Sad Coda to the 50th Anniversary of Teamsters National Master Freight Agreement

Jack Goldsmith

Jack Goldsmith is the Learned Hand Professor of Law at Harvard Law School, where he teaches and writes about national security law, international law, internet law, and, recently, labor history.  Before coming to Harvard, Professor Goldsmith served as Assistant Attorney General, Office of Legal Counsel from 2003-2004, and Special Counsel to the Department of Defense from 2002-2003.

Today is the 50th Anniversary of Jimmy Hoffa’s greatest achievement as a labor leader: the January 15, 1964 National Master Freight Agreement (NMFA) between the Teamsters Union and the motor carrier industry.  The contract covered 400,000 union members and 16,000 trucking companies.  It raised wages significantly, improved working conditions, increased employer payments into pension and health care funds, and most importantly did these things on a uniform basis with a national contract that gave the Teamsters enormous power over the national economy.  The New York Times described the NMFA fifty years ago as “one of the most significant labor developments of the post-war period.”

The NMFA has declined in scope and significance in the last fifty years, in step with the decline in the Teamsters union and the labor movement more generally.  (For a personal recollection and account of the decline of the contract’s significance, with a special emphasis on the effects of trucking deregulation, see here.)    A sad indicator of the difficulties in this area for the Teamsters is last week’s vote by the union against extending their contract with YRC Worldwide, a leading national trucking company and the successor firm to one of the original signatories to the NMFA.  The rejected contract would not have been a great one for the union, which has at least 26,000 members working for YRC.  As the Kansas City Star reported:

Approval would have meant the 15 percent pay cut the Teamsters have worked under since 2009 would continue into 2019, as would pension and other benefits reductions they had approved in three earlier votes.  It also would have made other changes to work rules, vacation benefits and other matters that management said would make the company flexible enough to compete with its mostly non-union rivals.

The union’s rejection of the contract was a blow to YRC’s refinancing efforts.  As the WSJ reports:

[YRC] has about $1.4 billion in debt, much of which is due in the next two years. The company’s creditors have said previously that they wouldn’t agree to a refinancing unless YRC was able to renegotiate its labor contract to stabilize expenses.  In December, the company said it had secured $300 million in financing from several investment firms, which would allow it to pay off debt maturing in February. That financing was contingent on a contract extension, the company said last month.

The threat of bankruptcy for YRC was not persuasive to a majority of union members.  “Our members have made huge sacrifices to keep this company alive and a majority made the decision not to sacrifice anymore,” Tyson Johnson, the director of the Teamsters National Freight Industry Negotiating Committee, told the WSJ.  The union and company are playing chicken here, and the sacrifice might be greater yet for workers if, as many believe, YRC will now be forced into bankruptcy.  We will see.

(In happier news for the Teamsters, union members voted last weekend to ratify a new 5-year contract covering UPS freight workers that provides $2.50 in wage increases over 5 years and other benefits.  This comes on top of a new National Master UPS agreement ratified last summer.)

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