Thursday, August 6, 2009

Barrier to Postal Service Downsizing Is Being Ignored

Amidst all the facts and figures flying around Capitol Hill this week describing the Postal Service's dire straits, one important -- and troubling -- statistic has been largely ignored: Three percent.

It's a number that demonstrates what could be the fly in the ointment for the Postal Service's aggressive cost-saving efforts, such as five-day delivery, route consolidation, and facility closings.

"About 150,000 USPS employees were recently offered voluntary early retirement, but fewer than 3 percent accepted," Phillip Herr of the Government Accountability Office told a Senate hearing today. In the private sector, a large company trying to carry out the kind of massive, multi-year downsizing that USPS envisions would consider even a 30% response disappointing.

But USPS's Voluntary Early Retirement (VER or VERA) program is a bust because "it contains a penalty for taking the package," says Eddie Mayhew, a postal consultant and retired Postal Service employee. "The Federal Office of Personnel Management will not grant permission for this program unless there is a two percent a year penalty for leaving with less than the required years of service or age combination."

"Since this penalty can end up in excess of a ten percent reduction in an employee’s pension and the economy continues to make alternate employment nearly impossible, no one wants to partake of the program," Mayhew wrote recently in his private newsletter to customers, who include some big-name magazine publishers. (Mayhew can be reached at emclass@optonline.net.)

With compensation amounting to 80% of USPS costs, any significant cost-cutting program is likely to mean fewer employees. Political opposition and labor-union contracts are likely to stymie such efforts unless most of the downsizing can be accomplished by attrition rather than layoffs.

It seems that some of the billions that the Postal Service is forced to pay into an over-funded retiree-health fund would be better spent on creating meaningful early-retirement incentives.

17 comments:

Anonymous said...

You would see at least 80% of the eligible employees take the Post Office retirement, this would be a fair downsizing without laying people off. As long as the PMG & his people get their retirement package worth over $1 million, they don't care. Auto industry's managers are getting their bonus packages but so are their employees, here in the post office, they just want you gone.

Anonymous said...

Yeah, Take a 8 perscent reduction in my pension forever. No thanks. Not for me. I can put up with a few more years.

Anonymous said...

I haven't seen the statistics, but it seems reasonable to assume the postal service would meet the "break-even" point of offering a $25,000 incentive in about 3 months.

What good does it do the economy of the American public to shift workers from payroll to unemployment roll? Offer a little help to make retirement a possibility to people who might otherwise choose to work a couple of extra years in this economy.

The thousands and thousands of us who would be interested should bombard our congressmen and ask them to pressure the postal service.

phg said...

I have e-mailed my congressman here in North Jersey. Congressman Pascrell. Notice that our Union heads are not soliciating the removal of the penalty or the incentive. They lose Dues

Anonymous said...

"Notice that our Union heads are not soliciating the removal of the penalty or the incentive. They lose Dues"

The unions will loose dues, anyway, if the USPS opts to lay-off (they are already letting many dues paying union transitional employees go and the Union, at least in my area, is not complaining). Laid off employees will not pay any union dues at all and many, if later recalled, will not rejoin the union. Many retired employees remain active members and pay dues, even though greatly reduced, as well as continue to contribute to union causes.

Worse, if the USPS does layoff, will be a lost employee morale and sense of security that will impact unions, employees, the company, and customers.

Anonymous said...

I am under CSRS and have 36 years in. I can not retire in this economy unless I am maxed out at 80%. They need to consider adding either 5 years of service or 5 years to age. The 5 years of service would have to be added to and not just to bring up to the 30 year qualification. Max us out and we will gladly go.

Anonymous said...

The reason you get a 2% reduction for each early year is because you will collect this pension earlier. So if you leave 5 years early you would be collecting for five more years. There is no penalty because you are collecting the same amount but over a longer time period. Do the math.

Anonymous said...

I know I would leave if we were not penalized. The extra time added or money would would help a lot of folks leave.

Anonymous said...

Yes, it's true. The 2% reduction is because you will likely live longer and collect longer.

But, eligible employees are CSRS. As it was stated yesterday by the associate director of OPM.. CSRS has been fully funded the employer's share for some time now. The post office hasn't contributed for the last couple of years.

Surprisingly, the employees go right on putting in their 7%. Why isn't OUR portion fully funded by now? It's the interest it's earning that's self-perpetuating now.

Seems like the employees through the years would have also fully funded by now. Maybe there is enough to cover a longer retirement without having to penalize. No one's rasied the question that I've read.

Anonymous said...

This letter make a lot of common sense. So the Postal Service, Congress and the Unions will not be interested.

Anonymous said...

$25.000 was alot the last time they offered it, today with taxes taken out you would be a fool to accept that. Offer 1 month for every year of service, if too many take it, just rehire at a lesser pay.

window clerk said...

we all agree that many would leave without a penalty. unions, opm and congress all must know this. how can we prove to them we are right?
seriously, i have inquired about setting up a website whereby a csrs employee would use their pin number to prove their employment so numbers are accurate. the person i asked said we cant. i wonder if he is right.. how about some help on this??

Anonymous said...

The U.S.P.S. would not have to offer a monetary incentive for many of the highest paid employees to retire. If only they would allow them to retire without a penalty many would go.If they did this and had to fill vacant positions because of alot of retirements, they could then hire new people at a much lower rate with less vacation time, and save money. It takes about 15 years to reach top pay.

Anonymous said...

Everyone should write their congressmen and senators. I have already mailed letters to all of them. It should be a massive immediate effort. The VSIP handbook available on the OPM website says it is most economical if the agency offers it at the beginning of the fiscal year. For the Postal Service, that is October 1. Get Busy.

Anonymous said...

When GM went through recent bankruptcy, they offered their 30+ year employees $115,000 and a $25,000 voucher for new car. The P.O. needs to get rid of 100,000
people BEFORE they go to 5 day delivery. An intelligent company knows this is the right move. Where is the P.O? Oooppss. I forgot I said INTELLIGENT!

Anonymous said...

The UWSPS is going to likely close facilities to get an excuse to "excess" people on a long range basis. What do I mean by "long-range" you ask? How about hundreds of miles? The idea I bet is to excess people so far that very few will take the bait and thus quit/retire early. A coworker described his wife's company closing offices and offering those "excessed" workers a new job a mere 70 miles away. None took the bait!

The implication is that long-range excessing is a disguised layoff as most people CAN'T just up and move to Fargo.

Anonymous said...

I understand how the majority of employees really can't afford to leave without an incentive.I have a place to work it I leave when i'm 50 years old and have 23 years in starting the fiscal year.I would go just give keep the early out open ended.