UPS driver pay and benefits deal in US to be worth $170k a year, firm says | Hacker News Reader

UPS driver pay and benefits deal in US to be worth $170k a year, firm says

bbc.com

51 pointscrhulls110 comments

See also: Wage Gains at UPS Have Amazon Workers Demanding More

https://labornotes.org/2023/08/wage-gains-ups-have-amazon-wo...

Really great to see people organizing again

One fact many people don't realize is that in order to achieve broad-based wage growth, we will have to face GDP losses. This is because there are many businesses that depend on cheap labor to exist. As wages rise, these businesses will start to fail, reducing GDP.

We should see this scenario (wage growth with stagnant or decreasing GDP) as a healthy adaptation. The danger is that politicians will react to the bad GDP numbers with dumb new economic interventions.

> One fact many people don't realize is that in order to achieve broad-based wage growth, we will have to face GDP losses. This is because there are many businesses that depend on cheap labor to exist. As wages rise, these businesses will start to fail, reducing GDP.

> We should see this scenario (wage growth with stagnant or decreasing GDP) as a healthy adaptation. The danger is that politicians will react to the bad GDP numbers with dumb new economic interventions.

As a European who loves work culture in America, I'm afraid that America is copying the worst aspects of European culture.

Europe is awesome, and I'd love to see America copy us more, but these kind of incentives are the wrong thing to be copying.

To expand - training and educating yourself is hard work. Why are we rewarding people whose training is being able to drive a van? It's not about it being "honest work" (of course it is) or "hard work" (of course it is), or "these are important jobs, we need someone to do it" (of course) it's about - do we want to incentivize that young people aspire to this? This is not a recipe for a winning country.

> do we want to incentivize that young people aspire to this?

Honest question, why not? Someone has to do it for society to function. We can't all be software engineers and CEOs, why shouldn't the person driving the UPS truck feel satisfied with their accomplishments instead of constantly being told they are doing it because they either didn't put in the work to "better themselves" or couldn't hack it, as certain parts of our society currently seem to do when it comes to "unskilled labor"?

The incentive is we need e-commerce and packages delivered to the last mile

Apparently there’s enough money there to pay for the merchandise and the delivery driver

Compare against the cost of running physical retail operations and getting people through the door - the people have voted with their wallets

Yup. Few people talk about fair wage rebalancing as a driver of inflation, but it's inevitable if the bulk of wage growth goes disproportionately to low earners who produce widely consumed goods/services, whose prices were deflated due to low wages.

As an extreme example, suppose all farmers were unpaid slaves. Slavery gets outlawed, and farmers now get paid. Food prices rise dramatically, resulting in massive inflation overall (and thus a fall in real wages for everyone except farmers).

But what if those prices weren't deflated at all by the low wages? What if instead of passing their low costs onto the consumer, businesses were just pocketing the difference instead, because prices weren't really based upon the costs to produce the good/service, but on the consumers' ability to pay. In other words, raising wages would have little to no affect on prices.

I'm describing a non-competitive market, which of course also describes the majority of the American economy today.

This is proven false. When more people are given more money, they spend more on average

[0] https://www.epi.org/publication/bp357-federal-minimum-wage-i...

[1] https://www.nber.org/system/files/working_papers/w25761/w257...

This is why—despite what your econ 101 models might lead you to believe—modern, data-driven economic research suggests that increases in the minimum wage almost always lead to increased GDP. Worth noting that there's also many other effects that may contribute to this observed impact[2]

[2] https://www.piie.com/blogs/realtime-economic-issues-watch/hi...

The studies you link to only consider effects of raising the federal minimum wage. While their conclusions may be valid, minimum wage workers only constitute a tiny fraction (~1%) of the labor market. It is unclear how well the studies' conclusions would extrapolate beyond minimum wage workers.

Is that min. wage workers working at the min. wage, or workers within the min. wage zone?

Fed. min. wage means jack all when states have their own, which is what we should be looking at.

The first study looks at federal

> Increasing the federal minimum wage to $10.10 by July 1, 2015, would raise the wages of about 30 million workers, who would receive over $51 billion in additional wages over the phase-in period.

