U.S. Postal Service Starts Union Negotiations

Facing a projected loss of more than $8 billion for this fiscal year and a projected need to reduce its workforce by 220,000 employees by 2015, the U.S. Postal Service last month began contract negotiations with the National Association of Letter Carriers, AFL-CIO, and the National Postal Mail Handlers Union.

The NALC represents 200,000 employees who work as letter carriers delivering mail primarily in urban areas. The NPMHU represents 47,000 employees who work in mail-processing plants and post offices. Respectively, wages and benefits for the NALC- and NPMHU-represented employees exceeded $15 billion and $3 billion last year. Both contracts expire Nov. 20.

Claiming that it will be insolvent this month as a result of mail volume, increases in costs, and managing a Congressional mandate, the postal service is making attempts to resolve financial strains.

The effects of the recession coupled with the ongoing shift to digital communications resulted in mail volume plummeting 20 percent to 171 billion pieces last year, the service reports. Over the last four fiscal years, the postal service reduced its size by 110,000 career positions and saved $12 billion in costs. Expenses, however, continue to exceed revenues in part due to an overstaffed workforce, information from the postal service says.

A white paper states that the postal service should have its own health benefits program as “fringe benefit costs constitute roughly 33 percent of total labor costs.” In addition, the postal service says that “approximately 80 percent of USPS total costs are labor costs. The Postal Service cannot address its current economic challenges without gaining control of its legacy costs, defining their breadth and scope, and setting up a reasonable program to fund them.”

The postal service receives no tax dollars for operating expenses, and relies on the sale of postage, products and services to fund its operations.

“If the Postal Service was a private sector business, it would have filed for bankruptcy and utilized the reorganization process to restructure its labor agreements to reflect the new financial reality,” said Anthony Vegliante, chief human resources officer and executive vice president. “Wages and benefits for all employees represent nearly 80 percent of our costs. To remain solvent, we must negotiate contracts that address our total labor costs and enable us to downsize quickly to adjust to America’s changing mailing needs while being fair to our customers and employees.”

In July, the postal service announced that it may be downsizing the number of its post offices by more than 10 percent – with some of these closures occurring in northern Wisconsin, depending on the results of postal service studies related to fiscal health.  A determination about these potential closures is yet to be made.