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What's up with the U.S. Postal Service?

August 29, 2011 – Scottsdale, AZ --  Facing losses in the neighborhood of $9 billion this year alone, the U.S. Postal Service is on the brink of insolvency unless drastic measures are taken.  Due in part to a steep decline in mail volume and the high cost of employee’s total rewards packages, the USPS  has been bleeding money to the tune of $20 billion over the last four years.  So, what's next for the U.S. Postal Service?

While Congress considers scaling back mail delivery to five days per week, leaders at the U.S. Postal Service are looking at more immediate solutions to help cut their bottom line.  On the top of their lists are steep cuts to their workforce and a withdrawal from federal health and retirement plans.    Earlier this month, employees were notified of a draft plan that would cut approximately 120,000 jobs and rein in the costs of health and pension plans.  Currently, health and retirement plan costs make up 1/3 of total labor costs at the USPS.  

The plan would require congressional approval and would involve breaking union labor contracts.  The American Postal Workers Union and the Postal Service struck a five-year deal last spring, and negotiations with the National Association of Letter Carriers began earlier this month.  Opponents argue that congressional action could set a precedent for lawmakers to become involved in other federal labor-management deals and, at a time when federal worker’s pay and benefits are under attack, the outcome at USPS could be a sign of things to come. 

It’s clear that the Postal Service is at a nexus, and today’s news that they spent $4.3 million for workers to do nothing in the first six months of 2011, does little to bolster the agency’s reputation. 

I guess we’ll just have to wait and see what happens. 

The opinions expressed are solely those of the author and do not necessarily represent those of WorldatWork.

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Mon September 12, 2011 12:44 PMReport Abuse
Paul Weatherhead
Program Manager
Member Since: 5/1/2000
Comments: 611
 

Sorry I didn't see this discussion sooner. 

This blog has missed the main thrust of our financial problems - Congress operating with a hand deep in our pockets, and not allowing us to truly act like a business.

Independent studies have shown that Congress is overcharging us about $5-7 billion a year in retirement health benefits.  The accumulated overcharge is $70 billion - about one year's worth of revenue.  To change this overpayment requires an act of Congress; but they are dealing with major budget issues and need those overcharges.

So what can the USPS do to be more profitable? 

  • Increase prices?  Nope, federal law restricts our price increases. 
  • Reduce our working hours?  Nope, federal law requires 6-day operations.
  • Close small, unprofitable post offices?  Nope, federal law says profitabilty is not a valid reason to close a post office.  Even though many small town post offices have nearby larger towns that could serve the delivery points, small towns view the post office as their identity.  Politicians love to demand productivity at the USPS, but god forbid they close any post offices in their voting district.   

What has the USPS done to be more productive?  When I first joined the USPS, career headcount was approaching a million.  Just a few years ago it was down to 800,000.  Now down to 600,000.  Technology moves the mail.  Go visit a processing and distribution facility near every large city and see letters and flats moving faster than the blink of an eye to be bar-coded, scanned and sorted to different locations.  The USPS handles more packages in one day than UPS and Federal Express in one year.  Countries all over the world visit the USPS to see how we move 40% of the world's mail.    

Of interest to compensation professionals is our award-winning pay-for-performance program built on a balanced scorecard of customer service, productivity, workplace environment, and financial performance measures that link rewards to objective, pre-established performance expectations.  This program has driven major success for actions that we have control over, and helped us better address issues we do not have control over.  But more freedoms are necessary to address issues we can not control.  

Don't worry, Sean, most of the public and press don't fully understand the issues either.

 
Wed August 31, 2011 8:35 AMReport Abuse
E Brennan
Senior Associate
Member Since: 4/19/1979
Comments: 589
 

"Letter carriers haven't been affected by standby time."  Some of the issue appears to come from problems in timing.  FedEx pilots experience weather delays and have to wait for flight departure approvals, too.  In addition, USPS seems to be prohibited from laying off excess support staff not engaged in actual delivery services.  Our top-posting member from that enterprise probably can't comment, for obvious reasons. 

 
Wed August 31, 2011 7:03 AM (edited 9/1/2011) Report Abuse
Frank Giancola
Researcher Writer
Member Since: 12/1/2004
Comments: 250
 

They have fierce competition from e-mail, Fedex, and UPS. If their employees don't have any mail to handle, something has to be done.

 
Tue August 30, 2011 9:14 AM (edited 8/30/2011) Report Abuse
E Brennan
Senior Associate
Member Since: 4/19/1979
Comments: 589
 

Saying that faithfully obeying a collective bargaining agreement to pay standby time is paying workers to do nothing is rather unfair.  Sitting at a stop light is "doing nothing" too, particularly appropriate if it is a police officer on the public payroll. 

If you read the link under do nothing in the embedded  newspaper article you will get the full story about the terrible labor contract terms that bind the Post Office.  Don’t blame USPS for the competitive strength of the private delivery services who won’t cover remote areas and who are not covered by similarly onerous union rules.  Anyone who has worked in a uniformed service knows you spend a lot of your time sitting around waiting for those few moments of action that totally justify your role.