NALC President: Five-Day Delivery Not The Best Economic Solution For USPS
President William H. Young has released a statement in response to media reports that Postmaster General Jack Potter is seeking to curtail the Postal Service to five-day delivery. “The continued appearance of letter carriers delivering the mail to the doorstep of every home and business and bank and credit card company six days a week is absolutely essential to economic recovery.” In his statement, Young makes the case for an alternative economic solution: H.R. 22.
On January 29, 2009, NALC President William H. Young urged letter carriers across the country to remain steadfast in the face of media speculation that the U.S. Postal Service plans to eliminate one day of delivery service. He issued the following statement:
There are no plans to eliminate six-day delivery. NALC is working with the Postal Service and other postal organizations on a common-sense approach to overcoming the economic crisis. Neither the American public, nor the postal industry, nor the key leaders of Congress, nor the NALC support any reduction in service.
Making the reduction of days of delivery THE answer is a red herring that the media has misleadingly laid at the doorstep of Jack Potter, the postmaster general. While Potter asked Congress for the flexibility to temporarily and selectively reduce the frequency of delivery if conditions worsen dramatically, he made it absolutely clear that eliminating a day of delivery was the last thing he wants to do. As NALC has done, Potter called on Congress to enact sensible financial reforms to
correct the schedule for pre-funding retiree health benefits. That would protect retiree benefits while freeing up current funds to help the Postal Service overcome the devastating effects the financial meltdown has had on the U.S. economy.
The United States Postal Service is a critical part of the country’s financial infrastructure. In a time of national financial crisis – with tens of millions of citizens under distress, millions of jobs disappearing, millions of homes being foreclosed, retail enterprises shutting their doors, factories closing – the very last thing this nation needs is to fracture the service that binds the nation together. The continued appearance of letter carriers delivering the mail to the doorstep of every
home and business and bank and credit card company six days a week is absolutely essential to economic recovery.
Existing law requires USPS to do something no other agency of the federal government, no state or municipal government, and no private company in the Fortune 500 (or as far as we know, anywhere) is required to do: to pre-fund its retiree health obligations. Not only that, it requires that it pre-fund 80 percent of these costs over the next eight years – even though the very few companies that voluntarily pre-fund these benefits amortize them over 30, 40 or 50 years. While it certainly makes sense to gradually pre-fund such long-term obligations, it makes no sense to maintain
such an onerous schedule.
In 2006, Congress mandated pre-funding to the tune of $5.5 billion to $5.7 billion per year over the next 10 years. It has already paid $32.6 billion into a special fund for this purpose. On top of this, USPS pays about $2 billion per year for its share of current retiree health premiums. To avoid unnecessary service cuts, Congress should enact H.R. 22, a bipartisan bill that will allow USPS to pay for its current retirees’ health premiums out of the existing retiree health fund. Such a
change would save USPS $2 billion a year while it continues to build up its retiree health fund for the future. Indeed, if H.R. 22 were enacted, USPS would still be pre-funding its future retiree health obligations at a greater rate than any company in America.
NALC will vigorously resist any legislative attempt to slash the number of days of delivery. NALC members should consult upcoming Bulletins and future issues of The Postal Record for the latest information on this important issue.
USPS Financial Solutions Must Include Eliminating Worksharing Discounts
Postmaster General’s Testimony Offers Little Insight
Burrus Update
The long-awaited announcement about the Postal Service’s plans regarding the dramatic decline in mail volume and revenue was presented on Jan. 28 to the Senate subcommittee with jurisdiction over postal affairs, when Postmaster General John E. Potter explained the crisis facing the USPS, and outlined management’s proposed response.
As previously reported to the APWU membership, postal volume has dropped precipitously, and, unless Congress provides legislative relief and the economy recovers, the Postal Service will become unsustainable in the near future.
In testimony before the Federal Workforce, Postal Service and the District of Columbia Subcommittee, the PMG once again cited electronic communications as a central factor in the decline of mail volume — an excuse that has run its course: Postal officials should be prohibited from offering this lame explanation ever again.
