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August 12, 2011

Nor Rain, Nor Snow, Nor Mass Layoff [Ben]

The United States Postal Service has made it clear that they need to reduce their overhead, 80% of which is employee salary and benefits. FYI, the postal service is 60% unionized with an average hourly income of $41.15.[Update: I want to make note I think this includes benefits, but I'm not certain]

Their plan is twofold. First up on the chopping block are 120,000 employees that need to be laid off by 2015. Then, in order to further reduce operating costs they need to withdraw from the federal healthcare system imposed on them by Congress.

But not to worry, they have plenty of time to implement this plan. Wait, did I say plenty of time? I meant to say one month.

The Postal Service said, “We will be insolvent next month due to significant declines in mail volume and retiree health benefit pre-funding costs imposed by Congress.”

The biggest obstacles to reform and layoffs are the American Postal Workers Union and Congress. The APWU has a clause in their contract that prohibits layoffs. This agreement can only be voided by congress. It seems unlikely Democrats will support such an action, but they might not have much of a choice:

How Congress will respond to the postal proposals remains to be seen. Many Republicans, including those who have sponsored legislation that labor considers anti-union, may support the plan. Some Democrats probably would back union opposition. But the Postal Service’s critical financial situation could make Democrats have second thoughts.

The USPS hasn't been a profitable organization for some time(if they ever were). As a matter of fact in the past four years they've run up a 20 Billion dollar deficit. In 2010 alone they lost 8.5 billion.

It's easier to understand how they could lose so much money when you consider they have 600,000 employees and 480,000 pensioners. I reckon it's hard to be profitable when you have (almost) a 1:1 ratio of retirees to employees.

I can only surmise that along with layoffs, we'll be seeing higher stamp prices and shortened delivery weeks.

Now you know why you've been seeing these Postal Workers Union commercials on TV.

[Update] It should be noted that Andy wrote a great post on the APWU ads about a week ago.

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posted by Open Blogger at 10:45 AM

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