> Across the phase-in period of the minimum-wage increase, GDP would increase by roughly $32.6 billion, resulting in the creation of approximately 140,000 net new jobs (and 284,000 job years) over that period.

30 million out of 156 million workers is ~19.2% of the workforce. Not nothing and not to mention the knock-on effects it'll have for workers just barely above that

The second link specifically analyzes both localized and federal minimum wage increases and explicitly tackles the question "Are the Effects Bigger When More Workers are Affected?"

> The pattern of results for nominal consumption growth are similar—the direct spending response is somewhat stronger than when we do not control for the share of low-wage workers across locations, and there is evidence of a small but positive differential effect in areas with a higher share of low-wage workers

The third is a collection of research looking at wage increases in general, not just minimum wage (contrary to OP's comment)

If that’s true why not raise the minimum wage to 30$? Why not 100$?

I completely agree! The minimum wage is not automatically adjusted for inflation (unlike the $12.92 million estate tax exemption, the $17k gift tax exemption, etc). If we go as far as to adjust for productivity, then the minimum wage would stand at $26/hr, matching the relative value it had in 1968 — a time remembered as a golden era for the American economy

I meant to ask if the theory is true, it should work for any number, until marginal propensity to spend is equal amongst everyone. My point being that a theory should be general. One person could argue for 17$ while the other argues for 15$. I don’t see how one would using a general principle would decide which value is correct.

I will pay more for items to be shipped to me and wait longer for them to arrive if it means the UPS drivers are treated fairly.

I won't.

I will. Two to one. So ha! :)

That's great but why are you forcing others to subsidize these jobs too, especially the poor?

It's not subsidizing, it's paying.

I don't subsidize a roofer when I hire them, I pay them.

So your question is "why should poor people have to pay UPS drivers a decent wage?" Which I predict you would argue that you think this is too much money/healthcare/retirement for a delivery driver.

The market determines the "fair" wage of a delivery driver and it is not $175,000.

The fun thing about markets is that there's one for labor too, and apparently the labor market has decided otherwise.

It's the result of decades of union busting and pro-capital class propaganda. Everyone forgot labor is sold, and its price has only ever increased outside rare boom times by collective bargaining.

Why do you say it is not 175K? How much should it be? Is it because you don’t want to pay that much?

It looks like ups have decided that they want to pay their drivers something in the region of $175,000 in order to do their business though.

If they didn’t want to pay that then they could pay less but then those drivers might not think that’s fair and then go work for someone else, it might not be for $175k but it’s their choice at that point.

It's worth noting the parent to this comment rarely if ever provides an original comment (always replying with a short quip) and doesn't seem to engage in debate.

That's what people who have underpayed workers normally say.

A pay upgrade for employees firsts lowers the income of the company and that's bad for owners and investitors, not the users.

Users get higher prices way later in that game.

UPS will have to increase shipping costs which directly hurts the poor with their Amazon purchases.

Counter argument: Which is good for local stores as they can compete more which will increase their profit so they can hire more people etc. It will also take a while to filter down like mentioned elsewhere.

I'm not saying these things are the case but due to the oversimplification you get these kind of responses.

Local stores also use UPS for their shipping. This hurts them too.

Your understanding of poor is really different from mine. Here (Europe) poor people don't buy online, they go to the store for food, it's cheaper. Amazon is a luxury, not an essential provider.

This depends on the country. In Poland most people buy online these days, but we all use postage boxes(company called InPost). They have 'boxes' everywhere, in every city, even small villages at this point have at least one, big cities have them everywhere within walking distance. They batch deliver packages to those boxes which is also more efficient and environment friendly, you get a code and can pick it up within 48hrs. They revolutionized online deliveries in Poland, noone wants to use a regular courier or postal services anymore. Having to sit at home, often not knowing when the courier will really come is tiresome. People just pick the package up along the way to/from work, groceries etc.

We have different definitions of poor. I’ve been what I’d call poor, and when I was in that state there wasn’t any room in my budget for things purchased on Amazon. Wal*Mart with a ride from a friend was all I had.