Let the record show that mail volume has not declined primarily because of electronic communication. In the 235-year history of the Postal Service, the years with the highest volume were 2005, 2006, and 2007, with 2006 being the highest. Didn’t the Internet and e-mail communication exist during those years? The facts indicate that they are not the principal causes of the steep decline of mail volume at this time.
Certainly, if these modes of communication had not been invented, postal volume would have expanded significantly more than it did, but the same can be said of the development of the telegraph, the telephone, and the fax machine.
The cause of the Postal Service’s current crisis is simple: “It’s the economy, stupid.”
Legislative Relief
The PMG’s testimony was intended to lay the foundation for an appeal to Congress for relief from the “crippling cost burden imposed by ‘Postal Reform legislation’ requiring that we prefund the employer premium for the health benefits of future retirees.” The Postal Accountability and Enhancement Act of 2006 requires the pre-funding of this liability through annual payments ranging from $5.4 billion to $5.8 billion over the 10-year period from 2007 through 2016.
Potter warned that without near-term relief from this stifling obligation, the United States Postal Service will be unable to survive in its present form.
I concur with the PMG’s conclusion that achieving relief from the unfunded healthcare liability is crucial to the survival of the Postal Service. Amending the Postal Accountability and Enhancement Act in order to reduce the USPS payments for retiree healthcare is essential. Unfortunately, this aspect of Potter’s testimony received scant attention from the press.
The options are to include this legislative relief in the stimulus bill currently being considered by Congress, or through separate legislation. Each alternative presents problems, but we must find a way to see that it is provided. The Postal Service must have time to develop long-term solutions to the serious financial deficits.
The solutions must include the elimination of “worksharing” discounts and contracts that duplicate work performed by postal employees.
A recent announcement by Pitney Bowes demonstrates how excessive worksharing discounts deprive the USPS of needed revenue. The mailing industry powerhouse, which “pre-sorts” mail that is ultimately given to the Postal Service for delivery, has opened a new mail facility in Corona, CA, which is expected to process 750 million pieces of mail annually. The 84,000 square-foot worksharing facility will employ approximately 100 workers. Clearly, Pitney Bowes believes worksharing will be profitable for them, but what about for the USPS? The plant will duplicate work that could be performed by postal employees in facilities that already exist.
Platitudes
Beyond relief from the obligation to pre-fund the retiree healthcare liability, the platitudes in Potter’s testimony revealed little about plans that have a chance of preventing a disaster. The PMG boasted of work-hour reductions that have paralleled the unprecedented deficits. But the crisis persists despite this massive decline in work hours, so it’s clear that disrupting the lives of hundreds of thousands of employees is not a solution to the Postal Service’s fiscal woes.
The other initiative under consideration is the possibility of a reduction in the number of delivery days from six per week to five. This proposal is the first cousin to work-hour reduction schemes, and if adopted, would not arrest the financial slide. The impact on APWU-represented employees would be to eliminate the possibility of moving to letter-carrier vacancies when our members are identified as “excess.” If mail processing also is curtailed for a day, a proportional reduction in APWU-represented assignments also would occur.
The American public would lose one day of mail service, which would stretch to three days when the additional day is combined with Sunday and a Monday holiday. Such delays will drive essential mail to private carriers, who will continue to deliver seven days a week.
Layoffs
The reduction of the employee complement through layoffs was not presented to the congressional subcommittee by the Postmaster General and does not appear to be under consideration at this time.
Contractual protections against layoffs require management to engage in a detailed process that includes severance pay for employees who volunteer to retire early. These requirements would make it extremely expensive to layoff employees, so, while layoffs were feared, this possibility no longer seems to represent a threat.
But the elimination of layoffs as a near-term option offers very little reassurance to the remaining part-time employees and those on light duty. The hours of these employees are being reduced to a level that is tantamount to a layoff. Area and District managers have issued orders to limit the hours of these employees to levels that cannot support a family — or an individual. The contractual limits on the use of casual employees to the detriment of PTFs or light-duty employees should be strictly enforced.
I find great comfort in knowing that the PTFs who were converted to full time as a component of the 2006 Collective Bargaining Agreement now enjoy the eight-hour guarantee, and are not suffering a serious reduction in their work hours.
