USPS: PreFunding Retiree Health Benefits Raises Overall Labor Costs

According to USPS:

Compensation and benefits costs represent approximately 65% to 71% of total operating costs. However, when workers’ compensation and retiree health benefits, including the legally mandated prefunding of the retiree health benefits, are added, total personnel costs increase to approximately 77% to 80%. Although many significant steps have been taken to decrease compensation and benefits costs in response to declining mail volume, many of these costs remain fixed and beyond the Postal Service’s control due to its participation in federal programs. Contracts with postal unions are negotiated for a fixed period of time, usually three to five years. They cannot be modified during the contract period
except by mutual consent. Retirement benefits are not determined by management but rather by the federal government, and healthcare benefit costs mandated by law or contract continue to rise well above the rate of inflation. In addition, the Postal Service’s ability to adjust its workforce and network infrastructure is limited by contractual, statutory, regulatory and political obstacles.

Employer contributions, as a percentage of employee basic pay for FERS will increase to 11.9% in 2012. Employee contributions for the past three years, as a percentage of employee basic pay were 7.0% for CSRS and 0.8% for Dual CSRS and FERS.

The number of employees enrolled in each of the retirement plans at the end of 2011, 2010, and 2009 is as follows:

Retirement Enrollment by Program
(Actual numbers) 2011|2010| 2009

CSRS- 79,014| 90,480 |110,024

Dual CSRS- 4,551|5,206 |5,947

FERS- 473,686| 488,222| 507,157

Total Enrollment -557,251| 583,908 |623,128

5 thoughts on “USPS: PreFunding Retiree Health Benefits Raises Overall Labor Costs

  1. 37 execs earn more than cabinet members! how many people are suffering for their job because of MATHematical miscalculation/ negligence “gross” in the form of bureaucracy subterfuge! as simple as that…just a means to “take away” a valuble service to the people in the name of “loss”.

    this is the first step, to rectify the biggest mistake first! GO h.r.1351. vote for 1351.

  2. I am lost of all words… people have said everything in these forums…no more words mean anything, I guess!

  3. 2001 – Potter Creates the Mail Industry Task Force (MITF) with DPM Nolan and Pitney Bowes CEO Critelli co-chairs creating a platform for Postal Reform (Privatization).
    2002-Critelli becomes Council President of the Mail Industry CEO Council (MICEO), allowing MICEO to lobby MITF which is championing Postal Reform (Privatization).
    2002 – Nolan praises the work of the MICEO giving tacit USPS approval to Postal Reform (Privatization) ideas submitted therein.
    2002 – Potter submits USPS Transformation Plan to Congress which was chock full of short- and long-term options for change in USPS operations and delivery practices, and was a partial basis for the landmark Postal Reform and Accountability Act (H.R. 6407) passed in late 2006.
    2005 – Mail Express, Inc. a startup business-to-consumer lightweight package delivery company is created. (In 2010 renamed Streamlite, Inc.)
    2005 – USPS Board of Governors Attacks Union Pay and Benefits.
    2006 – Nolan and Critelli tout the importance of their Postal Reform (Privatization) plans.
    2006 – Nearly dead H.R. 6407 rises, Lazarus-like, and somehow crawls onto the desk of Pres. Bush to be signed into law on Dec. 20.
    2006 – H.R. 6407 the Postal Accountability and Enhancement Act (PAEA) includes “pay for performance” language that enhances Potter’s retirement package (Super-size me, please), while saddling the USPS with 5.5 Billion dollar prefunding leading to present day fiscal insolvency.
    2007 – Nolan who co-chaired the MITF from 2001 to 2006 leaves the USPS for Mail Express just three months after passage of H. R. 6407. Gail Sonnenberg also leaves USPS for Mail Express (According to Streamlite, Inc. Sonnenberg is credited with establishing “pay for performance” during her tenure as Vice President of Human Resources at USPS). 2010 – Dec. 3, Potter retires with a 5.5 Million retirement package, enhanced by the PAEA, and “Pay for Performance” bonuses.
    2010 – Pitney Bowes spends one million lobbying the Post Office and another million lobbying the Postal Regulatory Commission.

  4. Dear Postal Reporter,

    Please, please, please STOP with the continued bogus insinuation that “labor costs” & “personnel costs” mean the same thing. This game has been played by the media and Congress in just about every single story on the USPS.

    To set the record straight AGAIN, 80% of postal expenses are PERSONNEL costs, PERIOD ! Labor costs imply that postal union workers eat up 80% of the budget. This intentional twist on wording is done to denigrate unions, mislead the public into false assumptions, and hand politicians a soundbite that dovetails plans to privatize the postal service.

    When media outlets continuously misuse “labor” in describing the state of postal finances, they are ignoring the biggest chunk of that 80% figure, which is MANAGEMENT SALARIES. In that “personnel costs” includes BOTH union wages AND management salaries, referring to said expenses only as labor costs misleads the public into thinking that the “greedy unions” are solely to blame for the demise of the postal service.

    In fact, management salaries, perks, and bonuses account for 57% of that 80% figure, meaning actual labor costs amount to 43% of that 80% figure! To illustrate the point, just read the story above this one that justifies management bonuses even in the face of huge revenue shortfalls.

    As such, it would be much more accurate to describe “management and labor costs”. You even prove my point in this article by putting the word “labor costs” in the story title, yet switching the wording in the dark print in the text to “personnel costs”. The words are NOT interchangeable. Each conveys a completely different meaning.

    Here’s a shout out to all my fellow postal workers to SET THE RECORD STRAIGHT every time you hear or read this gross misrepresentation of your working value. When you look the other way, or deem this point insignificant, you knowingly allow this subtle assault to inaccurately portray your worth, and provide the opposition with more talking points to bring about the end of your employment.

    It’s one thing to endure the selling out on display from our union leadership. But it is another thing altogether when we do this to ourselves in the form of silence in the court of public opinion. There IS a battle being waged over OUR jobs. Just what will it take to get you to fight for yours?

  5. “the Postal Service’s ability to adjust its workforce and network infrastructure is limited by contractual, statutory, regulatory and political obstacles”.

    Thank you jesus thank you lord

Comments are closed.