Mailers:Postal Employees Over Compensation Costs USPS And Public Needless $Billions Annually

“The Affordable Mail Alliance – a growing coalition of nearly 1,000 non-profits, Fortune 500 companies, small businesses, major trade associations, consumer groups, and citizens representing the vast majority of the mail sent in the United States – submitted further comments to the Postal Regulatory Commission yesterday. The comments focused on last week’s hearings at the Commission, where the Postal Service admitted that it is not facing an immediate cash crisis – the original rationale for demanding a rate increase ten times the rate of inflation.”


The Postal Service’s August 2 Response and testimony on August 10-12 also confirm the Postal Service’s failure to show that it would face a cash crisis—or suffer any losses at all—if it adhered to “best practices of honest, efficient, and economical management.” 39 U.S.C. § 3622(d)(1)(E). The Alliance’s July 26 motion summarizes decades of official reports, from the 1968 Kappel Commission to the present, documenting the Postal Service’s inefficiencies and the uneconomic costs that result from them. Specifically:

• The Postal Service maintains an inefficiently large network of undersized and obsolete mail processing facilities. Motion at 21-25.

• The Postal Service has an oversized work force, inflexible work rules, and low productivity. Id. at 25-30.

The total compensation of Postal Service employees—more than $80,000 per employee on average—is well above the amounts paid in the private sector for comparable work. According to the Postal Service’s own experts, this compensation premium is probably more than 30 percent. This inefficiency costs the Postal Service and the public $10 to 14 billion or more in needless costs annually. Id. at 30-34, 55-56.

The loss of mail volume to the Internet was not an unforeseeable surprise. The Postal Service had notice of this threat years before significant volume losses occurred. Id. at 35-39.

• The Postal Service’s failure to cope effectively with the 2008-2009 recession is further evidence of structural inefficiency. The average firm in the private sector saw its revenues collapse by nearly as much as the Postal Service; and many large firms saw their revenues collapse by 20 percent or more. Well-run private firms, including the Postal Service’s competitors, responded to the downturn with immediate headcount reductions and other aggressive and painful austerity measures that resulted in a return to profit relatively quickly, even while sales volume and revenue remained depressed. The Postal Service, by contrast, contented itself with a business-as-usual incremental approach to cost cutting that allowed productivity to plummet and unit costs to get further out of control. Id. at 39-55.5

• The Postal Service’s financial loss projections in this case assume no major improvements in cost control in the future. Id. at 55-57

The Postal Service has many cost-saving opportunities available to it that remain to be pursued seriously. Given the magnitude of the Postal Service’s inefficiencies, even a modest improvement could result in billions of dollars of additional savings annually. For example:

(1) The Postal Service makes much of the supposed legal obstacles to closing retail post offices. But the Postal Service cites no legal obstacles (including restrictive language in appropriations bills) to the closure of most Processing & Distribution Centers and other central mail processing facilities. Since 2005, however, the Postal Service has closed only 2 of its 270 P&DCs. “U.S. Postal Service: Strategies and Options to Facilitate Progress toward Financial Viability,” Report No. GAO-10-455 (April 2010) at 13-14, 31. Instead, the Postal Service boasts because it saved $68 million—only about 1/10 of one percent of total USPS revenues—from area mail processing consolidations (“AMPs”) in the past year. Tr. 1/60-61 (Corbett).

(2) A number of enterprises in the United States have asked their employees to reopen existing collective bargaining agreements in light of the recession. See Motion to Dismiss (Aug. 2, 2010) at 15, 45-46. Given the supposedly parlous state of the Postal Service’s finances, reopening of existing collection bargaining agreements with postal labor would be a logical step. During the August 10 hearing, however, USPS witness Corbett admitted that he was completely unaware of whether such relief would be sought. Tr. 1/100.