Hogwash, most poor people stay the hell away from UPS. 99.99% of the time the USPS is a better deal when hurting for cash.

UPS could also just lower their profits a little, but somehow that’s blasphemy but laborers asking for more money is not? That’s an incredibly lopsided take.

The BBC article mentions this. UPS reported they'd post lower profits.

Would that people like you think as much about the poor when it comes time for the government to make its budget. We’d be a better country if it this happened.

nobody's forcing anyone to do anything. It's just the free market, right?

There's nothing free about this.

What does that mean? Employers are raising wages in the free market. Unionized or not, the market is free - nobody is forcing companies to not unionize, and if that means more employee retention then the others better follow suit if they are keen enough. There’s no monopoly on who can have a union.

why would you be willing to when companies can easily allocate the record profits they have to wages?

Three reasons.

(1) I can afford it.

(2) The increase in price and latency will probably result in my ordering less stuff.

(3) I doubt that any company is going to allocate a substantial portion of their profits without raising prices. If it’s between raising prices, which I can afford, and people who do difficult jobs I depend on not having an easier, fairer life, then I’ll choose the raised prices.

> The increase in price and latency will probably result in my ordering less stuff.

No, you just stated your generous intent. You have to order the same amount in order to properly support the UPS driver. Ordering less stuff will reduce the demand for UPS drivers, causing some to be fired. You have now harmed UPS drivers, treating them unfairly.

I’m not so self centered as to think my personal consumption has any particular impact on the demand for UPS drivers.

UPS has a lot of fixed costs and doing less business could hurt them more than making less profits. They have to start paying higher wages now because of the deal they made. Their customers likely can't absorb higher prices as quickly and like you point out will cause a decrease in business as people ship less. It's a balance for UPS and it very likely isn't "just raise prices to match".

I suspect that UPS has a large contingency of MBAs who are better qualified at striking that balance than I am, which partially explains why I don't work there and why they haven't asked my advice on the matter.

I can only control the part of the transaction that originates from me. My commitment is to seek out the solution that seems, to my level of understanding and investigation, to result in the fairest treatment of workers given my lack of price sensitivity.

To do anything less is to give in to capitalist nihilism. It's tempting, but I'm not there yet, personally.

Wow, that's incredibly generous of you. If I start listing out thousands of other professions that are not well paid, do you promise to loudly state your intention of generosity on an internet comment? It's the least you could do, after all.

Not OP, but yeah most definitely. And I have also started actively seeking out providers who pay a fair wage - for example I only get groceries at farmers markets. I sincerely wish they would do the same for clothing but that’s harder to find. It’s not my fault that capitalism makes it incredibly hard for me to do this by restricting the number of businesses that pay a fair wage, but I genuinely do my part. I don’t buy from Amazon anymore unless I have no choice. I’ve paid double the price at times just to avoid Amazon.

I wish I had the option to! Everybody keeps shipping things with Ontrac

Awesome news! I'm glad for the workers and their families. That is a great wage and one that will pay dividends in terms of their health and the health of their communities.

How is this awesome news for the poor who will pay for it in more inflation?

Just to follow this slippery slope: are all increases in worker pay since, say, the pay freezes in the middle Roman Empire followed by just inflation, with no other socioeconomic benefits?

Good. These people have one of the most difficult and essential jobs out there. Bezo became one of the richest people in the world because these drivers were some of those who reliably delivered the last mile of Amazon's business.

In what way is the job of a UPS driver difficult and essential?

Have you ever loaded or unloaded a truck? It's the definition of difficult.

Do you have things shipped to your house? I think most people would consider that essential in 2023.

> Have you ever loaded or unloaded a truck?

yes, but whether I've done substantial amounts of manual labor in past lives isn't really that relevant. Of course, you might be sitting in your chair and think "that looks really difficult", and that'd be a fair observation for someone who hasn't worked in the trades.

> It's the definition of difficult.

Difficult like "hard work", or difficult like "curing cancer"?

