Amazon Faces Unionization Pressure as Teamsters Target Driver Wages Following UPS Contract Deal

A proposed contract between United Parcel Service, Inc UPS and the Teamsters Union could have significant implications for Amazon.Com, Inc AMZN, UPS's largest customer.

The contract would increase hourly wages for UPS employees by $7.50 over the next five years, with senior UPS drivers potentially earning an average top rate of $49 per hour, Bloomberg reports.

About 340,000 UPS employees are voting this month on a proposed contract.

Amazon, which has been building its delivery network, currently pays its delivery drivers around $19 per hour, significantly less than the proposed UPS wages. Amazon drivers now handle more than half of the company's packages in the U.S.

Paying drivers less than the union-negotiated rates is crucial to Amazon's strategy, but it threatens the union and undermines the value of organized labor.

Teamsters President Sean O'Brien has expressed plans to turn the union's attention toward Amazon after resolving the UPS contract.

The Teamsters have already increased pressure on Amazon with picketing at various facilities, highlighting concerns about low pay and working conditions.

Organizing drivers may prove challenging for Amazon, as most drivers are not direct employees but work for small businesses that lease vans and employ the drivers.

If the Teamsters secure higher wages for UPS drivers doing similar work, it could put more pressure on Amazon to address driver wages and working conditions.

Amazon had been at loggerheads with unionization efforts at its warehouses in the U.S. and the U.K. The workers resorted to unionization for fair pay and working conditions.

In 2023, a National Labor Relations Board (NLRB) judge ruled that Amazon illegally threatened to withhold raises and benefits from workers at two New York City warehouses lest they voted to unionize.

Amazon has faced dozens of complaints from workers and the ALU as the union attempts to organize warehouses nationwide. The company has generally denied wrongdoing.

Price Action: AMZN shares traded lower by 2.35% at $128.60 on the last check Wednesday.

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