The Postmaster General’s testimony has removed the cloud of impending layoffs, but it offered little comfort that there are realistic plans to reduce the impact of the current crisis on postal employees and the Postal Service as a whole.
William Burrus
President
USPS In Financial Crisis, PMG Potter Tells Congress
PMG Jack Potter today told a U.S. Senate subcommittee that worsening conditions in the economy now point to a further 12-15 billion mailpiece decline and a net financial loss of $6 billion or more in FY 2009.
Potter also proposed changes in current law to give the USPS Board of Governors the flexibility to reduce the number of mail delivery days each week. Click here to read Potter’s formal statement to the Senate subcommittee.
“We have stretched the limits of our system as they have never been stretched before,” Potter said in his formal statement to the Senate panel. He pointed to a cumulative $20 billion in cost reductions since 2002 and the elimination of 120,000 jobs through attrition. He noted, however, that volume is outpacing the speed at which the Postal Service can adjust operations. “No one knows at what point mail volume will bottom out,” he said.
Among further cost-cutting actions already taken or under way, Potter cited:
An indefinite suspension in the facilities construction.
Salary freezes for officers and executives at 2008 levels.
A reduction in staffing at Headquarters.
Reductions in staffing at the nine Area Offices.
Early retirements — USPS has accepted more than 14,000 to date.
Reduced travel budgets.
Consolidation of duplicative mail processing operations.
Potter also noted that USPS continues to pursue revenue growth by vigorously enhancing its shipping service, delivering record on-time performance with its mailing services and investing in modern technology and web services. Nevertheless, he said structural changes in customer mailing behavior, robust competition in all markets and the worsening economy have placed USPS in a grave financial situation. “If current trends continue,” Potter said, “USPS could experience a net loss of $6 billion or more this fiscal year.” The maximum loss the Postal Service can absorb under current law is $5 billion.
Potter said it was now time to consider options that have not been on the table up to now. He said he would work with union leadership to “create needed levels of workforce flexibility” to ensure USPS viability and to protect jobs. He also said worsening economic conditions may make it necessary to “temporarily reduce mail delivery to only five days a week.”
Potter called for legislative change to reduce the crippling cost burden imposed by the Postal Act of 2006 that requires USPS to prefund future retiree health benefits in addition to paying for current benefits. Last year, the combined $7.4 billion cost accounted for nearly 10 percent of the USPS operating budget. Without this requirement, USPS would have posted positive net income in 2008 instead of a $2.8 billion loss.
Potter said the intent of the law is sound, but that the aggressive payment schedule was unsustainable in light of the growing deterioration in the U.S. economy and the mail. He noted that the change would not diminish USPS responsibility for funding employee health benefits, and it would not increase health benefit premiums for current and future retirees. He also said the change would not affect benefits.
source: USPS
PMG Potter to Address Worsening USPS Finances Wednesday
Source: National Association of Postal Supervisors (NAPS) Legislative and Regulatory Update – January 26, 2009 (NAPS.org)
Rumors have been swirling throughout the Postal Service in recent weeks about big changes coming: significant plant consolidations, area and district staffing reductions, craft work-hour cutbacks, the list goes on. The Postal Service has remained mum about these rumors. One union president has been particularly candid about the prospects for significant change. Mailers are concerned about the possibility of USPS filing for an emergency rate increase in 2009, to supplement the annual rate hike available in May.
Greater clarity should come about on Wednesday afternoon when Postmaster General Jack Potter appears before a Senate postal oversight panel to testify on the deteriorating financial health of the Postal Service and what can be done to stabilize the ship.
Sen. Tom Carper (D-DE), chairman of the Senate Federal Services Subcommittee, has called the hearing to learn how badly the flagging economy is hurting the Postal Service and whether the Postal Service should receive any kind of relief, and if so, what kind and how much.