Loading/unloading a truck is definitely not "the definition of difficult". a lot of other professions that make a lot less than $170k a year would disagree. By the way, you might know that UPS has loaders and pre-loaders; they're not drivers, and they're not unionized (AFAIK). It'd be a lot more fun and less work to drive a truck than to do that, but I'd definitely argue that loading garbage cans in residential neighborhoods is far more difficult than being a UPS driver.

> Do you have things shipped to your house? I think most people would consider that essential in 2023.

Yes, of course, but I still wouldn't consider a UPS delivery essential, especially when there are so many other delivery services. Is Uber Eats essential? It might be the only thing keeping me alive, but it's still not essential in my view. Even the USPS isn't really essential.

For some people who have oxygen equipment or COPD or something, electricity might be keeping them alive. Those are truly essential.

Here's a thought experiment: if UPS was still available but cost ten times as much, would you still pay it? If not, then it's probably not essential. Those paying for electricity for life support equipment would still pay it.

> Of course, you might be sitting in your chair and think "that looks really difficult"

I have family who work for UPS (hell my friend since Kindegarten had a mom who retired out of UPS) and I have a brother who throws bags for Southwest. It takes a toll on the body. It's difficult. Full stop. This doesn't invalidate the varied difficulties in other professions. Sheesh.

> Yes, of course, but I still wouldn't consider a UPS delivery essential,

Delivery in aggregate is essential, which is the gracious interpretation. I would pay whatever to get my drugs delivered, because without it I die.

I'm not sure what creating strawmen, in response to someone's earnest sentiment, does for the conversation.

My dad drove for RPS for years and, like my sibling, can confirm. It's grueling, sometimes dangerous work, and you do it pretty much no matter the weather. Think of a mix of long-haul trucking, professional movers, and the constant threat of being robbed.

Drivers were already making great money. The other package handlers like at the sorting facilities get left out though.

Full time drivers were/are doing pretty good, particularly those with decades of time at UPS. Part time drivers (the bulk of their workforce) were not. That was the main thrust of the recent negotiations (that and AC).

But yes, package handlers and sorters next, please.

UPS is capitalized in the BBC story title (and everywhere else), it should be capitalized in the HN title, methinks.

Great news if you are lucky enough to drive for UPS. I would be envious if I was a driver for another firm. The average salary for a delivery driver in the US is around $50K. But maybe this will pull up wages for the rest of the industry.

In Belgium average tech job salary is 36K to 87K EUR/year (from this source [1], it's just one source but it's just to back up my experience, also it really leans much more to the 36K, 87K sounds like too much), before taxes

It's mind boggling how much higher salaries in the US are.

[1] https://www.paylab.com/be/salaryinfo/information-technology?...

That total compensation figure includes both salary and benefits (healthcare, retirement income, etc.) before taxes. A family healthcare plan could have an annual employer cost of $25k or more, plus the employee contribution.

UPS provides a breakdown for the previous $145k figure here: https://about.ups.com/us/en/our-company/great-employer/real-...

that's more what I'm payed as a senior dev ... maybe I should change career

The company might be doing some funny math with the value of the benefits: $50,000. That could include things you might never use, like IVF assistance.

My wife is a teacher in NC. We are on her insurance with the state health plan for a whole family. We pay $700/mo for our portion on the 80/20 plan.

I would say they likely do pay $30k+ per employee and 50k isnt a big stretch when you count every benefit as you stated.

https://www.shpnc.org/documents/open-enrollment-documents/sh...

That is the beauty of employer subsidized benefits with preferential tax treatment.

The worker cannot easily compare compensation offered by different employers, so they are less likely to leave. And bigger/more profitable businesses can afford to hire professionals to analyze and implement these benefit plans, while small businesses are left competing for 2nd tier employees since they cannot afford that overhead.

Why someone gets health insurance and retirement savings with pre tax money if their employer subsidizes it and why someone has to pay for health insurance and retirement savings with post tax money if their employer does not subsidize it is a pretty great injustice that neither party is interested in addressing.

One more reason healthcare needs to be divorced from employment.

My company sends out an amount of the value of benefits. For me it was around $30K. It includes all paid holidays and PTO, health care, 401K contributions, and social security contributions.

No need for dramatic responses. If you JUST want money you can go make more in the trades.

