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 firstname.lastname@example.org.)
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.