Chairman Darrell Issa’s Hearing Preview Statement:
Tuesday’s hearing of the House Committee on Oversight and Government Reform, entitled “Are Postal Workforce Costs Sustainable,” will continue the Committee’s ongoing effort to monitor the fiscal condition of the United States Postal Service and the affordability of USPS’s workforce compensation expenses. One pressing question remains at the forefront of congressional oversight of USPS: What is needed for the postal service to bring its operating costs in line with its declining revenues?
For the past several years, USPS has been on the brink of insolvency. Immediate structural reforms and cost-cutting measures are imperative. Labor costs comprise 80 percent of USPS’s annual budget, and the current negotiations for continued labor agreements present an opportunity to implement an effective business model for USPS and place the postal service on more solid financial footing.
Congress is keenly aware that technological advances in the communications market have left USPS behind the innovative curve. The loss of volume to electronic communication and the no layoff provisions of USPS labor contracts mean that more workers are handling less mail than a decade ago. This trend will only get worse unless comprehensive reforms are implemented.
Oversight of the postal service falls within the Committee’s constitutionally-mandated responsibility. Congress will work with USPS management to ensure the permanent viability of the postal service without the need for taxpayer bailouts or the use of budget gimmicks to hide the real crisis.
Witnesses & excerpts of Prepared Testimony
The Honorable Louis J. Giuliano,Chairman, Board of Governors United States Postal Service
The Board unanimously supports the tentative agreement.
• This tentative labor agreement achieves one of our most important operational objectives – the ability to apply work hours where and when we need them rather than deal with static work shifts and significant overtime costs.
• It also calls for an immediate twoMyear real freeze on wages.
• It allows roughly 20 percent of the APWU workforce to be temporary, at a cost 50 percent lower than our permanent employees.
• It establishes a two-tiered workforce, with a lower wage tier for new employees.
• It increases the employee contribution for healthcare.
These provisions of the tentative contract constitute a cost saving of $3.8 billion. We believe that both labor and management have demonstrated their determination to right
The Honorable James C. Miller III,Governor.United States Postal Service
Let me say that I, too, am disappointed that we did not accomplish more in the negotiations. As everyone involved will confirm, the Postal Service bargained long and hard to achieve more. The reason we did not get more, and the reason we agreed in the end to the contract now out for ratification by the rank and file is that the current law governing our labor negotiations is biased against management and in favor of labor. More steps could be considered , wilh the goal of not just restoring the Postal Service’s financial viabi lity, but increasing the efliciency of the broader postal market. The most obvious proposal is to demonopolize and privatize the Postal Service -simultaneously freeing the Postal Service from rate/product supervision by the PRC, putting additional distance between the Postal Service and the complications associated with political management (see above),” and subjecting the Postal Service to the additional pressure of having to answer to stockholders with a keen interest in the “bottom line.” A request to repeal the private express statutes as well as privatize the Postal Service was contained in President Reagan’s 1987 budget proposal to Congress. The initiative got absolutely no support — none. Congress and the President might consider directing the arbitrators more explicitly about what constitutes truly comparable pay. Or, they might even consider giving the unions the right to strike and management the right to lock out — and in either of those cases, of course, trigger an automatic suspension of the private express statutes. Finally, the Postal Service might consider increasing its use of contract employees. Besides being lower in cost than full-time employees, the work rules for contract employees are not nearly so confining — and thus pose an opportunity to increase productivity as well.
Patrick Donahoe,Postmaster General and Chief Executive Officer,United States Postal Service
Our total full-time career complement today is 572,000 employees. We will continue to reduce the number of full-time career employees, thereby reducing our legacy costs. By 2020, the Postal Service workforce will be less than 400,000. This tentative agreement also provides immediate cost relief by freezing wages for the first two years, and leads to wage savings of $1.8 billion over the term of the agreement.We negotiated structural changes that resulted in a two-tier career pay schedule for new employees that is 10.2 percent below the existing schedule. We will also be able to increase the use of non-career employees from the 5.9 percent today with restrictions, to roughly 20 percent totally unrestricted. These changes provide a $1.9 billion benefit.
Cliff Guffey.President,American Postal Workers Union, AFL-CIO
Some postal commentators have sought to compare the Postal Service to Federal Express and UPS with regard to the percentage of costs that come from workforce-related costs. In case anyone has that comparison in mind, I want to point out that it is not a valid comparison for at least two reasons. One is that those postal competitors own their own fleets of airplanes, which makes them more capital-intensive than the Postal Service.In addition, FedEx and UPS do not deliver to every address every day as the Postal Service does. While they do some sortation of packages and expedited messages, they do not have to provide sortation of the many billions of First Class and standard mail letters the Postal Service sorts.A unique and extremely valuable feature of the Postal Service is that it provides universal service to the American public.The agreement helps the Postal Service meet its immediate need to constrain costs by freezing wages for the first two years of the agreement. This means that most postal workers will not receive any wage increase for a period of three years, from November 2009 until November 2012. It also follows the pattern set in earlier postal collective bargaining agreements of reducing the percentage contribution of the Employer toward health insurance by one percentage point for each year of the contract. The agreement also will give the Postal Service the right to employ a substantially larger percentage of temporary workers who will be paid relatively low wages.
Below are the full prepared testimonies:
4-5-2011 Louis Giuliano, James C Miller, Patrick Donahoe Testimony
APWU President Cliff Guffey