For the work we do as software engineers we are beyond well compensated.

speak for yourself. Local jobs (salary is monthly obviously):

  Hiring part time staff:
  - java script 6 people
  - Flutter Developer 3
  Working hours: 8:00am -5:00pm can negotiate
  Salary : 300$-700$

Not sure what full-time hours are, I guess 996 or whatever.

Sorry, I don't understand your comment.

SWE does not pay very well everywhere.

Oh I see, responding to my "we are beyond well compensated". Sorry. Thanks for clarifying.

Yes, I was definitely speaking from the U.S. perspective (typical american stereotype).

Note that benefits are valued at at least $50k/year in this number.

Let's be honest, they're probably doing more important work. But keep in mind this is including all costs of benefits, etc. If you're making less than that as a senior dev in the US you might just need to change job not career

$170 - $50 for benefits is $120K for base pay. Senior Devs in the US earn on average about $103K. You might be surprised at the number of developers out there earning normal non-FAANG salaries located in smaller cities. But I agree, the drivers are delivering more value, literally.

Value delivered is meaningless, otherwise garbage collectors would be paid millions.

What matters is scarcity of resources, be it commodities, or human skill!

In that case, we better keep scaring off newbies from coding

That's part of what guilds were for.

Or participate in collective bargaining!

Just a side thought, but how do the collective bargaining protections work in the age of automation? Basically like robots as scabs or permanent replacements?

If your work could be fully automated - you wouldn’t have a job right now and collective bargaining wouldn’t be relevant.

> If your work could be fully automated - you wouldn’t have a job right now

To nitpick this - there's a non trivial up-front cost associated with automation. As such using (well, abusing) people is sometimes just plain cheaper than the amortized costs of automating.

Does your sense of your senior dev pay include considering your benefits? Back when I was an underpaid junior dev, I once had my employer go and attempt to convince the software devs that we were making money than we thought via a statement outlining benefits. It more than doubled my salary... but most of it would come with any software job that wasn't self-employment/contract work.

You can also do what the UPS drivers did by unionizing and negotiating to keep a larger share of the fruit of your labor.

Do you want back pain and constant work for 10 hours?

I don’t. And I did make way more. But keep in mind that physical labor jobs are continuous work and hard on the body. As a swe I could work an hour, go for a walk to think, work another 2 hours, play ping pong with the PM while we discuss something, and enjoy multiples in RSUs. Just saying.

Most of the time drivers are.. driving. And the drivers have hand carts for larger or heavier items (which still have significant limits), and most packages are the size of a hard cover book. So, really, almost all of the job is driving with occasional chances to stretch your legs and deliver a small package. And the job is average of about 43 hours a week (they have very exact data on this), which is probably less than you put in and definitely not 10 hours/day.

Sounds like you have a pretty nice SWE job, perhaps in the valley? But your experience is not typical.

Did a google search for ups driver downsides and literally every result is “I have chronic back pain” and a workers compensation for physical injuries.

I’m sure there are downsides to swe but I’ve met swe/tech people who are 65+ and super sharp and innovative.

Have you ever met a 65 yo UPS driver? Most drivers seem young.

Interesting. I too am a senior dev and I really don't feel the need to compare. I'm doing something I'm good at and I'm compensated well for it. I am getting mine, and I want everyone else to get theirs too. It's not a race. It's not a competition. It's not about being/feeling important.

I'm not sure I can put a dollar cost on the theoretical toll that a package delivery job puts on your body versus being a dev.

Most devs are very sedentary. That puts an enormous toll on the body. Which is worse? I don't know, but neither is great.

Doing the math from the article, they'll be at an average of $120k in wages for an average of around 43 hours a week.

If you are doing below that as a dev, probably worth first changing companies.

A lot of numbers are being thrown around in the article. $170,000 a year and Drivers discussing their hourly pay of $40 or more routinely make national headlines. and Prior to the new deal, the company said drivers earned about $95,000 in pay annually on average or about $42 an hour, and another $50,000 in benefits and raised starting pay for part-time staff to $21 an hour and the new contract would provide a pay boost of $2.50 an hour this year and $7.50 an hour over the five years of the deal.

