The headlines are everywhere – unions have secured $170k a year from UPS!
Many tech workers got in a tizzy over this, especially on the AI/crypto/VC/tech bro side of Twitter. How could a UPS driver make more than a software engineer? There’s only one problem: this number doesn’t reflect how most people think of their salary.
Almost anyone working in tech will know that comparing take-home salary alone isn’t an accurate view of one’s total compensation. To start, many companies – not just in tech anymore – offer bonuses or stock-based compensation. Usually, employees receive a stock package that vests (is made available) over several years. Big employers may still offer boutique services like fresh meals, in-house coffee bars, transportation, gyms, laundry service, and so on, which don’t have a direct cash value. And don’t forget the biggest bonus of all – healthcare. The average cost of healthcare per employee is $13,700, and I would assume tech companies are above average.
In short: most employees judge their cost to the business as only the cash/stock they get – they don’t think about the benefits cost to the business. Unions are the opposite: the total cost of an employee to the business is the focal point in union salary negotiations. This makes sense as all aspects of an employee’s cost to the business – their healthcare, retirement and so on – is under negotiation. When an individual negotiates with their employer, they usually only talk about take-home pay.
Drivers don’t get paid what people think they are when they see “Drivers making $170,000 a year”. Full-time delivery drivers will take home $102,000, and have the same benefits many tech workers consider table stakes, like healthcare and retirement benefits, which cost $50,000. $102,000 is a good salary, of course (please don’t interpret anything here as making a value judgement on the deal, I’m not qualified for that). But $102,000 is a far cry from $170,000.
But wait, there are more caveats!
- If you’re a math whiz and noticed those numbers don’t add up, good eye – delivery drivers can’t make $170,000 even under the new agreement, from what I can find, only tractor-trailer drivers will be able to make enough to push their total comp up to $170,000.
- Part-time workers don’t make the same hourly amount as full-timers. Especially for part-timers, pay has historically been low.
- Union contracts cover much more than just pay and benefits. The new UPS contract mandates air conditioning, for example.
I’m not a journalist, in a union, or a professional researcher, but pulling these details out of the story took ten minutes, and they pretty significantly change the context of the $170,000 number. I think that goes to show how bad the mainstream media is at reporting on labor. With contracts or journalism, always read the fine print.