UPS Seeks Tax Cuts on Top of Cuts Already Subsidizing Student Labor

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Above: Packages being unloaded at UPS Worldport in August 2009; via

By Steve Horn

Fourth in a series on FedEx, UPS, and their positions on taxes and jobs

Although UPS CEO David Abney has publicly boosted the message from President Trump and congressional Republicans that corporate tax cuts will create jobs, his company is ramping up its use of part-time student labor—in lieu of full-time staff positions—through the use of tax breaks extending all the way through 2027.

The tax-subsidized, part-time jobs require college students to work overnight shifts four or five nights a week, and high-school students to work four-hour shifts in the afternoon.

TYT previously reported that both UPS and FedEx—two of the largest employers in the country—have been active supporters of cutting corporate taxes. Both companies have lobbied for tax cuts and support business groups that advocate for lower taxes, as well.

Neither has said that they will use a tax windfall to hire more workers. Instead, as TYT reported, they are pouring hundreds of millions of dollars into a wide range of initiatives that could limit or even reverse job growth, including automation, drones, driverless vehicles, and investment in companies that use non-staff drivers in delivery systems similar to how Uber serves passengers.

The oldest UPS student-labor program is called Metropolitan College, although it is not actually a school. Metro College is a public-private partnership between UPS, state and local government, and two academic institutions: the University of Louisville and Jefferson Community and Technical College.

Participating students must work “third shift,” typically from about midnight to 5 a.m., at UPS’s Worldport facility in Louisville for no more than 20 hours each week. Students earn $10.20 per hour and are eligible for full employee benefits and a 30-cent-per-hour raise after one year.

According to UPS Worldport spokesman Jim Mayer, about 10,000 full- and part-time employees work at the facility, 6,500 of them on the overnight shift, which UPS calls its Next Day Air sort.  Of those 6,500 workers, 2,141 of them in the 2016–2017 school year were Metro College students, Mayer told TYT.

The program covers students at the two partner schools, providing participants book fees and tuition money for courses in which they receive a grade of C or above.

Kentucky Taxpayers
Half of the academic benefits are paid for by UPS. The other half, according to Metro College’s website, is paid for by Kentucky taxpayers. According to the Kentucky Cabinet for Economic Development, Metro College received over $4 million in state tax subsidies for fiscal year 2016.

The City of Louisville also chips in close to $1 million per year for what Metro College describes as “support [for] staffing and infrastructure of the program.”

A 2015 press release from then-Governor Steve Beshear, a Democrat, announced he was extending the Metro College tax break, which had been set to expire this year, through 2027.

“The extension of the Metropolitan College tax credit is critical for UPS and helps to ensure the longevity of this great example of public-private collaboration,” UPS Airlines President Brendan Canavan was quoted as saying. “We look forward to continuing to provide educational and job opportunities in the city of Louisville and Commonwealth of Kentucky for years to come.”

Metro College was created in 1998 to help UPS combat a high turnover rate among its part-time workers on the overnight shift. Turnover had risen to 70 percent, according to the Employment Pathways Project.

In a 2014 presentation, UPS Director of State Government Affairs Nick D’Andrea said the average night-shift worker-retention period before Metro College was eight weeks. A 2016 report by the “Say Yes” education initiative spearheaded by Louisville government and higher-education leaders found that the average Metro College worker now lasts 177 weeks on the job.

According to Metro College, “4,900 individuals have earned over 7,900 certificates, associate, bachelor, and graduate degrees.” That’s out of a pool of 16,500 students who have participated for at least one semester since 1998, according to Mayer, the UPS Worldport spokesman.

“Metropolitan College is, in fact, little more than a labor contractor,” according to the 2008 book, How the University Works: Higher Education and the Low-Wage Nation. “Supported by public funds, this ‘college’ offers no degrees and does no educating. Its sole function is to entice students to sign contracts that commit them to provide cheap labor in exchange for education benefits at the partner institutions.”

Ilya Lyalin, who participated in Metro College for five semesters from 2007 to 2009, told TYT that many students drop in and out of the program, take longer than four years to complete college, and in many cases struggle to complete their degrees or obtain the necessary grades in their classes.

