Postal Service Falling On Harder Times. [Layoff Watch]

11/02/2008 11:06:00 PM

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disg_lgExpect to see shorter hours and longer lines at the post office.

Back in July, 2008 proposals to reduce mail delivery from six days a week to five were being tossed around.  On June 25, the House Appropriations Committee approved an amendment offered by Rep. Jack Kingston (R-GA) that woudl require the USPS to study the cost effectiveness and fuel consumption of five-day mail delivery, and to survey consumer demand for Saturday delivery.  Rep. Kingston called Saturday delivery "a perfect example of government waste that is driving up the price at the pump."

More recently, the  United States Postal Service seems to also be feeling the pinch of the economy.  The USPS has already extended early-retirement offers to more than 156,000 workers, roughly 20% of its work force.  And the postmaster general has told the postal union that the agency has identified as many as 16,000 employees who can be laid off without the need for collective bargaining because they lack seniority.

The USPS offer, which had to be approved by the federal Office of Personnel Management, is open to employees who are at least 50 years of age with 20 years of creditable federal service, or any employee with 25 years of creditable federal service.  The USPS sent out a total of 156,000 early retirement solicitations for three stages. 

In Sept., nearly 3,700 employees had accepted early retirement offers in the first three rounds of early-retirement offers, representing about 5% of the 72,000 who were eligible in the first round, expiring Sept. 30.

The second round of early-retirement offers, which expires Nov. 21, targets 67,000 letter carriers, headquarters staff and motor vehicle and maintenance employees.  The third and final round, which expires Jan. 16, is available to 17,000 field management employees and postmasters.

Officials anticipate that between 3% and 5% of the eligible population will apply for the early out, said a USPS spokesman.  If the numbers aren't good enough, for the first time in history, the USPS may have to consider layoffs.

William Burrus, president of the American Postal Workers Union has stated that "It makes little sense to leave a good paying job with benefits to enter the troubled economy unless there is incentive to do so."  "Their target is 6% and I don't suspect they will meet that."  The reason for his statement is that currently no incentives are attached to the early-retirement.  For another, postal workers are no longer civil-service employees.  Their money for the future goes into the Federal Employee Retirement System, which rides the crest of the stock market.  It seem that while the union would like to see incentives attached to the early-retirement offer, the USPS has adamantly said no.

The problem is that mail volume has dropped 12% in fiscal 2008, causing the USPS to spend $2.3 billion more than it made during the year.  If the postal service can't increase mail volume, it won't have enough money to pay staff.

"Unless they tell Congress they don't have the money to pay these guys, they will have to lay people off," postal expert Murray Comarow, who led the commission that was responsible for restructuring the Postal Service in 1971. "  Congress has denied the USPS the ability to raise postage rates to cover costs.  A legal restriction was enacted two years ago against raising the price of most services beyond the rate of inflation.  "I don't know what else they could do except trying to change various constraints in the law that are more limiting of USPS management than any other company in the private sector," he said.

Additionally when fuel prices were high this past summer, it played a big factor in additional costs for the USPS.  For every penny gas goes up, it costs the USPS $8 million for their 200,000 vehicles in its fleet.

Things are not looking much better economically in other areas of the shipping industry.  DHL, who has said it will lose about $1.3 billion this year, is in the midst of a restructuring effort.  DHL and UPS are negotiating a contract through which UPS would provide air transport services for DHL's North American business for 10 years. 

Meanwhile, FedEx Office has announced layoffs saying it is cutting 650 jobs, including 200 domestically.  It also said it might close 20 US retail locations in the next nine months.  The company has already pulled out of Mexico, Australia and the Netherlands.



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