The U.S. Postal Service proved this week what mailers have been saying for weeks -- that it is seeking exigent rate increases without first having done everything it can to reduce costs.
Specifically, it demonstrated that it still has excess career employees – many of whom are eligible for retirement – yet is doing nothing to reduce those numbers. Before the Postal Service is granted rate increases that require bending, if not breaking, the law that governs postal rates, postal executives need to explain why they are discouraging employees from retiring when they should be encouraging early retirement.
The Postal Service provided the first piece of evidence against itself on Monday when it answered the Postal Regulatory Commission’s query, “Please provide the percentage of [flats] pieces currently processed in a non-optimal fashion by manual sort.” The Postal Service’s answer: “30 percent of volume was handled manually in FY 2009.”
A surplus of equipment, a dearth of automation
The Postal Service has enough equipment – in fact, a surplus of equipment -- to avoid virtually all manual handling of flats. Mailers have been claiming for years, without refutation from the Postal Service, that the only reason for so much manual handling is to keep “automation refugees” (excess employees) busy. Imagine a farmer who kept a combine idle while having his workers harvest with machetes, or a construction company turning off its backhoe so its employees can move some dirt with shovels.
What is the Postal Service doing to reduce its excess employment levels? Nothing. Stephen J. Masse, vice president of finance and planning, told the PRC today that the Postal Service has no plans to offer early-retirement incentives and is waiting for attrition to reduce its employment levels.
In fact, the Postal Service is doing worse than nothing. Its practices discourage retirement by providing many employees with estimates of retirement benefits that are too low. Dead Tree Edition explained the problem in The Postal Service's Early-Retirement Snafu and PostalReporter documented the situation in more detail a year ago. But the Postal Service seems to have done nothing to correct the problem.
Some have told me that federal bureaucrats and regulations tie the Postal Service’s hands in this matter. If that’s true, why aren’t postal officials raising a stink with Congress? And why aren’t they communicating better with employees about the issue rather than leaving that to the unions.
It makes you wonder whether the people at L’Enfant Plaza who provide estimates of retirement benefits are the same ones who allowed the government to overcharge the Postal Service $75 billion in pension costs.
USPS officials are rightly arguing that the federal government should return those pension overpayments to the USPS. Their case would be stronger if they committed to putting some of that money aside for early-retirement incentives that would help reduce the Postal Service's workforce, which constitute 80% of its costs.
It could even get creative -- for example, letting employees in an overstaffed facility bid to retire early, with the lowest bids winning. Some employees might be more willing to retire from career positions if they could switch to part-time or on-call status without their pension benefits being harmed.
Previous articles in the “tough questions for the Postal Service” series: