Congress questions USPS ability to cut costs through union deal

The US Congress saw a fairly heated exchange today, as the powerful House oversight committee examined last month’s collective bargaining agreement between the US Postal Service and the American Postal Workers Union. The 4.5-year agreement, yet to be ratified by APWU members, was described by both the USPS and the union today as one of “give and take”, with both sides making key concessions to seal the deal after eight months of negotiation.

The two sides agreed a two-year wage and cost-of-living adjustment freeze, deferred 3.5% wage increase and reduction in healthcare contributions, while offering the USPS more flexibility in use of full-time and part-time workers.

But House Republicans expressed doubts that the deal would save $1.7bn in wage costs over its term, and expressed concern about an extension of the union’s previous protection from lay-offs.

Postmaster General Pat Donahoe told Congress that the deal was the “best we could have achieved under the current law”, but appeared to avoid promptings as to whether that meant it was actually a “good deal”.

Although the USPS has reduced its head count by 110,000 employees in the last two years, committee chairman Darrell Issa was concerned at the Postmaster General’s remark that the Postal Service would be able to run with 400,000 employees by 2020, compared to the current 572,000.

Issa said to the PMG: “Today you’re carrying almost 200,000 more people than you would need if you were going to start an organization to do the job that you currently do.”

Florida Congressman Dennis Ross, who chairs the Oversight committee’s postal subcommittee, said: “It is unclear how this deal, which could serve as a template for deals with other unions, would give the USPS the ability to reduce its work force costs and remain solvent.”

The Oversight committee appeared to divide fairly clearly down partisan lines, the Democrats expressing more support of the USPS and its workers, the Republicans gunning for stronger cost reductions.

Ranking member Cummings, the top Democrat on the committee, repeatedly expressed gratitude for the work of the USPS and its employees, and applauded both the USPS and the APWU for their achievement in agreeing the deal.

The Congressman from Maryland recalled that the Postmaster General had told him previously that if all the USPS union deals could be agreed similarly to the APWU deal, “we could solve all kinds of problems”.

Flexibility

During their testimony, the Postal Service representatives spent much time urging Congress to tackle the USPS obligations to pre-fund its retiree health benefits system – which Donahoe said was “the big issue” needing Congressional attention, rather than labour costs.

But in discussing the labour deal itself, the Postmaster General and his governors repeatedly stressed the importance of the increased worker flexibility within the union deal. Donahoe paid tribute to the APWU’s willingness to take the USPS financial circumstances into account in making the allowances.

The deal allows the USPS to use up to 20% part-time workers in clerical work, and up to 10% in vehicle maintenance divisions – the previous union deal had set a 5.9% limit.

As well as increased use of part-time workers, who can be sent home when not needed, the APWU is also allowing a more flexible approach to full time workers, who could have their work patterns vary from week to week depending on requirements.

Miller insisted everything had been done in the APWU contract negotiations to cut the USPS labour costs, which represent around 80% of its total costs. The APWU itself has 220,000 members, accounting for around 29% of the USPS costs.

“Whether we were in financial dire straits or not, I think it would not be responsible if we did not look for every opportunity to cut costs in a labour negotiation like this,” said the USPS governor.

Miller stated his belief during the hearing that if the APWU deal had not been negotiated as it was, after eight months of talks with the union, the process would have moved to arbitration – and he suggested arbitration would have been worse for the Postal Service.

“The system is biased in favour of labour and against management – the union knows this and we know this,” he said, adding: “If we want a better deal, we have to change the law.”

Heated

Tempers particularly flared during the committee hearing today as the APWU was questioned about its view on the USPS deal, which appeared connected to national tensions in the US at the moment regarding the view of certain politicians on unions and collective bargaining rights.

Congressman Ross suggested to APWU president Cliff Guffey that the USPS work force would have to do more to adapt to the changes in the postal market and particularly declining mail volumes.

“In order to adapt, the USPS and its work force have to adapt to the changes in the market – not only the internet, but technology as a whole,” Ross said, adding that even when the economy had been strong in 2006, mail volumes had been declining.

In response, giving his view on the contract, Guffey said: “The agreement was a give and take. We gave some flexibility in exchange for the security of our people from various things.”

The exchange then almost broke down as the Congressman from Florida alleged that the union was effectively paying its members to vote in favour of the USPS contract, pointing to offers of incentives on the APWU website.

Guffey explained that the incentives were designed to encourage units to increase voter turnout, not determine the vote result.