The $170k number comes from the employer, and the article expresses no curiosity about which end of the confidence interval at the end of 5 years that benefits fall on. Future cost-of-labor numbers from the employer may incorporate burden and liability forecasts as well, as those are considered to be a portion of labor expense when discussing compensation. The article also seems to be doing its own math to arrive at hourly rates, naively assuming that an entire amount is paid compensation and doesn't include benefits or overtime.

The base rate being increased from (apparently?) $18.50 to $21 is a red flag that should have us asking critical questions. Delivery driving is destructive to one's body and dangerous. $18.50/hour is a ruinous rate for work that's not unlikely to change the usefulness of your body.

Holy crap! I'm switching jobs! I hate technology and I want to work outside, this amount of pay seems crazy but if it's true I'm definitely becoming a driver

Drivers are definitely needed, and it's very different work from programming. But, be prepared to work for decades before realizing those levels of pay/benefits. You'll also probably have to fight for one of the coveted full time positions.

Also check out USPS, they're hiring like crazy and have good benefits. It won't be as cushy or well-paying as our tech jobs, but I'm thinking about it, too. I'm so tired of tech.

To clarify, because it wasn’t immediately apparent to me, this is over a 5-year period so the average annual increase is just over 3%.

Am I the only one who didn't know that UPS drivers were paid 6 figures? This is news to me.

Wtf am I doing in software?

> UPS said the average full-time driver would earn about $170,000

Why is the _BBC_ using the corporation as a source for a headline number like this? Are they now just corporate mouthpieces like the US media? This number is surely inflated (including potential benefits not everyone will use like IVF, disability, etc). Very poor showing BBC.

Just pay them a million a year each, why should they be anything short of rich?

Even if the company could afford to pay the drivers $170k/yr without increasing shipping costs, they're still going to increase shipping costs. So this just gets passed on to the consumer rather than the company, much like tipping. And at a time when discretionary spending is down tremendous, this just means more people will get laid off. I will eat my hat if there are no mass layoffs in the next year.

It depends on what you mean by mass layoffs. In post-Jack Welch America, there is ALWAYS some company doing massive RIFs. Often when they're already profitable.

I think your hat and your stomach are safe.

UPS makes about $75 Billion per year in profit. This is a $25k increase after a few years of record inflation. There are 300k teamsters at UPS (including other jobs like package handler). If 1/3 of those employees are drivers, we're talking a 3% reduction in profits. They can afford it. (also worth nothing this $170k is also including all benefits).

>this just means more people will get laid off.

The threat of a strike makes this much less likely.

Anecdotally UPS drivers are much, much better than Fedex and Amazon. They don't toss my packages or leave them sitting in the rain etc...

You are wrong. UPS does not make anything close to $75 B per year in profit.

Looks like they made $100B in revenue and $74B profit in 2022.

https://www.macrotrends.net/stocks/charts/UPS/ups/revenue

  UPS annual revenue for 2022 was $100.338B, a 3.14% increase from 2021.
  UPS annual revenue for 2021 was $97.287B, a 14.96% increase from 2020.
  UPS annual revenue for 2020 was $84.628B, a 14.22% increase from 2019.

  UPS annual gross profit for 2022 was $74.152B, a 3.08% increase from 2021.
  UPS annual gross profit for 2021 was $71.939B, a 12.32% increase from 2020.
  UPS annual gross profit for 2020 was $64.05B, a 13.61% increase from 2019.

You need to look at net profit not gross which is much smaller. The net profit margin 10%.

Why? Aren't salaries paid before obligations and taxes?

UPS just over 100 billion revenue and 11.55 billion NET profit.

https://en.m.wikipedia.org/wiki/United_Parcel_Service

Strange how many in this thread don't get revenue vs profit.

According to the article: UPS "now expects its adjusted operating margin this year to be 11.8%, down from 12.8% expected in May. The drop also reflects a fall in shipments as the economy weakens."

Their shipping prices are determined by what the market will pay and their competitors prices. Employee compensation affects UPS profit/stock price.

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