Post Office to Cut Workforce by 20%

[Gaspar]

The USPS has released a plan to cut it's workforce again.  This time they will lay off 20% of postal employees.

http://www.washingtonpost.com/r/2010-2019/WashingtonPost/2011/08/11/National-Politics/Graphics/WhitePaperRIF.pdf

They are also proposing to drop out of the federal healthcare plan and shop private market plans that offer cheaper rates.  Collective bargaining contracts have brought USPS healthcare and pension benifits to 33% of the total labor cost of the USPS, and they can no longer sustain the deficits.

During the past four years, the USPS has lost $20 billion.
 
Some advisers recommend ending collective bargaining rights and reducing benefit programs to right the ship, but union officials indicate that any move in the direction of the union would be met with a fight, so they are left with no choice but to eliminate over 120,000 jobs.

"The APWU will vehemently oppose any attempt to destroy the collective bargaining rights of postal employees or tamper with our recently negotiated contract — whether by postal management or members of Congress,” American Postal Workers" Union President Cliff Guffey said.

[AquaMan]

See Wevus. Either doesn't listen or doesn't comprehend.

If your business model does not plan for keeping your labor force healthy or honoring your past commitments to them, then your plan either doesn't need labor because of its increasing dependence upon mechanization and technology (note USPS) is factoring in decreasing demand for your product (note USPS) or you have unfettered access to unlimited labor pools (note US labor market).

How does eliminating collective bargaining solve their basic problems which are low demand for their product, increasing dependence on digitally controlled machines and being hated by the general population? Its like being mad that Grand Lake has algae and draining it in retribution.

[Gaspar]

See Wevus. Either doesn't listen or doesn't comprehend.

If your business model does not plan for keeping your labor force healthy or honoring your past commitments to them, then your plan either doesn't need labor because of its increasing dependence upon mechanization and technology (note USPS) is factoring in decreasing demand for your product (note USPS) or you have unfettered access to unlimited labor pools (note US labor market).

How does eliminating collective bargaining solve their basic problems which are low demand for their product, increasing dependence on digitally controlled machines and being hated by the general population? Its like being mad that Grand Lake has algae and draining it in retribution.

I don't know???

Could it be because starting pay is $39,520 (with an extra $19,000 spent on benefits) to perform less complex labor than properly cooking french fries or delivering pizza?

Could it be that the equivalent position at UPS or FedEx starts at under $18,000 a year with "World Class" health and pension benefits that cost far less?

Could it be that the post office has to compete with solvent companies like UPS and FedEx who operate a business model that keeps their labor force healthy and employed?

I listen, and comprehend.  I just see a larger picture.

[RecycleMichael]

Could it be that the post office has to compete with solvent companies like UPS

I thought UPS workers were unionized and part of the Teamsters.

[Gaspar]

I thought UPS workers were unionized and part of the Teamsters.

They are. 

[RecycleMichael]

So when your write "some advisors" (translation, nobody who is really in a position to really give advice, but feel compelled to bash unions) you really just wanted to bash unions, too.

When you then compare in the same thought that they can't compete with a "solvent company' after you bash the union and that other company is also a union shop, you really mean that you are full of B.S.

If you hate unions so much, don't join one.

[Gaspar]

Not really bashing the union here.  Bashing the Post Office for gross mismanagement by allowing the union to influence wages and benefits beyond the point of insolvency.

FedEx (non-union) and UPS (union) do a fine job of competing against each other.  In fact FedEx is actually a contractor of USPS for air freight because they can do point-to-point cheaper.

UPS does an excellent job of labor relations with the Teamsters by not allowing policies that would result in competitive disadvantage. 

The Postal Worker's Union is the other side of that coin.  They have total control over the USPS.  You can't really argue about what that produces.

[we vs us]

The USPS doesn't charge actual costs for what they ship.  They are price-controlled, and despite the occasional 1 or 2cent increase for postage, they aren't necessarily mandated to cover their overhead.

Their overhead doesn't just include personnel costs.  It also includes outposts in rural communities across the country, which also means there are vehicle costs, building ownership or rental costs, and supply chain costs -- extending what amount to the USPS trucking lines into deepest Montana or wherever. 

What always gets lost in every USPS discussion is that it isn't a business, it is a Constitutionally mandated government service, and there're fundamental differences in expected outcome between the two.   

[AquaMan]

You just don't get it Gas. But that's alright.

Oh, please Lord, that Gas may have an opportunity some day to work for any one of the postal delivery operations he refers to so that he may speak with some insight. Some on here have worked at them and have noted the physically horrid conditions and stupid with a capital S management. One of my sons worked at UPS (they scammed him with his paycheck for heavens sake). My sister worked at USPS (contract only-probably how the average pay shows so high-benefits never kicked in for those folks). No experience with FedX but I did see that movie "Castaway". I doubt its much different.

[Gaspar]

The USPS doesn't charge actual costs for what they ship.  They are price-controlled, and despite the occasional 1 or 2cent increase for postage, they aren't necessarily mandated to cover their overhead.