(3) Two of the Postal Service’s national collective bargaining agreements expire in November 2010 (with the American Postal Workers Union and the National Rural Letter Carriers’ Association), and two more in November 2011 (with the National Association of Letter Carriers and National Postal Mail Handler Union). The expiration of these agreements presents a timely opportunity to negotiate reductions in head counts, greater freedom to employ layoffs and furloughs, and improved flexibility in work rules and employee utliization. Successful negotiations could narrow, or even eliminate entirely, the forecast 10-year shortfall.

(4) The expiration of the same collective bargaining agreements also presents a timely opportunity to deal with the more than $10 billion in above-market compensation that the Postal Service concedes it pays. The Postal Service, however, already appears to have taken the renegotiation of these compensation premiums off the table. Tr. 1/120-121 (Corbett). Instead, the Postal Service appears content simply to try to reduce its share of the total cost of the health benefit packages—from the current 81% down to 72%, the percentage paid by other federal agencies. Id. Even a full nine-point reduction would save the Postal Service only about $750 million per year. This is a small fraction of the $10 to $14 billion or more in excess costs that the Postal Service incurs each year because of the existing compensation premiums. Moreover, even these limited savings would occur with halting slowness: the Postal Service does not seek to increase the employee contribution by more than one percentage point per year. Tr. 1/121 (Corbett).
At that pace, even the $750 million savings target will not be reached until 2020.

(5) The Postal Service suggests that seeking relief in arbitration from inflexible hiring and work rules and above-market compensation premiums is useless because arbitrators tend simply to rubber-stamp the status quo. USPS Response at 31-33. But the Postal Service has not invoked its right under 39 U.S.C. § 1207 to arbitrate its major collective bargaining agreements in years, and certainly not since the beginning of the recent recession. It is premature to assume without exhausting the arbitration remedy that arbitrators today would ignore the supposedly “extraordinary” and “exceptional” economic developments since the last arbitration decisions, and the desperate financial straits the Postal Service says it now faces as a
result. This is particularly so given the number of economic concessions made by unionized employees of state and municipal government employees downturn. Motion to Dismiss (July 26, 2010) at 45-46; Brophy (Consumers Union) Impact Statement. At a minimum, best practices of “honest, efficient and economical management” certainly require that the Postal Service at least exhaust its administrative remedies under 39 U.S.C. § 1207 rather than throwing up its hands and shifting $3 billion in costs annually to mailers as the stakeholders of first resort.

(6) Finally, the Postal Service’s analysis of the legal implications of the “honest, efficient and economical” standard is as inaccurate and one-sided as the Postal Service’s discussion of the facts. The notion that the standard of “honest, efficient and economical management” requires the regulator to ignore inefficiencies that result from past decisions by the regulated company (USPS response at 23-25) is contrary to precedent and would have perverse consequences. It is well-established, for example, that the standard of
honest, efficient and economical management supports the disallowance of capital investment in long-lived assets as imprudent when made, even though the investment was the result of past decisions, and is now sunk and irrevocable. Missouri ex rel. Southwestern Bell Tel. Co. v. PSC, 262 U.S. 276 (1923); Verizon Communications Inc. v. FCC, 535 U.S. 467, 485-486 (2002). Indeed, the regulator may deny a regulated company a return on a sunk longlived investment that was prudent when made but “rendered useless by
unforeseen events.” Verizon, 535 U.S. at 484 n. 6 (citing Duquesne Light Co. v. Barasch, 488 U. S. 299, 311-312 (1989)).

