The U.S. Postal Service will offer retirement incentives if it is allowed to make cost-cutting moves like eliminating Saturday delivery, its CEO told a Congressional panel today.
Rep. Dennis Ross, chairman of the House subcommittee overseeing postal legislation, stated that USPS needs to lose nearly 150,000 employees via attrition "to rightsize the expenditure side of the Postal Service." He asked Postmaster General Pat Donahoe whether he would offer employees retirement incentives to make that happen.
"We do plan on issuing some incentives based on the fact that we make some changes in our operation," Donahoe responded during a hearing. "As we shrink the network, as we move from six- to five-day delivery, we would put in some incentive money to move people along."
He did not specify what sort of incentives would be offered or how they would be funded. Nor did he state whether retirement incentives would be offered if Congress blocks some of his cost-cutting proposals.
"We think that by the year 2015 we need to be at about 400,000 career employees," Donahoe said. USPS has about 545,000 career employees today. About 155,000 are eligible to retire now, and another 100,000 are scheduled to become eligible within the next five years, he said.
"It's critical for us to move the headcount down but at the same time we've got a lot of non-career people on our rolls who are less expensive to work with but they are also younger people. If we had to take them off the workforce they would end up unemployed, and I don't want to do that," the PMG added.
The hearing, Can a USPS-run Health Plan Solve Its Financial Crisis?, was called to focus on the Postal Service's proposal that it be allowed to offer its own healthcare plan for employees and retirees.
But Donahoe presented that proposal within the context of the various efforts to reduce USPS's costs in light of declining mail volumes. (See USPS Seeks 'Soft Landing' For Downsized Employees, Donahoe Says for more about his prepared testimony.) If Congress takes no action on the various proposals, USPS will run out of cash in October 2013, Donahoe predicted.
"This is much more of an issue of a crisis of confidence about the postal industry than it is just our cash flow," he said, to which Ross replied, "I agree."