Their overhead doesn't just include personnel costs.  It also includes outposts in rural communities across the country, which also means there are vehicle costs, building ownership or rental costs, and supply chain costs -- extending what amount to the USPS trucking lines into deepest Montana or wherever. 

What always gets lost in every USPS discussion is that it isn't a business, it is a Constitutionally mandated government service, and there're fundamental differences in expected outcome between the two.   

That's all good and true, but salary expenses make up over 89% of their expenditures at over $49 Billion dollars.

So, as I said before, when you look at other businesses (union, non-union, mandated, and any other classification you wish to offer) you come to the same conclusion.  UNSUSTAINABLE

The other expenses they are shackled with are minute compared to their labor expense.

[AquaMan]

Duh. After everything in distribution centers reached their peak of computerized mechanical systemization (back in the 80's) and could be expected to last long periods of time with little capital outlay other than maintenance, then yeah, your remaining costs are labor and will tend to make up a larger percentage.

It is still a labor intensive system at the loading/delivery level. Look, letter carriers are contract basis. Many USPS workers are contract basis. Their management is so strict that a single episode of being late by one minute puts you at risk of contract termination. So many people think its a cushy job. My long time letter carrier had to have knee replacement (occupationally related no doubt) even though he is in his 40's but refused to use his company medical benefits lest it jeopardize his contract. He knew they would find out he played high school football and would fight the claim.

People who have worked these jobs don't pay much attention to anti-union, anti-labor sentiments. If the USPS can't manage itself even with government protection advantages, then change the management, don't punish the labor.

[Gaspar]

Duh. After everything in distribution centers reached their peak of computerized mechanical systemization (back in the 80's) and could be expected to last long periods of time with little capital outlay other than maintenance, then yeah, your remaining costs are labor and will tend to make up a larger percentage.

It is still a labor intensive system at the loading/delivery level. Look, letter carriers are contract basis. Many USPS workers are contract basis. Their management is so strict that a single episode of being late by one minute puts you at risk of contract termination. So many people think its a cushy job. My long time letter carrier had to have knee replacement (occupationally related no doubt) even though he is in his 40's but refused to use his company medical benefits lest it jeopardize his contract. He knew they would find out he played high school football and would fight the claim.

People who have worked these jobs don't pay much attention to anti-union, anti-labor sentiments. If the USPS can't manage itself even with government protection advantages, then change the management, don't punish the labor.

Again, if you pay no attention to whether they are union or non-union, you still come to the same conclusion that they operate an UNSUSTAINABLE enterprise due primarily to the cost of labor.

If we were to raise postage costs to competitive market standards with UPS and FedEx they would still operate an UNSUSTAINABLE enterprise due primarily to the cost of labor.

It is obvious that they need to increase postage costs significantly, but that still leaves them with two additional  choices in order to reach sustainability:

1. Decrease the cost of labor by bringing salaries and benefits down to competitive market levels, ultimately saving the USPS, if it can remain competitive in providing service.

2. Decrease the total labor force, therefore reducing service level, and hope they can catch up with increased rates alone.

[AquaMan]

That is an unjustifiable position and unsupportable conclusions. It may be your opinion but the USPS is not the same operation as the other two. Its goals for distribution are only domestic in nature for one thing. Seen any USPS trucks delivering to remote regions of foreign countries like "Brown"?

BTW, what is the cost of their management? Is that included in your labor costs and at what level does the differentiation between labor and mgmt occur for them? If you are figuring total labor cost are you/they counting lower levels of management that are often promoted to keep them out of union purview?

Not so simple when you look at the details. Real easy to just say they are unsustainable because of high labor costs. That simplistic, bombastic thought process was on display last nite at the debate.

[Townsend]

last nite at the debate.

..was cringeworthy

[we vs us]

Interesting point re: employee costs at the USPS, via TPM:

http://talkingpointsmemo.com/archives/2011/08/more_on_the_postal_service.php?ref=fpblg

"As a union organizer for SEIU, I have a distinctly labor perspective on the USPS crisis; and, I think that there are two HUGE pieces of information that are often left out of the "The USPS is an aging dinosaur" narrative often perpetuated by the mainstream media.

Firstly, the USPS is subject to a regulation forcing them to pre-pay retiree health benefits for 75 years in the future. This means that they are paying for health benefits for postal carriers who haven't yet been born. The cost of this regulation (a regulation not required of any other government or private entity) was about 5.5 billion dollars in FY 2011 and was even higher in previous years.

Secondly, the Postal Service has overfunded their pension system by about $75 billion dollars in recent years. Thus, there is money in a separate account that could more than handle the current shortfall in postal revenue ($0 of which comes from tax dollars)."

Obviously, take it for what it's worth . . . but if true it would lend some very interesting perspective to the labor costs.  I'm looking for back-up citations now (not that anyone on this board really cares about that but . . .).