USPS Has Good News for Prospective Retirees

The U.S. Postal Service recently made a quiet change that will cause retirement to look sweeter for thousands of postal workers.

Pension estimates the USPS provides to employees who are considering retirement now include an amount for the FERS (Federal Employees Retirement System) supplement, reports Don Cheney, an APWU official with a long history of helping fellow union members understand their retirement benefits. The Postal Service has not announced the change.

“According to the responses I’ve received on Facebook, numerous employees are getting the new FERS annuity estimates with the supplement amount listed,” Cheney says. He provided a sample statement from one employee who would receive more than $15,000 annually – nearly equal to her regular annuity.

“This means FERS employees [those hired after 1983] will finally feel comfortable retiring. The USPS may get a huge exodus,” Cheney predicted. 

The supplement is meant to take the place of Social Security until USPS retirees turn 62, when actual Social Security payments kick in. Usually, a postal worker needs to be at least 55 with 30 years of service to qualify for the supplement. About 85,000 postal workers have 30 or more years of service.

As Dead Tree Edition has reported previously, ignorance of and uncertainty about the FERS supplement have hindered response to USPS early-retirement offers. In a VERA (Voluntary Early Retirement) campaign, the minimum years of service to receive a VERA supplement drops to 20.

That could have been a huge incentive for some employees to retire early -- except that they typically were not told how much the supplement would be, or even if they were eligible, until after they submitted their request to retire.

But the era of big VERAs seems to be over. Instead of having too many employees, the downsized Postal Service now struggles to handle the rising tide of package deliveries while keeping deliveries on time and overtime under control. And there don’t seem to be any major productivity improvements on the horizon that would make it easy to eliminate more positions.

In theory, retirements enable the Postal Service to save money by replacing high-paid career workers with part-timers who gets much lower pay and few benefits. But union contracts limit the number of such non-career employees.

And with the recent trends of low unemployment rates and rising part-time wages, the Postal Service has struggled to recruit and retain non-career workers, especially in markets that have a high cost of living.

“The shortage of clerks and carriers has reached a critical point in almost every post office,” Cheney said. “I expect a massive failure of service standards during the Christmas rush.”

Related articles:

• The Hidden Benefit of Postal Service Retirement

• 8 Reasons USPS Productivity Is Declining: The Employees Speak Out

• The Postal Service's Early-Retirement Snafu

 

USPS Comes Up With Yet Another Way to Discourage Early Retirement

Please see the Postal Service's response to this article: USPS Responds To Criticism of Its Annuity Estimates.


Amidst all of the postal reform proposals that went nowhere the past few years, the one tactic that has definitely worked for the U.S. Postal Service is getting employees to retire early.

The tactic would work even better if the Postal Service stopped confusing or misleading potential retirees – by providing them with incomplete or just plain wrong information about what their retirement benefits will be.

Here’s the latest chapter in this sorry saga: In the most recent round of VERA (Voluntary Early Retirement) offers, many among the thousands of affected postmasters have received annuity estimates containing no calculation of what their monthly annuity payments will be, reports Roseanne Jefferson, a retired USPS benefits manager, in her Postal Retirement column.

Drop dead
She notes that the postmasters have to decide by “an irrevocable drop dead date” whether to retire without knowing what their retirement income will be.

“Who does that?!" she asks. "Who retires not knowing how much EVEN the gross annuity is, even before any deductions are made? Seriously….do you apply for a job, get the job, and then go home and tell your spouse, hey honey, I got a job…and the spouse says….GREAT!!!, how much will you be making….and the newly employed spouse says, gee I don't know, I guess I will find out when I get my paycheck.”

“The Postal Service has done NOTHING to improve their FERS [Federal Employee Retirement System] annuity estimates,” says Don Cheney, who has been working on USPS early-retirement issues for a decade, often on behalf of fellow APWU members. “They still don’t include the FERS Annuity Supplement when it is applicable."

Confusion is rampant
"Employees don’t know when they are eligible for the FERS Annuity Supplement or how much it is,” Cheney adds. “The rules in FERS are complex, unlike the old CSRS [Civil Service] Retirement System. Confusion is rampant, because local personnel offices were abolished in 2007” when the work was contracted out.

The Postal Service’s practices violate the Office of Personnel Management (OPM) instructions, Cheney claims.In a list of annuity estimates an employing agency must provide upon request, OPM’s handbook provides this instruction (in Section 40A2.1-3, pp. 20-21): “For FERS employees eligible to receive an annuity supplement, estimate the monthly amount payable to age 62.”

The case of the missing annuity estimates is just another chapter in a story that has been unfolding for years. In 2009, for example, only 3% of the 150,000 employees offered a VERA accepted, partly because many mistakenly thought they would be subject to a penalty.

