The five-year Teamsters contract, which boosts worker wages and benefits by 3.3 percent over five years, will lift holiday wages, even for non-union hires.
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“While hiring the same number of seasonal hires as last year could be seen as them not willing to pay the higher rates they are now obligated due to the new Teamsters contract, I would argue it’s more a sign that they don’t anticipate much growth over last year’s seasonal volume,” said Jeremy Tancredi, a partner in the operations excellence practice at consulting firm West Monroe.
Hourly pay is at $21 for package handlers and driver helpers and $23 for delivery and tractor-trailer drivers. Last year, package handlers’ starting hourly pay was $15.50 and delivery drivers made a minimum of $21.
UPS said it is hiring both full- and part-time positions with a focus on drivers and package handlers.
Under the terms of the Teamsters contract, UPS must now offer seasonal driving positions to current part-time workers, before hiring new temporary workers.
Holiday jobs aren’t always temporary—50,000 seasonal employees have earned permanent positions over the past two years, said UPS. Some permanent positions are also currently available for early applicants.
According to Tancredi, the UPS hiring move might be a direct response to rival Amazon.
“It seems as though UPS is acknowledging that Amazon’s delivery network will continue to cut into their volume share. What makes the situation interesting, is that even with Amazon committing an additional investment of $1.3 billion into their workers’ pay, they still fall short of the UPS Teamsters deal,” he told Sourcing Journal. “On average, Amazon workers now make $20.50 per hour compared to UPS workers who will start between $21 and $23 depending on the position. Considering this, the war for seasonal talent will be more competitive than ever this year.”
FedEx has yet to announce any hiring plans. The shipping company, which benefited from the paralyzing UPS-Teamsters negotiations, didn’t make an official recruitment announcement last year. At the time, FedEx said it was hiring fewer than the 90,000 it recruited in 2021, when holiday sales jumped at a brisk 14.1 percent pace, per NRF data.
Not all companies in the logistics space are matching or exceeding last year’s numbers. Earlier this month, global logistics provider Geodis said it’s recruiting nearly 3,000 seasonal workers in the U.S. and Canada, down from 5,000 in the year prior. The company is hiring material handlers and equipment operators this peak season for 13 North American warehouses.
Geodis’ decision reflects what is expected by many to be a weaker holiday season than years’ past. The company cited an Insider Intelligence report indicating that 2022 holiday sales grew 4.8 percent year-over-year. This year, some projections see a 4.5 percent increase.
Retail appears to be hit harder by the year-end sales forecast so far than their logistics counterparts. A report from executive recruitment firm Challenger, Gray & Christmas showed that weaker spending and increased labor costs would result in U.S. retailers hiring 410,000 seasonal employees this year, the lowest since 2008. This number represents a potential 41.5 percent decrease from the 701,400 hired in 2021.
As UPS ramps up for the holiday, it’s cutting back on other costs by laying off employees in the Dallas-Fort Worth area. Roughly 50 percent of all Dallas-Fort Worth-area managers were asked either to accept a severance package or be demoted to full-time supervisor. One-quarter of all full-time supervisors were given the separation plan.
The layoffs come as UPS braces for $500 million in extra costs this year related to the union contract. Last month, the Atlanta company cut its full-year revenue and profitability targets, citing the higher labor costs as well as $200 million in business lost during the tense contract talks.