George Will on the UPS/Teamsters Campaign against FedEx

Kurt Vonnegut’s short story, “Harrison Bergeron,” describes a world in which the utopian dream of equality has been achieved beyond anyone’s wildest imaginings: “Nobody was better looking than anybody else. Nobody was stronger or quicker than anybody else.” This strict equality is enforced by the U.S. Handicapper General through a regimen of artificial “handicaps,” like disruptive ear transmitters for the highly intelligent and weights for the athletic.

Equality taken to that extreme strikes nearly everyone as absurd. Unfortunately, when it comes to business, such across-the-board kneecapping enjoys some undeserved acceptability. Consider the ongoing controversy between shipping giants UPS and FedEx over their differential labor law status. As George Will notes in his Washington Post column today, organized labor helped Democrats considerably in taking control of Congress in 2006 and the White House in 2008, so now, “Congress might change labor law to assist UPS, a Teamsters stronghold, by hindering its principal competitor, FedEx.” Here’s how:

The growth of railroads had put America’s increasingly integrated economy at the mercy of local strikes. “Brakemen in Altoona, signalmen in Wichita,” says Fred Smith, could cripple the transportation network [no relation to CEI President Fred Smith]. Smith, FedEx’s founder and chief executive, says that in 1926, to protect the arteries of commerce, Congress passed the Railway Labor Act (RLA). It ensured that any bargaining unit for workers must be systemwide so that no local unit could hold the railroads hostage.

In 1935, the National Labor Relations Act (Wagner Act), which covered everyone except railway workers, allowed organizing and bargaining based on localities. The path to unionization is steeper under the RLA, which requires a nationwide vote by all workers.

In 1936, airlines were brought under the RLA. FedEx, which began as an air freight company and created the modern express business, is precisely the sort of integrated system for which the RLA was written. This matters: 53 percent of all U.S. exports by value travel by air, and virtually all priority and express U.S. mail is carried by FedEx.

In 1981, UPS began air services, and in the 1990s it tried, legislatively and judicially, to be put under the RLA. In 1993 UPS said all of its operations, “including ground operations,” are properly subject to the RLA “because the ground operations are part of the air service.” FedEx supported UPS’s efforts, even though the vast majority of UPS parcels never go on an airplane, whereas FedEx’s trucking operations exist to feed its air fleet and distribute what it carries.

FedEx characterizes itself as the “world’s most effective airline” and UPS as “a 100-year-old trucking company.” FedEx, Smith insists, is not anti-union; its pilots are unionized. He says that the pay and benefits for its drivers are, on average, higher than those of UPS drivers and that new FedEx drivers must wait only three months to be eligible for benefits whereas UPS drivers must wait a year. Nevertheless, today’s Democratic majority in Congress, with UPS now aligned with the Teamsters, wants to put FedEx’s ground pickup and delivery operations under the NLRA, thereby making FedEx’s entire integrated system susceptible to disruption by local disputes.

UPS is right to decry the fact that its workforce is treated differently from that of FedEx in terms of the law. But the solution it is pursing is the wrong one. Rather than try to weigh FedEx down, UPS should strive to see itself as the ballerina in Vonnegut’s story who sheds her “handicap” weights and then dances free. And other firms, including FedEx, should help UPS and others extricate themselves from this unfair burden.