UPS to lay off 12,000 workers 5 months after agreeing to massive pay raise with union, stock price plummets

The United Parcel Service announced Tuesday that it would be laying off 12,000 workers only five months after it was celebrated for agreeing to a massive pay raise for drivers negotiated by a union.

"We are going to fit our organization to our strategy and align our resources against what's wildly important," said CEO Carol Tome on a conference call.

He went on to call 2023 a “difficult and disappointing year” for the company.

The company reported that revenue plummeted by 7.8% in the fourth quarter to $24.92 billion, just below Wall Street projections of $25.31 billion according to NPR.

UPS stock plummeted by nearly 9% on Tuesday.

Tome said the layoffs would save the company about $1 billion, and he added that employees would be ordered to work back at the office five days a week.

Many on social media blamed the company's problems on the union agreement it signed that would raise pay for drivers to an astounding $170,000. When the deal was announced in August, social media went wild with memes portraying UPS drivers as suddenly wealthy.

The Teamsters' Union touted the deal in August as "single largest private-sector collective bargaining agreement in North America." The union represented about 70% of the company's employers.

The company had agreed to increase part-time workers' salaries to $25.75 per hour and also ended mandatory overtime as part of the union deal.

Tome also blamed the broader economy for the disappointing outlook after citing the threat of a strike by Teamsters and the union deal.

Other companies have announced layoffs in recent months, which some economists see as a sign that the economy is weakening. Polls show that Americans blame President Joe Biden for the high inflation that has significantly impacted household budgets in a negative way.

Here's more about the announcement:

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