The Postal Service is Hurting
There’s no doubt about it. The worsening economy has thrown the Postal Service into a financial tailspin. Mail volume is declining at a pace not seen since the early 1930’s. The business sectors that have provided the greatest amount of mail to the Postal Service – financial services, retail and housing – are among the industries hardest hit by the worsening recession. Direct mail campaigns are being cut back or coming to a screeching halt. In 2008, the Postal Service lost $2.8 billion, and volume declined by 9 billion pieces. Current trends indicate that USPS this year could lose $4 billion or more.
No one knows whether the lost mail volume will return when the economy revives, or how long that will take. Significant structural changes to the Postal Service, even to its business and products model, are inevitable, but those take time and are several years down the road.
The USPS can only do so much in shedding costs, while preserving service quality and its universal service obligation. Given the way the Postal Service is a barometer of the economy, it’s no wonder that the Postal Service’s finances have tanked.
The House version of the economic stimulus package, set for a vote in the House on Wednesday, does not include relief for the Postal Service. The Senate stimulus measure is still being crafted, but questions remain whether an appropriation for the Postal Service is necessarily the right move.
Reducing the Strangle Hold of Prefunding Postal Service Retiree Health Care
One of the best ways to provide financial relief for the Postal Service is through the reduction of one of the Postal Service’s largest costs – its payments toward the future health insurance premiums of its retirees. This prefunding obligation was created by the 2006 postal reform law, with a payment schedule far too ambitious, especially now. No federal department or agency has this kind prefunding obligation, nor are USPS or FedEx required to do the same, nor do they.
In response, Rep. John McHugh (R-NY) and Rep. Danny Davis (D-IL) have introduced legislation, H.R. 22, that will address the USPS prefunding requirement and make a simple but significant change in the law. HR 22 will permit the Postal Service to satisfy its payment for the premiums of current retirees out of the $32 billion that USPS has already set aside (including the infamous “escrow” lockbox) for future retiree health insurance premiums.
NAPS President Ted Keating and the presidents of the six other postal management associations and postal employee unions urged the Congressional leadership last month to include prefunding relief for USPS in the economic stimulus package.
The change would not affect the health insurance benefits of any retiree. Nor it is a bailout; it simply would revise the payment schedule under which the Postal Service makes down payments for the health insurance premiums of its future retirees.
In these difficult economic times, the question becomes: Should the Postal Service be forced to annually prefund $5.4 billion for future retirees, in addition to paying the $2.3 billion for current employees, when it cannot afford these payments right now and is going deeper and deeper into debt?”
Wednesday’s Senate hearing will take a closer look at this issue and others.
Bruce Moyer
NAPS Legislative Counsel
USPS Board of Governors to Meet Feb. 3-4, 2009 in Washington, DC
WASHINGTON, DC — The Board of Governors of the U.S. Postal Service will meet in Washington, DC, at Postal Service Headquarters, 475 L’Enfant Plaza, SW, on Feb. 3-4, 2009. The public is welcome to observe the Board’s open session, scheduled to begin at 10:30 a.m. on Feb. 4 in the Ben Franklin Room on the 11th floor. The Board is expected to discuss the following items:
Wednesday, Feb. 4 at 10:30 a.m.
- Minutes of the previous meetings, Nov. 12-13, Dec. 2, 2008, and Jan. 22, 2009.
- Remarks of the Chairman of the Board.
- Remarks of the Postmaster General and CEO.
- Committee reports.
- Quarterly report on service performance.
- Update on financial performance.
- Tentative agenda for the March 31-April 1, 2009, meeting in Washington, DC.
- Election of Chairman and Vice Chairman of the Board of Governors.
Postmaster General Names New Chief Financial Officer
Postmaster General Jack Potter today announced appointments to key leadership positions. Joseph Corbett has been named chief financial officer and executive vice president. Susan Plonkey has been named vice president, Sales.Corbett has more than 25 years of accounting, finance and consulting experience. Most recently, Corbett was president and managing director of FinSol, a finance and accounting consulting business he founded in 2005. He also has served as senior manager at KPMG, where he began his professional career; director of internal audit at NVR; controller, chief accounting officer and chief financial officer at Intelstat, Ltd. and chief accounting officer and chief financial officer at BearingPoint.
Corbett begins his new duties on Feb. 2.
