Thursday, August 25, 2011

Is USPS Underestimating the Number of Layoffs Its Downsizing Plan Would Require?

Note: An earlier version of this article contained an erroneous interpretation of federal severance benefits; they only apply to employees not yet eligible for retirement.

The U.S. Postal Service's estimate that its "workforce optimization" plan will require 120,000 layoffs in the next four years may be substantially understating the number of postal workers who would be forced out.

The recently released plan calls for shedding 220,000 career employees over the next four years. It estimates that attrition will take care of 100,000 employees, meaning the rest of the cuts would have to come from layoffs.

The estimate accurately reflects recent trends, when the number of career employees declined by just over 25,000 in a 12-month period. (See The Downsizing of the Postal Workforce Slows.)

But there's a big reason not to project recent trends into the future: the generous severance policy for USPS and federal employees. An employee with 20 years of service, for example, would get at least 30 weeks of severance pay and be eligible for unemployment insurance, according to Courier, Express, and Postal Observer.

Being laid off seems to be a much better deal for postal employees than just quitting or retiring. Those who think they are likely to be laid off in a year or two will be inclined to stay with the Postal Service, so they can collect severance and unemployment, rather than quitting. And even those able to retire, who are ineligible for severance benefits, may find the possibility of collecting unemployment benefits a sufficient incentive to stay with USPS.

Postal workers have a history of responding to retirement incentives. The Postal Service's attrition rate was about 40,000 annually a couple of years ago when many employees were offered early-retirement packages. And many employees have indicated they are ready to retire if another VERA (Voluntary Early Retirement) deal is offered.

So it's only logical to assume that postal workers would also respond to an incentive not to quit.

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10 comments:

Anonymous said...

Sometimes waiting for a layoff -- if there are severance benefits, etc. -- can be more profitable for a worker than just leaving a job or retiring. I have worked in the private sector since 1995 and I've heard of people who were considering changing jobs (back in the early 2000s) and were resigning who were clued in by HR that a layoff was coming, and to just volunteer for a buyout or layoff instead. They got their severance and off they went, and the company didn't seem to care.

In 2008, when I was laid off, several people with enough time in at the company I worked for simply took their layoff, the severance and unemployment benefits, and then applied for their retirement. The company let them and even helped them do it. Of course, for those of us who weren't vested or had enough time in, we were out a lot of money and a job, but I learned how it could be done for the future.

I wonder, though, if the PO wouldn't simply hire new workers at the bottom of the pay scale to replace those who've left. Especially if the mail system gets gridlocked again.

Anonymous said...

the whole problem the USPS has is that it is mandated to pre fund retirees health care costs. this is between 5 and 8 billion a year. In am audit done by the G.A.O. this year it was learned that since the 1970's Postal restructure retiree heath funds have been OVER paid between 60- 80 Billion dollars. so the prefunding has already been met, with a tidy sum, around 20 million, over paid. If one takes facts into account the Postal service( without the prefunding payment) has been in the black every year except 2009.

Anonymous said...

110,0000 management/'support' jobs and 465,000 clerk and carrier jobs. 200,000 jobs cut since the year 2000. 55,000 carrier jobs cut since 2008, alone. Barely any management cuts. Who do you think needs their jobs cut? Anyone but USPS management can figure the correct answer.

Deadwood said...

I have almost 31 years in. I thought these idiot's would offer some kind of incentive.I planned to just give up and retire in January..BUT..not now..Maybe Obama will get unemployment up about 150 weeks and the ole USPS will lay my sorry butt off. ONLY IN AMERICA!!!!!Deadwood

uncommonsense said...

Employees who are eligible for an immediate retirement annuity are not eligible for severance pay. So waiting for a severance is not a good reason not to retire.

Read the first paragraph of the Courier Express blog referenced.

Anonymous said...

We need Congress to stop the PMG from making any more decisions until they can investigate the PO's problems further. Each state's reps should be totally involved with the way things work, and what is happening on a daily basis. The public and the media are being deceived. Numbers a reports and studies are falsified regularly. There is a solution to the PO's problems and it starts with giving Donahoe the boot.

Anonymous said...

Actually the USPS requested authority from the OPM recently and was rejected! Why you ask? Because of the new APWU contract. The USPS was planning on lighting the load with a VERA so that it could replace those who take a VERA with cheaper labor. Smart in theory but regulations prohibit this and so the OPM said NO! Thus the new plans to increase those who on the streets that need entitlements instead of real solutions to the real problems! Currently HR1531 is the last best hope for all that has an interest in the USPS.

Anonymous said...

This is FYI for all postal employees. If an VERA or buyout is offered, several states allow you to collect unemployment benefits upon retirement because it is considered a layoff. Yes, if you accept a VERA or buyout and you will be collecting a retirement pension, you would be eligible for full enemployment benifits. I checked with my state to verify this and it was confirmed. So, the Postal Service doesn't need to offer a money incentive to get people to retire.

Anonymous said...

If the USPS would just get rid of the people that have over 40 years of service who just walk the building getting exercise instead of doing work. Also get rid of all the light duty people who sleep in the cafeteria for 8 hours and get a full paycheck, yet they can carry around a heavy lunch pail but can't file a single letter. Get rid of all the family members of the supervisors who think they are too good to do any work. The USPS should be hit with a big reverse discrimination lawsuit for the way they treat current employees...Just give me another shot at VERA and I am out of here, my body can't take all the physical and mental abuse...

Anonymous said...

Am I crazy or wsn't there talk during negotioations to the effect if we signed this crappy agreeement there would be an early out offer (VER). I probably imagined that along with the no layoff clause...