In any event, a very large share of the Postal Service’s excess costs is neither fixed nor sunk. Inefficient Processing and Distribution Centers, for example, can be closed or consolidated in a relatively short period. Likewise, as previously discussed, the Postal Service’s major collective bargaining agreements are up for renegotiation when they expire this year or next, even if the Postal Service is unwilling to seek to reopen them during their term.8 as well as private sector employees—including the unionized employees of the Postal Service’s customers—since the beginning of the current economic downturn. Motion to Dismiss (July 26, 2010) at 45-46; Brophy (Consumers Union) Impact Statement. At a minimum, best practices of “honest, efficient and economical management” certainly require that the Postal Service at least exhaust its administrative remedies under 39 U.S.C. § 1207 rather than throwing up its hands and shifting $3 billion in costs annually to mailers as the stakeholders of first resort.

see full pdf file submitted to PRC

40 thoughts on “Mailers:Postal Employees Over Compensation Costs USPS And Public Needless $Billions Annually

  1. I am making 48,658.00 pr. year. What i find interesting in this article is that anybody can find out our salaries through union published pay scales. They, however can not find out what usps management pay scales pay. WHY IS THAT???? Why the secrecy???

  2. As a management scum I would like to get that big “bonus” I here about. We had 6 SDOs and we now have 4. We still have our maintenance EAS posisitons – for now. We had 2 support EAS positions – they were abolished. The work they did now is divided up between me and oh-ya – ME. All this and I’m not supposed to work more than 40 hours a week, or should I say get paid for more than 40 hours a week. It’s not that I don’t feel for all of the brothers and sisters in solidarity – but I have worked in non-union private sector. Now if you want to complain – work for one of those employers for awhile.

  3. For those inquiring, the current VER authorization (with the OPM) expires on 9/30/10. I don’t know if employees need to be off the rolls by that date, or if an offering needs to enacted by then.

    The $80K they quote is the total burden cost per employee which includes; salaries, benefits and other associated costs. It’s probably a pretty close estimate reflecting a top-of-scale craft employee, but the study doesn’t address bloated and overpaid management, failed initiatives (ROI from FSS), inefficient policies (every piece, every day and bi-annual, botched route adjustments), etc. The Postal Service is its own worst enemy and blaming craft employees for its maladies is a travesty. Fortunately, more and more of the behind-the-scenes shenanigans — pulled by top tier Postal management — are coming to light, which could bode well for craft employees at contract time. What the Postal Service wants, is the ability to mismanage employees with impunity and force Postal customers to cater to the Postal Service’s needs, not the other way around. Not quite a formula for success…

  4. I am a rural carrier and a trained monkey could do the job. You union folks need to realize that the golden goose has been killed and it’s time to pay the piper. Of course mgmt. needs to take haircut but so do we.

  5. Looking for the end date of the VERA window, not the actual VER. Anyone know? Thought it was the end of November 2010. That information could provide an insight as to whether another VER will be offered withing that VERA window.

  6. Omaha PD&C: now down to one MDO per tour, and the ration of SDO/employee is supposed to be 25 to one I think. Not there yet. Recently excessed nine or ten clerks, anywhere from 12 to 45 more by Nov 13th (Happy holidays, right?).

  7. And yes, 55 thousand a year gross! not 80 thousand, maybe they’re included SDOs, MDOs, and unneeded plant support people etc?

  8. ok, just breezed through this, but as a clerk processing DPS mail every night, I see a huge waste of money: We break bundles of walk sequence mail every night, run the mail twice to get it in with the other DPS mail. Basically this tray or bundle of Walk Sequence mail is treated like a first class letter that cost my mom 44 cents to mail. What discount are these mailers getting for walk sequencing their mail? There should be no discounts, no matter the count, for any mail under a zone sort. Cause we’re gonna run the mail just like my mom’s letter with a first class stamp on it! Not sure of the difference between a zone sort discount and a WSS discount, but shouldn’t be any!

  9. I have worked for the postal service as a rural carrier for 20 years. I make $54k a year. To make that much I have to work 6 days a week in all types of weather, put up with a lot of harrassment from uneducated managers, and do tedious work that most people wouldn’t have anything to do with. Along with that we have to deal with the normal nightmares of the job such as “mailcounts” where they try once a year to reduce our wages. I don’t know anyone who is making $80k
    a year except the layers and layers of management.