“I am extremely pleased that Joe is bringing his knowledge and skills to our organization,” Potter said. “The severity of the current economic downturn has profoundly challenged the Postal Service. Joe’s depth of experience and particular expertise in guiding the financial activities of large and complex organizations through times of change, make him ideally suited for this position.”
Corbett replaces H. Glen Walker, whose leadership was instrumental in aligning financial systems with the complex requirements of the Postal Accountability and Enhancement Act of 2006, Potter said.
“I am grateful for Glen’s accomplishments,” he said. “Glen’s efforts significantly enhanced our financial transparency with a transition to SEC-like financial reporting and implementation of provisions of the Sarbanes-Oxley Act.”
Walker will work closely with Corbett to ensure an orderly transition of responsibilities.
The current economic climate is one reason the Postal Service is moving forward with one, integrated sales and service team. The Sales team now will include the Business Service Network, Business Development Teams and the analytical support provided by the Customer Relationship Management unit.
Integrating all revenue-generating departments within the Postal Service will allow the organization to focus on serving the needs of our customers in order to grow the business. Susan Plonkey will head this effort.
Plonkey helped create Business Development Teams, cross-functional business units with customer service as its primary driver. The teams are an example of a new way of looking at customer support and revenue generation and represent the first step toward the new sales function.
“As we examined our commercial activities, we saw the opportunity to increase our efficiency and effectiveness by combining separate sales and service functions into a single unit,” Potter said.
Plonkey’s experience includes positions as Postmaster, plant manager and district manager in offices, including Austin, Dallas, Fort Worth and Oklahoma City. Immediately preceding her appointment she served as vice president, Business Customer Relations.
Plonkey will report to Bob Bernstock, president, Mailing and Shipping Services. She replaces Jerry Whalen, who will join the Global Business group as executive director, International Sales. Potter said Whalen’s background and sales experience will help further drive the fastest-growing segment of our company, the International group.
Postal Employees FYI: Next Contract Cost of Living Adjustment May Be ZERO?
From NALC.org: Contract COLA =0%
There was no projected accumulation toward the fourth regular cost-of-living adjustment (COLA) for letter carriers under the 2006-2011 National Agreement following the January 15 release of the December Consumer Price Index (CPI). The next COLA will reflect the increase in the CPI, if any, between July 2008 and January 2009, and will be payable the second full pay period following the release of the January 2009 index.
There are eight COLAs included in the 2006-2011 contract.
From APWU.org: Cost of Living Adjustment (COLA) Update
For Employees Covered by the National Agreement and the Operating Services Agreement:
In December, the Consumer Price Index (CPI-W) fell to 610.075. After the fifth month of the six-month measuring period, and assuming the next COLA were based on the December index, the fifth COLA under the 2006 National Agreement and the Operating Services Agreement would be zero. However, the next COLA will be based on the January 2009 index point and will be effective March 14, 2009.
The fourth COLA ($1,477) was effective Aug. 30, 2008 (pay period 19-2008, pay date Sept. 19, 2008).
Photo: Mount Hope, Alabama Post Office
Post Office in Mount Hope, Alabama 35651
Burrus Questions Keeping The Current Levels Of Postal Management While Reducing Craft Employees
APWU President WIlliamBurrus Update
Significant Changes Expected; Sacrifices Must Be Shared, Burrus Says
Over the past several months I have attempted to alert APWU members to the financial crisis that is confronting the Postal Service, and the substantial impact it will have upon postal employees. Although some in the postal community dismissed my warnings as alarmist, it was my intent to prepare APWU members that — unless there was a sudden and dramatic improvement in the economy — significant changes were inevitable.
Non-union postal employees have been particularly oblivious to the adverse consequences of low mail volume and reduced revenue. Evidently, they believe they are protected by virtue of their employment; clearly, they fail to appreciate the need for collective action to protect employee rights.
Well, change is upon us: In the near future, the Postal Service will implement modifications to postal operations that are unprecedented in the 230-year history of this great institution. Change will take place, and the changes will affect employees.
