UPS Cutting 12,000 Jobs Months After New Labor Agreement

by Derek Major

January 30, 2024

UPS announced Tuesday it will lay off 12,000 workers just five months after it reached a new labor deal that gave its workers big raises.

CBS News reports UPS CEO Carol Tome said in a conference call Tuesday morning that reducing the company’s headcount will save UPS $1 billion in costs. Tome added UPS is also ordering employees to return to the office five days a week this year.

“We are going to fit our organization to our strategy and align our resources against what’s wildly important,” Tome said according to CBS.

Last summer UPS and its 50,000 workers agreed to a five-year contract after contentious labor negotiations that threatened to disrupt millions of deliveries businesses and households across the U.S.

In the agreement, part-time workers got a raise from $15.50 an hour to $21 an hour and full-time workers are now averaging $49 an hour. Under the deal, workers also received $2.75 more an hour and $7.50 an hour more over the five-year contract. UPS drivers are set to average $170,000 in pay and benefits at the end of the five-year agreement.

The New York Times reports the positions the layoff will come from are not union jobs. Instead, the layoffs will come from UPS’ managerial staff, “throughout the world and in all functions.” 

UPS added it expected package volumes to continue falling in the first half of this year, and then increase in the second half. 

“The moves reflect a “change in the way we work,” Ms. Tomé said, adding that even if the business rebounds, those jobs may not come back.

After the announcement, UPS shares dropped nearly 9% and fell just short of its revenue projections for the fourth quarter of 2023.

UPS is one of several large companies that have announced layoffs in recent months amid forecasts for slower economic growth. Google, Microsoft, and Amazon have all recently announced layoffs along with eBay, Macy’s and Wayfair.

According to UPS, the multinational shipping & receiving service delivers 27 million packages per day and 25 billion per year.