According to Metro College, during the 2016 to 2017 school year students received Cs or better in 78 percent of the classes they took. Participating students received Ds in five percent of classes, Fs in nine percent, and withdrew from seven percent. Students, put another way, would have had to pay for 21 percent of those courses out of pocket.

Lyalin said that once he transferred from Jefferson Community and Technical College to the University of Louisville and its engineering school, it became untenable to coordinate his academic schedule with the Metro College work schedule. Lyalin said that the rigid nature of the College and its mandated night shift can limit academic options for students if they want to do the program throughout their college tenures.

Mayer, the UPS Worldport spokesman, told TYT, “We do not track graduation rate, as there is no long-term commitment, students are free to come and go from the program based on their needs.”

He added, “Some students with especially demanding majors may only participate for a year or two, but that still knocks 25 or 50 percent off the cost of an undergraduate degree.”

In 2003, UPS spearheaded a program similar to Metro College, the Chicagoland Regional College Program. According to CRCP’s website, it has admitted 3,800 student workers so far. Students have a choice of two weekday overnight shifts: either 10 p.m to 3 a.m. or 4 a.m. to 9 a.m . Wages start at $10.20 per hour. The CRCP has seven Chicago-area colleges, and 35 other affiliates, as partners.

Chicagoland, like Louisville, is a major UPS hub. CRCP students all work as package handlers at UPS’ Chicago Area Consolidated Hub (CACH) in Hodgkins, Illinois, about 17 miles southwest of Chicago.

Similar to Worldport, CACH is a highly automated facility, which, according to the industry publication Progressive Railroading, moves 10 percent of UPS’ entire nationwide volume of packages.

Mayer said that UPS also subsidizes college educations in exchange for part-time work with its Earn & Learn and Kentucky LOOP (Living Options and Opportunities Path) programs.

Earn & Learn offers tuition reimbursement up to $25,000, and up to $5,250 per calendar year, for students who work on shifts other than the night-shift in package-handler positions throughout the country.

Kentucky LOOP, Mayer said, also offers a housing stipend for students attending Jefferson Community and Technical College who live outside of the Louisville region, in addition to the tuition expenses covered by Metro College if they choose to work the overnight shift. LOOP, launched in June 2016, also allows students to participate in Earn & Learn.

“We call the program LOOP because that’s what we expect many of the students will do–come to Louisville for two years, get a degree or certificate, and loop back to their hometowns across the state to build their careers and communities,” Mayer said.

“Indoctrinated Early”
College students are not UPS’ only student laborers. The company also has a School to Work program for Louisville high school seniors. Those students work up to four hours per day—for a maximum of 18 hours per week—on afternoon shifts.

The School to Work program paid $10.10 per hour as of 2014. Successful participants can earn up to six college credits.

In his 2014 presentation, D’Andrea called School to Work “a way to get them indoctrinated early and get them through the pipeline.”

High school students can also get a foot in the door at Worldport through the SummerWorks program, which is not restricted to seniors. SummerWorks was created in 2011 by Louisville Mayor Greg Fischer to help area companies hire teens for summer jobs. Speaking at Worldport in March 2016, in front of a UPS airplane, Fischer announced that UPS was hiring 100 new high-school workers.

Students who complete the SummerWorks program can then segue into the School to Work program. The most recent Louisville budget calls for $465,000 in funding for SummerWorks, while last year’s budget provided $500,000.

While Abney has not said whether he will increase UPS hiring in the event of a tax windfall, UPS’ part-time student labor apparently will continue, if not expand. A UPS factsheet says Metro College “will continue to play a major role in helping attract and maintain employees for the expanded hub.”

According to the Jefferson Community and Technical College Strategic Enrollment Management Plan for 2016–2020, the school has set a goal of boosting its student-worker headcount at Worldport from 1,098 students in 2015 to 1,955 by the year 2020, an increase of almost 80 percent.

You can find all of our reporting on this here: TYT Investigates Series: Tax Cuts & Job Creation – UPS & FedEx.

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