Those eligible for a VERA frequently receive FERS annuity estimates that understate their annuity payments by more than $1,000 per month. And at times many postal retirees have had to wait seven to nine months to receive their full retirement payments.

No winners
No one wins when such incompetence discourages employees from retiring. Certainly not the Postal Service, which is desperate to reduce expenses in light of declining revenues. And with half of the postal workforce being 50 or older, plenty of employees are eager to leave if they could just be sure what their retirement income will be.

By enabling USPS to replace long-time employees with lower-paid new hires and to eliminate jobs without violating no-layoff clauses, the various early-retirement drives are probably saving the Postal Service billions of dollars annually.

Just think how much greater the savings would be if the Postal Service could just do what is commonplace among large businesses – provide accurate and timely retirement information to its employees.

Related articles:

• Budget Cuts Are Delaying USPS and Federal Retiree Payments 
• How Does the Postal Service Discourage Early Retirement? Let Me Count the Ways 
• The Hidden Benefit of Postal Service Retirement

Postal Workforce Is Both Shrinking and Growing

The U.S. Postal Service added more than 4,000 jobs in February, but the postal workforce is actually shrinking.

USPS’s payroll had 607,600 people in February, up 4,600 from January, according to data released by the federal Bureau of Labor Statistics on Friday.

“The US Postal Service continues to lose money as it is bleeding cash,” responded Jon C. Ogg of 24/7 Wall St. “So can someone please manage to explain how the USPS added jobs at a time that Saturdays are being dumped for delivery days?”

Yes, I can explain: USPS hired the newbies to take up the slack from a massive wave of retirements. And perhaps to save money.

The Postal Service reports that it had 468,000 full-time employees in late

Employee Buyouts Surpass USPS Projection

At least 23,000 APWU-represented employees have signed up for incentives to leave the U.S. Postal Service, according to Postmaster General Patrick Donahoe.

Donahoe provided that number at a "State of the Postal Service" presentation last week to leaders of the Mailers' Technical Advisory Committee (MTAC), according to notes released yesterday by Idealliance, a trade organization of publishers and their suppliers. Postal officials had predicted that 15,000 to 20,000 of the approximately 115,000 eligible employees would take the buyout, which includes $15,000 and for many the chance to take early retirement.

Full-time employees had until yesterday to accept the buyout or to change their minds if they had already signed up. Part-timers' deadline is Jan. 4.

Donahoe also told the MTAC leaders that USPS is urging the lame-duck session of Congress to take action on postal reform and not start over in 2013, according to the Idealliance summary. The key issues are removing the burden of prefunding retiree health benefits and allowing five-day delivery, he said.

Related articles:

• USPS Underestimates How Many Employees Will Take the Money and Run, Poll Says
• Congress Is Fixin' To Fix the Postal Service  
• USPS Planning Retirement Incentives To Help Downsizing, Donahoe Testifies

USPS Underestimates How Many Employees Will Take the Money and Run, Poll Says

The majority of voters in a Dead Tree Edition poll predict that more than 20,000 APWU members will accept incentives to quit.

Of the 1,577 votes in the poll that ended tonight, only 16% agreed with a postal executive's recent estimate that 16,000 to 20,000 of the 115,000 eligible employees would accept the buyout package. Nearly 62% of voters predicted a higher number.

But voters also concluded that the "in the range of 35,000" estimate from William Burrus, former APWU president, is too high. Only one-fifth of voters predicted that more than 30,000 members of the Postal Service's largest labor union would call it quits.

The buyout package includes $15,000 and, for many employees, an even more valuable opportunity to take Voluntary Early Retirement.

Dead Tree Edition estimates that, if successful, the buyout program could reduce the Postal Service's compensation costs by more than $1 billion annually. But USPS seems to be doing little to present the buyout package in the best light, for example sending thousands of employees inaccurately low estimates of their retirement benefits.

Ironically, the APWU, which stands to suffer a significant loss of dues income as a result of the buyouts, is doing more than USPS to clear up the confusion about retirement benefits that may dampen response to the offer.

For example, it sent out a bulletin today informing members about the FERS annuity supplement, about which the Postal Service has been mostly silent. And Burrus urged those considering retirement to "take the money and run" because the Postal Service is unlikely to offer them a similar incentive in the future.

Related articles:

• USPS Seeks 'Soft Landing' For Downsized Employees, Donahoe Says 
• USPS Planning Retirement Incentives To Help Downsizing, Donahoe Testifies
• Response to Buyout Offer Better Than USPS Expected  
• New Poll: How Many Postal Workers Will Take the USPS/APWU Buyout Incentive?
• The Hidden Benefit of Postal Service Retirement 

The Hidden Benefit of Postal Service Retirement

Question: When does $16,638 actually equal nearly $30,000?