Rumors have been circulating throughout the system recently, but at this time I have received no information from the Postal Service about which alternative or alternatives management plans to implement.
When I receive official notification about the course of action management intends to pursue, I will be in a better position to inform APWU members of the contractual provisions and employee protections that apply. Any plan that is adopted will include work-hour reductions, which has been at the very core of management’s response to reduced volume and financial deficits.
I have previously expressed my concern over this narrow approach. No business can exist for long with this strategy; eventually it will become impossible to maintain an acceptable level of service.
But when work-hour reductions are implemented, they should not be applied disproportionally to bargaining unit employees. Staffing is based on workload and responsibility, so if the number of employees must be reduced, reductions should be made across-the-board, including all craft employees, supervisors, postmasters, managers and contract employees.
The very foundation of the postal complement is craft employees, with the remaining categories staffed at a ratio of responsibility for the activities of those employees. Since the number of craft employees has already been reduced by more than 100 million work hours over the last four years, there should be proportional reductions in the remaining categories. There is no justification for the retention of supervisors, managers, and contract employees at previous levels when the number of craft employees has been reduced to this extent.
If postal executives want craft employees to understand the need for significant changes, the sacrifices must be shared by every segment of the postal community.
If the sacrifices are not shared, employees will reject the plan, and I will proudly lead that effort. If there are fewer craft employees, there must be fewer supervisors, fewer postmasters, and fewer contract employees. And “workshare discounts,” which subsidize the major mailers at the expense of the Postal Service and employees, must end.
APWU President Addresses Postal Rumors
Ask the President
Question:
Would you be able to address any of the rumors that are floating around the Postal Service?
President Burrus:
Thank you for inquiry about rumors that are circulating throughout the Postal Service. Your question is timely, given the current events in the USPS and in the nation.
Over recent months I have informed the membership of significant changes that will be made in response to the economic slump and the corresponding reduction in mail volume, which has produced massive USPS deficits.
I am aware that many postal employees and union activists believe there is a union response that can mitigate the impact of these changes or prevent them from occurring. They believe that vigilant contract enforcement or political action can forestall the negative impact that is affecting every other part of the economy.
Certainly, the APWU and the other unions will vigorously enforce all negotiated agreements, and we will engage the public and elected officials in the preservation of postal services; but until the economy recovers and volume returns to its former level, there will be significant changes. Postal management has very few options.
The Collective Bargaining Agreement includes provisions that govern the reassignment of employees, protection against layoffs, and the assignment of employees. Strict enforcement of these provisions will restrict, but not eliminate, the inconveniences that will be fostered on employees.
The APWU Legislative & Political Department has joined with the postal community in seeking relief from onerous provisions of Postage Accountability and Reform Act that require the Postal Service to pre-fund future retiree healthcare liabilities. Legislation is pending that, if adopted, would relieve the Postal Service of the obligation to make annual payments of $5 billion for the short term. The temporary waiver of this liability is not a long-term answer to significant reductions in mail volume, but it will provide breathing room and time for an economic recovery, which is central to a healthy Postal Service.
Approximately 3,500 APWU-represented employees are exposed to the possibility of layoffs. The remaining APWU-represented employees are protected, but other changes will affect them, including relocations and reassignments. Part-time flexible and light-duty employees will experience work-hour reductions to a level that cannot support a family. The toleration for absences from work will be diminished, so that many absences will be challenged, requiring the application of the contractual “just cause” standard.
Until mail volume returns to previous levels, postal employees should anticipate that many, many changes will be imposed. The union will apply the contractual standards to each change, but many will be beyond the contractual limitations.
The success of the Obama administration in addressing the economic malaise besetting our nation and the world is the key to the future of the Postal Service. While many voters did not apply this standard in selecting the candidate of their choice, all jobs will be affected by his success or failure. Guns, religion, abortion, sexual preference and the other wedge issues that often dominate our political discourse will fade in their importance as the very source of our lifestyle — our jobs — are challenged.
Under the best of circumstances, and no matter how successful the incoming administration is, the economic recovery will not happen quickly. So, in the short term, postal employees and all other employees who work for a living can expect disruption and inconvenience for months to come.