  10. Affordable Mail Alliance says I make over $80,000.Let me check…
    no not quite. How about $55,000 with 22yrs. You guys sound like FoxNews and Rush, using lies and scare tactic’s…

  11. I think it is scandalous that those union slugs make that much in a year. I will immediately put in a request to the Board of governors that my salary be tripled so that I will be making 10 times what they make

  12. Well I think your C.E.O. is over compensated.
    C.E.O. gets millions when they call it quits.
    Where does all that money come from?

  13. 80,000.00 per yr is above the the amount payed to the private sector. Private sector like U.P.S. and Fedex?? They make just and much or more money as we do. NEXT!!!!!

  14. mismanagement, corruption is rampant in usps and mailers want to cash in at expense of workers. Congress should step in and clean house but they’re corrupt too so nothing will get done and usps will go like the do-do bird. Screw you fat cat mailers and all you backstabbing postal management scum. People like you are ruining this country with you greed.

  15. We are a small PDF,we have 5 EAS people on tour 2 manageing 7 craft worker’s while we have 204B’s running tour3 and 1 Processing Ops and being paid level 17pay! Can ANYONE please explain any form of “Good Management” behind that? The USPS would NOT survive 1 pay period in the REAL world.We had 1 EAS leave..REPLACED Instantly..we’ve had approx 30 craft retire or transfer in the last year..Replaced..NONE-Jobs Abolished!!!!!If the OUTSIDE world could come in an take a look at the way the USPS is managed they would laugh their heads off and understand why the BIG BOY’S are the reason we are going BROKE!!!

  16. Yeah, my total compensation is around 80K, according to the letter the USPS sends me each year. That includes my AL, my Sick Leave, and their contribution to my TSP. But I’m an ET-10, stepped out (probably the highest paid group of hourly employees in the PO). So that means for EVERY clerk, mailhandler, mechanic, janitor, or carrier, there is a management person making MORE than I do!

  17. When every other LARGE company and that IS what the USPS is although it sure isn’t managed that way,has downsized they have offered a REAL insentive to leave.I have thirty years in and I will gladly retire but on MY terms. If the USPS wants me to leave…then PAY me to go!If not I and thousand’s more in the same situation will continue to draw our salaries and benefits and leave when WE are ready!! SHOW ME THE MONEY…….Ready2GO

  18. If you really want to ask the big question, Ask USPS in the South Florida District why employees are placed in a stand by room for up to 8 hrs. and when they are ready to leave at the end of their Tour, they are given overtime. 8 hrs pay plus shift differential then 2 to 4 hrs of overtime. No wonder we are in financial trouble. Upper Mgt. states that this is not to be done but it continues to be done by supervisors with the knowlege of upper mgt. with no dicipline issued. And the same managers keep telling the world we are in deep financial trouble…….Give us a break!

  19. $80,000 a year? I am a postal employee and I DO NOT make nearly that amount. I would definitely love to make even close to that. A typical high priced scum CEO lying again to pad their million dollar plus pockets. Tell you what! Why don’t you take your business to UPS OR FEDEX and see if you can get the same underhanded mailing deal you got with the USPS? My guess is you will come begging us to take you back. Why don,t you deliver your own mailing product door to door. You don’t have to pay any postage and you can leave the paper(s)/package(s) on the door steps or you can set up your own individual boxes to put the product into. You high priced scum CEO assholes make me sick!

  20. These bastards who are advocating a cut of 30% in Postal employees wages and benefits are the Pukes who are the greedy of the greedy. Take from working man and woman to line their billion dollar pockets even more with the public money. The reason a postage increase is necessary is because of the discounts these bastards get then line their pocket with the Net savings. I don’t hear them saying they will step up and pay their fair share, no they want more discounts so they can fatter the Pigs. Just my opinion..

  21. In our plant in springfield mass we have 4 mdo’s on t-3 to stand around and watch the understaffed employees work.Cut more employees hire more mgmt seems to be the norm at the p.o.

