USPS begs Congress to help cut its workforce by 20%

The US Postal Service issued a stark warning last night that it will be insolvent next month without major changes including the loss of 220,000 career positions by 2015. Although nearly half of this would be through attrition, for the remaining job losses the USPS said it needs help from Congress to bust layoff protections included in union deals agreed as recently as May 2011.

Along with the new workforce “optimisation”, USPS said today that it also needs independence from federal pension and benefit programs.

The Postal Service is set to reach its $15bn legal limit on government borrowing next month as this year’s losses are expected to pass the $8bn mark following last year’s $8.5bn loss.

Today, after informing workers yesterday, USPS publicly published its workforce optimisation white paper and discussion draft on benefit and pension programs.

It said it was facing the equivalent of bankruptcy thanks to the 20% drop in mail volumes over the past four years, from 2013bn pieces a year to 171bn.

Following plans to close up to 3,700 post offices, announced earlier this month, and cut administrative staff by 7,500 positions, USPS said today it can only afford a total workforce of 425,000 by 2015 – a big drop from the current 570,000-strong workforce, but a figure that also includes use of more non-career or part-time workers.

“Extraordinary request”

Today’s white paper states that with natural attrition from the workforce, it was expecting that forced job losses would number around 120,000 over the next four years.

To do so, the USPS said it would need Congress to help it break union agreements.

“We recognize that asking Congress to eliminate the layoff protections in our collective bargaining agreements is an extraordinary request by the Postal Service, and we do not make this request lightly,” said USPS in its white paper.

“The Postal Service is facing dire economic challenges that threaten its very existence and, therefore, threaten the livelihoods of our employees and the businesses and employees in the broader postal industry and overall economy.”

The request for additional measures to cut its costs come after USPS has already cut its operating costs by $12bn over the past four years, reducing its workforce by 121,000 since 2007.

It said today that it is now clear that volumes of First Class Mail – the big money-maker for USPS – “is declining even more rapidly than we had previously predicted”.

USPS said as a result, it was imperative that cost-cutting also accelerates, and for the Postal Service to take control of its own health benefit and pension costs.

The new legislative requests do not change ongoing efforts to get access to multi-billion dollar overpayments into the federal pension funds, and to get Congress to allow USPS to drop Saturday deliveries.

Unions

The plans issued last night and today by the USPS have been broadly attacked by the postal unions in the United States.

The National Association of Letter Carriers said the announcements came just days before the start of collective bargaining for its next contract, with negotiations to start August 18.

NALC President Frederic Rolando said his team would “resist this blatant attempt to subvert and circumvent collective bargaining”.

Rolando told his members that the USPS health and benefit proposals would “dramatically” cut their benefits below those enjoyed by other federal workers.

“Let me be clear: we would never agree to any benefit plan unilaterally designed by postal management,” he said, adding that Congress does not engage in union negotiations “and we do not believe they are about to do so”.

“USPS is free to bring these issues to the table. If they do so, we will bargain in good faith,” Rolando insisted.

The American Postal Workers Union, which ratified its current labour deal back in May, to run through January 2014, said it “vehemently” opposed the attempt by USPS to “destroy the collective bargaining rights of postal employees”.

APWU president Cliff Guffey said “Crushing postal workers and slashing service will not solve the Postal Service’s financial crisis.”

Guffey argued that the 2006 Congressional mandate to pre-fund future retiree benefits was what needed rectifying.

“We will not allow the hard-working men and women of the US Postal Service to be made the scapegoats for the outrageously poor judgement of Congress in instituting the pre-funding requirement.”

The postal unions, who are legally prevented from strike action in the United States, are supporting legislation put forward by Democrat Congressman Stephen Lynch to correct the pre-funding issue. However, the majority House Republicans, including Oversight chairman Congressman Darrell Issa, do not want to alter pension and benefit arrangements, preferring to put USPS into receivership if it cannot pay its bills.

“Heartened”

Last night, the mailing industry group Coalition for a 21st Century Postal Service said it was “heartened” to see that the USPS was acting aggressively to reduce its costs in the light of the economic downturn.

The group’s director, Art Sackler, said: “This reported proposal from the Postal Service deserves careful study. It will undoubtedly be controversial, but desperate times may require desperate measures. There are eight million private sector jobs that depend on the Postal Service, and these jobs may be threatened if action isn’t taken soon.

“While the pros and cons of the plan must be weighed carefully, we are heartened to see the Postal Service is determined to confront its financial crisis aggressively.”