USPS cuts staff bonuses as losses hit $1bn per month
The US Postal Service has canceled staff bonuses and frozen its officer pay-for-performance incentive program, as it continues to take emergency measures to stay financially afloat. The move follows on from last week’s decision to suspend its $115m biweekly payments into the federal pension fund, as the USPS faces the farthest reaches of its government credit limit this summer.
From today, the USPS confirmed that its discretionary pay awards for administrative and management staff were suspended until further notice.
The move does not affect union members where awards are outlined within collective bargaining agreements.
The officer and executive pay-for-performance program will also be frozen until further notice. The program was based on certain targets being reached, and in past years has seen top executives receiving bonuses in the high five figures, while last year saw then-Postmaster General receiving $228,088 in incentives.
A week ago today, the Postal Service issued its financial results for May 2011, which showed a net loss for the month of $1.3bn, more than double the loss seen in the same month last year.
In the year to date, the Postal Service has already made a $4.7bn loss, although $3.6bn of that has been its Congress-ordered requirement to pre-fund future healthcare costs for retirees.
Without the prefunding requirement, losses would be $589m for the year to date, $434m in May 2011.
Along with the pension payments set by Congress back in pre-recession 2006, the Postal Service continues to be hit hard by declining mail volumes.
Mail volumes for May 2011 were down 1.9% compared to the same month last year, with volumes in the money-making First Class Mail segment were down 7.2% as more Americans use internet channels for activities like bill payment.
USPS executives believe losses could reach as much as $8.3bn by September, and on the back of last year’s $8.5bn loss that would squeeze the Postal Service up against its $15bn ceiling on government borrowing.
But confirming the bonus freezes today, the Postal Service said that priority had to be for Congress to step in to help restructure its pension and benefit obligations.
Despite multi-billion dollar cost reductions, it said it still desperately needs Congress to bring in legislation to help it maintain financial stability.
The plea will find little interest from the Republicans that currently control the House of Representatives, however, with postal subcommittee chairman Dennis Ross expounding his views through social media in recent days that there has been no overpayment by USPS into its pension funds.
Last week saw House Oversight Committee Chairman Darrell Issa unveil a bill that ignored the pension and benefits issue entirely, and virtually assumed that the US Postal Service will default on its government financial obligations this September.
The legislation proposed measures that would set up a form of receivership for USPS when it fails to pay its federal bills.
National Association of Postal Supervisors President Louios Atkins said yesterday the legislation was “dangerously misguided” in ignoring USPS pension overpayments while setting up more government control on the struggling Postal Service.
“We continue to support proposals that will authorize the Postal Service to use billions of dollars in pension overpayments – as conclusively determined by the Postal Regulatory Commission and the Inspector General of the Postal Service – to help prepay its retiree health care costs,” said Atkins.
“We urge the Congress to adopt the common-sense measures proposed by Rep. Stephen Lynch and Senator Tom Carper and Senator Susan Collins that would address the overpayments issue and help restore the Postal Service’s financial health.”