  22. All people talk about is reducing labor and labor cost. Why does’nt anyone say any thing about all the very high payed and way overstaffed managers and executives and V.P.’s of this and V.P’s of that .They are the real ones taking all the money from the p.o. not the ones who acctually touch the mail.Oh, and what about all the bonus’s paid from a company that’s going broke? Makes sense huh?Cut the real workers pay and bennies and not touch the overpaid overstaffed mgmt and exec’s

  23. Every time a non-management person leaves the postal service, that job is being eliminated through attrition. Every time a management person leaves the postal service, that job is filled by at least one person if not more. It is at point in our facility that we have more management than workers. And I sure don’t make $80,000 a year.

  24. This person doesn’t know what he’s talking about. It doesn’t cost the public billions as the postal service isn’t reliant on any taxes, just the revenue from it’s business operations.

  25. Stop discounting these mailers. We re-sort their mail with all the other mail after they get pre-sort discounts. This is done so the carriers don’t have too many diferent trays to pick mail from and to save them time.This attack on the unions is a right-wing talking point to do away with unions. The cry always gets louder around contract negotiations. Get rid of most of the management types and we would save a lot.

  26. I assume the non-profits in this mailer group include churches. How about taxing the churches instead of giving those businesses a free ride. Most churches are nothing more than businesses. ALSO charge the maileres that are crying full prices instead of all these HUGE discounts. It’s a little different when the shoe is on the other foot, huh? And which is it 10 or 14 billion? 4 billion is still is still a fair amount of money. At least to me.


  28. i love how statistics can be manipulated to fit the desired “results”. i have 25 years and make just over 51k. my pension will not even be 1000/mo. yeah, i make a living wage, but i’m certainly not making a killing. and the public does not pay my wages through taxes. my wage is paid through postal revenue. i do admit, though, that there is too much “management”, and that they get bonuses, but that’s not the working class here. statistics say 80% of the p.o.’s fixed costs are labor, but i’d disagree. the actual work force (not including management, just those who are actually doing labor) is probably closer to 20-33%. why is everyone always crying about postal costs while other labor pools are not attacked? i have a cousin in her 30’s who works for the auto industry on the line. in 2007 or 2008, she made $156,000. where’s the public outcry? instead, the public cries when the p.o.’s stamps increase 2 cents. gimme a break. let’s get some perspective here, folks. is the public aware that in some areas of the country, postal management is reducing the work force and forcing its employees to relocate as much as 500 miles away or quit? they’re not even offering early retirement. yet, last year on the news i saw how the p.o. relocated someone who voluntarily changed jobs and they bought his house for something like 2.1 mil but could only get 1.7 mil on resale. please don’t lump us together.

  29. Will that includes the big discount the big mailers are getting? How about the useless layers and layers of redundant Management. How about creating T-6 Postmasters, this will save the PO billions off dollars.

  30. These same people advocate constantly for lower costs through cutting
    wages and benefits to American workers.

    It is very odd that these same people DEPEND on the same wage earners
    to support THEIR economic interests.


    I believe these people are out of their collective minds.

    There are no American wage earners getting rich in America.

    Only the “Corporate Captains” and their minions are getting rich.

  31. “According to the Postal Service’s own experts” Would these be the same experts that provide discounts that exceed costs avoided? Would these be the same experts that thought PAEA was the greatest thing since sliced bread? These so called experts couldn’t pour sand out of a boot if the instructions were printed on the heel.

    A new OPM study finds that federal employees earn 22 percent less than their private sector counterparts doing similar jobs. Now, the study examined straight salary and didn’t factor in benefits. OPM says there is no information to compare federal and non-federal benefits. The findings are based on data from the Bureau of Labor Statistics. OPM Director John Berry ordered the study in June, following media reports that feds earn much more money than people in the private sector

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