On March 23, 2011, Rep. Darrell Issa (CA-R), Chairman of the House Oversight and Government Reform Committee announced “a full committee hearing on United States Postal Service (USPS) pay and benefits on April 5th. The Committee expects to hear from the Postal Service on their tentative agreement offered to their largest union, the American Postal Worker Union (APWU), last week. The agreement has yet to be signed.” “The Postmaster General, the President of the American Postal Workers Union, and two members of Postal Board of Governors are expected to testify.” The hearing will bed shown online at http://oversight.house.gov
A few days ago Issa released another statement:
Are Postal Workforce Costs Sustainable? Can the United States Postal Service survive as its employees are paid increasingly higher wages while their workload decreases? Currently, 80 cents of every dollar the Postal Service spends goes to workforce costs. As of 2003, the Postal Service paid a 34.2% wage premium[ PR emphasis] to its employees over comparable private sector labor, and wages have only risen since.
Issa’s statement (and Congressman Dennis Ross [R-FL] of Postal Workers receiving a 34.2% wage premium relies on the testimony of Dr. Michael Wachter to the President’s Commission on USPS in 2003. Actually, Wachter wrote, ” By combining the benefits premium with the wage premium, a total compensation premium can be estimated. In the most recent interest proceedings before Arbitrator Goldberg, the total compensation premium was found to be 34.2%.” Wachter included wage, health, retirement AND paid leave. He did not write Postal Workers receive a WAGE premium of 34.2%, he said COMPENSATION premium. Several economists during 2003 in their testimony to the President’ Commission rebutted Dr. Wachter’s assertion of Postal Workers’ so-called wage premium in comparison to the private sector.
In rebuttal testimony, Dr. James L. Medoff, a Harvard University Professor (see full testimony below) in 2003 wrote the following:
Dr. Wachter argues that the firm size variable is largely irrelevant in the case of the Postal Service because, while the firm size is large, the average establishment size in the USPS is not.This argument might be valid if his regressions could be done with accurate measures of both firm size and establishment size. Dr. Wachter’s regression is based entirely on data from the Current Population Survey (CPS) compiled by the Census Bureau. The data from the CPS lumps all firms with more than 1,000 workers together into one category. This means that including the establishment size variable leads to highly misleading results in the case of the Postal Service.The USPS is an “extremely large” firm, but because of the relatively small size of its establishments, Dr. Wachter’s analysis will effectively consider it comparable to firms that are not even “large”.
In short, Dr. Wachter’s conception of “comparable levels of work” is deeply flawed and his model of the labor market is misleading and incomplete. I have never personally or professionally found his claims ofa postal wage premium convincing. The NALC’s approach to comparability, which focuses on similar workers performing similar functions in national delivery firms that compete with the Postal Service is much more compelling. I urge the Commission to rely on the common sense exhibited by the union’s approach and to treat Dr. Wachter’s testimony with an appropriate level of skepticism.
William H. Young, President of NALC in 2003 wrote (see full letter below) to the President’s Commission:
This Commission would commit a grave error if it were to misinterpret the meaning of the recent Goldberg and Wells Awards (which covered other bargaining units) or even the decade-old Kerr and Mittenthal Awards (which covered the NALC as part of a Joint Bargaining Committee with the APWU). While these awards concluded that a wage premium existed, they never adopted a precise estimate of the size of the premium. Certainly, none have adopted Dr. Wachter’s estimate of 21 percent wage premium.
According to economist Joel Popkin in his testimony (see full testimony below) to the Postal Commission in 2003 regarding 80% of USPS revenue is spent on the workforce:
The first is the widespread popular characterization –spin, if you wish– of labor costs as representing 80 percent of the total costs of USPS. That is blatantly incorrect. Publicly available USPS records (summarized since 1984 in Chart A) show that wages and benefits allocated to workers covered by collective bargaining represent 56.8 percent of total costs. Costs associated with workers covered under APWU bargaining agreements, largely mail processing and retail station clerks, accounted for only 26.0 percent of USPS costs in the 2002 fiscal year. In addition, the data in Chart A show that over the past couple of decades the labor share of postal costs has declined, the share of the APWU most dramatically.
It has been pointed out by GAO and Postmasters that delivery costs contributes to 43%-45% of USPS labor costs. Since 2002 USPS has reduced its career workforce from 752,949 to 571,566 (as of Pay Period 7, 2011) or 181,383 employees. But yet USPS, postal pundits and lawmakers still use the 80% figure to describe solely the bargaining unit workforce when it includes all postal employees including supervisors and managers.
Issa’s statement went on to say:
In an as-yet unsigned contract with their largest union, the Postal Service expanded “no-layoff” protection to thousands of new employees.
Here is language from Article 6 of the Tentative Agreement
(2) Employees who become members of the regular work force after the date of this Award, September 15, 1978, shall be provided the same protection afforded under (1) above
on completion of six years of continuous service and having worked in at least 20 pay periods during each of the six years.
(3) With respect to employees hired into the regular work force after the date of this Award and who have not acquired the protection provided under (2) above, the Employer shall have the right to effect layoffs for lack of work or for other legitimate reasons.
As with most negotiated contracts the Article 6 language also includes: “Protection against layoffs continues for all career employees who were on the rolls as of Nov. 20, 2010. The language of Article 6 , which governs layoffs and reductions-in-force, remains unchanged.” Arbitrator James J. Healy in settling the 1978-1981 Contract Agreement required six years of continous service to achieve protection against layoff.
Lastly, Issa’s statement “….and wages have only risen since” is incorrect:
APWU General Wage Increases (Level 5/6 Step 0) and COLA – Contract Year 2006-2010:
2006- 1.3% | $0
2007- 0% | $0 and $686
2008- 2.6% | $479 and $1477
2009- 1.2%| $0 and $0
2010- 0% | $0 and $0
Total for almost SEVEN (7) years (2011, 2012 included) = $2,466 wages, $2,642 COLA=$5, 108= $730 ($729.75) per year or $29 per pay period or $14 per week- subtract the 4% increase in Health Premiums and inflation. The last pay raise for Postal Workers represented by APWU was 2009. The next pay raise if the Tentative Agreement is ratified by the membership is scheduled for November of 2012. The next COLA is scheduled for 2013. Three years without a pay raise yet Issa and company thinks this is too much.
Note: On the Health Premiums. The issue of USPS contributions to Health Care Premiums has ignited much debate. But during one of the negotiations on the contract NALC and APWU suggested Postal Workers pull out of FEHB but USPS declined.
APWU Tentative Agreement 2010-2015
2011- 0% | $0 and $0
2012 – 1% (Nov. 17, 2012) | $0 and $0
2013- 1.5% | TBA
2014 – 1% | TBA
2015- 1/2 of year $0
Dr. Joel Popkin Rebuttal On Postal Worker’s Pay 2003
NALC and Dr. James L. Medoff
NALC and Dr. James Medoff Rebuttal To Dr. Wachter On Postal Pay 2003