UPS delivers 12,000 job cuts to management months after historic deal for unionized drivers—yet another sign the pendulum is swinging toward blue-collar workers
Accustomed to delivering unwanted gifts like Aunt Kitty’s homemade fruitcake and rather insincere “Sorry we missed you” slips, United Parcel Service continued to be the bearer of bad news during an earnings call this week. Executives announced Tuesday they’re set to cut 12,000 mostly management positions, as CEO Carol Tomé informed investors that it was considering selling off its company’s Coyote truckload brokerage business. She admitted in the meeting that “2023 was a unique and quite candidly, a difficult and disappointing year.”
On the heels of a historic deal with its 350,000-strong workforce that delivered to drivers a six-figure salary and benefits (and which Tomé herself praised) it seems as if 2024 is starting off as a disappointing year, to say the least, for UPS managerial staff. In an attempt to save $1 billion amid sinking revenue, executives at UPS are culling 14% of full- and part-time managers and contractors.
Tuesday’s announcement reveals a split between the fates and fortunes of blue-collar workers and their office counterparts. With the backing of the largest union in the nation, the Teamsters (whose single largest contract is with UPS), blue-collar workers have succeeded in getting the stability and benefits that white-collar employees are now losing. The cushy corporate jobs that used to be seen as a pathway to wealth have experienced a bit of a swingback lately from their heights in the 2010s—look no further than the recent rounds of layoffs amid once high-flying tech companies.
Most of UPS’s earnings call dirge was focused on slipping profits, as consolidated revenue decreased by 9.3% last year, a fall company top dogs blamed on the economic climate and lower demand for small packages. The company also mentioned the drivers’ fight for better wages and benefits, with Tomé claiming the “disruption associated with our labor contract negotiations as well as higher costs associated with the new contract” as a factor in UPS’s woes. Even so, labor disputes can’t be blamed for the greater decline in revenue, as by December (a short couple of months after the averted strike) 60% of what was lost had been recovered, per the earnings call.
A Teamsters spokesperson did not respond to a request for comment.
What might take the place of those laid-off managers? Potentially, technology. UPS has teased plans to rely more on machinery at the expense of warehouse workers’ jobs, according to a Citigroup report released in September 2023. Not long after, the company unveiled a new warehouse housed by 3,000 robots, as Bill Seward, president of UPS Supply Chain Solutions, praised their “very high service and speed.”
These 12,000 managers’ jobs aren’t just on pause while UPS’s revenue is down, they’re becoming extinct. “As volume returns to the system, we don't expect these jobs to come back,” Brian O. Newman, the company’s CFO, told investors. “It's changing the effective way that we operate.”
It’s a move that is becoming increasingly common, as executives newly fixated on productivity slash the more qualitative jobs the white-collar workers often hold.
During the 2010s, there was a boom in these managerial so-called dream roles in fields like tech, finance, and communications, where companies were growing thanks to the low cost of borrowing, and many of which are now swinging the pendulum back with rounds of job cuts. Still navigating a tight economy and pressure from stakeholders, CEOs have found a new lame duck in these managerial roles; they’re without union protection, after all. “We may be at the peak of the need for knowledge workers,” Atif Rafiq, an author who once worked as an executive at McDonald’s and Volvo, told the Wall Street Journal. “We just need fewer people to do the same thing.”
Managers in the white-collar world might not have stability, guaranteed good pay, or solid benefits, but they recently were thrown a bone with newfound flexibility and remote-work options. Most people who are still allowed to work from home at some capacity are wealthy, college-educated suburbanites, finds a newly released poll from Ipsos Consumer Tracker. But even that luxury is more of a mirage, as executives increasingly call their workers back to the office with mandates. UPS is no different, as Tomé called for a return to the office five days a week during the earnings call.
With strong union backing, blue-collar employees at UPS and across the workforce have a bit of a shield from executives’ whims. Unions have been flexing their muscle and winning many arm wrestles recently. Just this past fall, the United Auto Workers won out after a six-week strike against the Big Three. But while unions are increasingly popular across the nation, with young adults and people of color in particular viewing them favorably, they’ve decreased in density, with just one in 10 workers last year belonging to a union.
Last year, more than 60 million employees who wanted to join a union were unable to do so, according to the Economic Policy Institute. And while white-collar unions might be on the rise, legacy unions often fare best due to their consolidated power. Many of these long-standing unions are in blue-collar fields, leading to greater protection and pay for these workers who are leading a labor movement.
No one expected managers to lead the labor revolution, after all. But it seems they may be in need of some good ole’ union protection if they’re to stay afloat like their blue-collar peers.
This story was originally featured on Fortune.com