Answer: When a U.S. Postal Service employee compares the retirement annuity the USPS says he will receive to the payments he will actually get. Ignorance of the additional payments has hindered employees from accepting early-retirement incentives that are so crucial to the Postal Service’s cost-cutting efforts.

Consider the case of “Joan”, an APWU member who is eligible for Voluntary Early Retirement (VERA) and a $15,000 incentive to quit as part of a major USPS downsizing effort. In early October, as part of the incentive program, USPS sent her a notice that her retirement annuity would be $16,638 annually.

After factoring in her other potential income sources, Joan at first decided she couldn’t afford to quit her $53,000-per-year job. But fortunately, she dug a little further and talked to experts in the arcane world of USPS retirement benefits.

An additional $13,000
That’s how Joan learned that if she took the VER she would be eligible for an additional “FERS annuity supplement” of $13,020 annually when she turns 56 in a few years, says Don Cheney, who for years has been helping fellow APWU members understand their various retirement benefits.

“With this new information, she is taking the VER,” Cheney says.

Response to Buyout Offer Better Than USPS Expected

Unless a lot of postal workers get cold feet in the next couple of weeks, more employees will accept a $15,000 incentive to quit than postal executives had expected.

About 20,000 APWU-represented employees have already signed up for the buyout, Federal Times quoted Postmaster General Patrick Donahoe as saying today. That's at the top end of the 15,000-to-20,000 expected range the U.S. Postal Service provided last month and then reiterated last week.

Those who have signed up can back out before the Dec. 3 decision deadline, Federal Times' Sean Reilly noted. But it seems unlikely that many who signed up so far in advance would have a change of heart. Among the early sign-ups are some who had decided months or even years ago to leave as soon as a buyout was offered.

Thousands of the approximately 115,000 eligible employees are probably still digging through the complexities of postal pensions, annuities, Thrift Savings Plan payouts, tax implications, payments for unused leave, etc. to decide whether to take the money and run. Thanks to the incomplete information and lack of guidance USPS provides to potential retirees, the more postal workers learn about their various retirement benefits the better retirement usually looks.

So expect the number of employees who take the buyout to exceed 20,000. By Dead Tree Edition's rough calculations, that means the buyout could end up reducing USPS costs by more than $1 billion annually.

A slight majority of voters in a Dead Tree Edition poll so far believe the USPS estimate is too low. As the number of votes reached passed 1,000 this evening, 52% predicted that more than 20,000 would take the buyout. And 20% predicted the number would be above 30,000. Current results, and the chance to cast your own vote, are near the top of the right-hand column.
  
For more information on the buyout offer, see:

• Confusion, Misinformation Could Hinder USPS's Early-Retirement Push  
• Take the Money and Run, Burrus Tells Postal Workers  
• New Poll: How Many Postal Workers Will Take the USPS/APWU Buyout Incentive?

New Poll: How Many Postal Workers Will Take the USPS/APWU Buyout Incentive?

Offering 115,000 APWU-represented employees $15,000 to quit will clearly be one of the best investments the U.S. Postal Service has ever made.

What's not clear is how big the investment and payback will be. In other words, how many eligible employees will take the buyout? Dead Tree Edition is asking its readers to make their own prediction (the poll is near the top of the right-hand column) on the early-out incentives that could yield $1 billion or more in annual savings.

When it announced the program a month ago, USPS said it expected 15,000 to 20,000 employees to participate.

Former APWU President William Burrus soon countered with his a much higher estimate -- "in the range of 35,000" -- and advised postal workers not to hold out for something better. (See Take the Money and Run, Burrus Tells Postal Workers.) But the Postal Service's chief human resources officer indicated recently that his estimate had hardly changed; it's now 16,000 to 20,000.

Eliminating a position held by a full-time career postal worker probably saves USPS at least $60,000 annually. And a new employee is likely to cost USPS only half of what a veteran career worker does, according to Burrus.

That means that if half of the early retirees are replaced, a total of 15,000 buyouts would save USPS nearly $700 million annually. But if 35,000 take the package, the savings could be nearly $1.6 billion.

Confusion, Misinformation Could Hinder USPS's Early-Retirement Push

Confusion reigns among the 115,000 postal workers who received notices in the past few days about a buyout offer. The confusion could limit the number of APWU-represented career employees who accept the U.S. Postal Service’s $15,000 incentive to retire or quit.

”The Postal Service's voluntary early retirement annuity estimates are as bad as before,” says Don Cheney, a long-time critic of the U.S. Postal Service’s communications with its employees regarding retirement benefits.

As usual, the errors tend to understate what employees’ benefits will be upon retirement, says Cheney, an APWU member who for the last nine years has been advising postal workers and writing about errors in retirement estimates the U.S. Postal Service provides its employees.

(See How Does the Postal Service Discourage Early Retirement? