robert Bruno wrote of a similar dynamic at play in a contract covering 780 Caterpillar employees in Joliet, Ill. Already working under a two-tier contract, the union agreed to a contract that retained the tiers despite what Bruno describes as the company’s “eye-popping profitability,” along with agreeing to further concessions. He concludes that rather than an aberration, “examples of firms with healthy bottom lines demanding that workers surrender pay and benefits feels more like a contagion.” Once the precedent for working-class sacrifice exists, it spreads.
UPS doesn’t have the excuse of low profits. What it does have is a position as the biggest company in the package-delivery business, followed closely by FedEx. Such control over a market gives the company the confidence to try to set the rates of labor costs. UPS’s leadership can’t make the arguments its equivalents in the auto industry made. Instead, they’re acting based on the continued decline of working-class power, banking on union leadership taking what it can get and the rank-and-file accepting it. As auto did before them, UPS is playing the long game, seeking a toehold in flush economic times so that it will allow them to expand the two-tier model when things go south.
As it stands, thousands of rank-and-file members, organized around Teamsters for a Democratic Union (TDU) and Teamsters United, are calling for workers to vote the contract down. Ninety-three percent of members voted to authorize a strike should UPS refuse to agree to a passable contract. Although a strike seems unlikely, members may well force recalcitrant negotiators back to the bargaining table. Given the UAW’s success in 2015, the Teamsters may still be able to defeat it before it’s rolled out.
UPS is gambling, engaged in hubris born of reading the room and seeing little evidence that workers can fight back. Should the members agree to the proposed contract, it will be a signal heard in every boardroom. Workers who have more pound-for-pound structural power in the U.S. economy than almost anyone else, executives will say, accepted a bad contract instead of voting it down, much less striking for more. It’ll be one more sign to employers that they can do as they please: pit workers against each other, even if they’re in a union; pay them a pittance if they’re not. After all, even workers’ strongest collective bodies — unions like the Teamsters — will take it.
Much rides on whether UPS can force this contract on its workers, and not just because it directly governs a quarter-million people, affecting them, their families and their communities. It’ll also reassure those in charge, telling them they can ride this out, that workers aren’t organized enough yet to threaten them. But if the union rejects it, demanding more, its members could send the opposite signal: Workers aren’t content with getting theirs unless it means their co-workers get equal pay, too.
This story has been updated.