This is precisely the problem that confronts the FedEx work force. A full time Courier starting with FedEx makes about $15/hr, and has a benefits package worth about $5,000/yr (full family coverage), and the “joke” pension worth another $2,500 a year. So a FedEx Courier costs Fred just under $40,000 a year for 2200 hours of work each year.
To compare apples to apples (UPS to FedEx), compare a FedEx Courier at their 10 year point to a UPS driver that has been with the company for 10 years. The UPS driver will have done a few years loading packages, whereas most Couriers never work as handlers. At the 10 year point (company employment), the UPS driver will be maxed out making about $70,000 in direct wages, and possessing a benefits package worth $7,500/year and a pension plan that is worth an additional $10-15,000/year. The UPS driver makes about $90,000 a year in total compensation at their 10 year point with UPS. The FedEx Courier would make an hourly rate of about $20/hr at the 10 year point, have a benefits package worth $5,000/year and a pension “contribution” around another $5,000/yr; making for an annual compensation package of about $55,000 a year (including OT when the economy is doing alright). This is a disparity of $35,000 a year. I’ll grant that the UPS driver has a more physically demanding job (comparing the average UPS route to the average Express route), so the UPS driver does indeed “deserve” a higher compensation level. I reluctantly work FedEx given the “moderate” physical demands of the job, but I wouldn’t even show up to work if I had to have the physical demands of a UPS driver with my FedEx wages (some FedEx Couriers DO have the same physical demands as a UPS driver, and they have that $35,000/yr disparity).
But “deserve” has absolutely nothing to do with market economics. Fred has learned that he can get packages delivered for $13/hr AND offer no benefits to his Ground drivers. He likes this model, since he can save a lot in labor costs and transfer the savings over to expansion of market share. A Ground driver works as long and as hard as the “typical” UPS driver, and they take home about $30-35,000 a year, with NO BENEFITS. It isn’t a matter of “deserve”, it is a matter of what compensation level is necessary to get the job done; in Ground it is $13/hr with no benefits.
This is why I’ve written that I’m “pragmatic” about what a union can achieve if the RLA exemption gets pulled from FedEx (and the people I’ve spoken with are either reluctant or opposed to unionization). If Fred can get people to deliver his volume for $13/hr, what are the odds that he can get people off the street to deliver Express packages for somewhere between that and what Express is making now in wages? Unionized labor has the power to strike, FedEx has the power to have a lockout if he decides he doesn’t want to play ball.
This gets to the crux of the issue. Is Fred going to roll-over and begin compensating his work force at $80,000 a year, when he’s only paying $55,000 a year right now? This is the source of my pragmatism. Look at it from this angle. Fred in the past 18 months, has gutted the pension plan, halted 401k matching funds less than a year later and then turned around a froze a “scheduled” pay increase not much after that. How many employees quit, and how many are still making sure they get their PO off on time, and don’t blow a PU? We all know the answer.
Some are going to say now, “This idiot is taking the side of Fred, shoot him!!” No, this idiot despises what is happening in America right now, with a freefall in wages and corporate greed squeezing the middle class out of existence. “Broke” made $34,000 in wages last year, and had compensation of about another $7,000 in total benefits, for $41,000 total compensation for working his tail off. Is that equitable to the UPS driver making in excess of $80,000 doing very close to the same thing? (Rhetorical question)
I look at it this way. A modified game of blackjack is about to start between FedEx and its employees. The modification is that the bet is placed after the cards have been dealt. Fred is the dealer, and has dealt the hand. We’ve got an “8” and a “7” in our hand, and Fred is showing a face card right now. What are we going to bet? Some of the “hotheads” are really hoping he’s got a “2” in the hole, and are willing to bet accordingly. A lot of people think he’s got something between a 7 and a 9 in the hole. What do I think he has in the hole?
When I play blackjack, I like to keep a running count of what cards have been dealt, so I have an idea of the probability of what the next few cards will be. Right now, it looks like there are a lot of face cards left in the deck to deal (meaning it would be a bad thing to take a hit with a 15). So what is there to be done?
We can’t play Fred’s game of blackjack. The deck is stacked against the employees. We have to find a different game to play, to better up the odds, and have a decent chance of winning. That game is poker. That is what unions do every time they negotiate with companies. They essentially try to bluff the corporation that they have a better hand (employees will indeed strike), while the corporation tries to determine if it is indeed a bluff, or the employees will indeed strike. The corporation does a cost-benefit analysis of the contract proposal (bluff) and the losses that would occur in the event of a strike. Right now, FedEx agreeing to a contract that even comes close to UPS standards would cost FedEx too much, so they’d rather have a lockout (strike would be cheaper than agreeing to a contract). What would FedEx do then? Refuse to play poker with the union and look for another player (replacement workers, scabs…).
This is why I’ve written that for a union to be successful, membership must be in the 70% level on a nationwide basis. It also must be supported by the union (financially) to reduce the temptation of striking employees to cross the picket line to get their wages back (no doubt Fred will be throwing out bones to get enough people to cross the picket line). It must also include the mechanics, to shut down the line haul system of Express. If Fred can keep the line haul system operational, and only has to deal with 30-40% strike compliance among the craft employees, Fred has the capability to break a strike. This is what I see right now on a nationwide basis (that rigged game of blackjack).
In an ideal world, the best solution (for the employees/potential union) would be to have the Ground drivers immediately classified as employees instead of Independent Contractors. This would substantially reduce the pool of potential “scab” labor to break an Express strike. Fred’s possessing the Ground IC’s, gives him the ability to bring them in to deliver overnight volume in markets that have substantial union membership and to use them to deliver non-overnight volume where needed (all those face cards I think are in his rigged deck).
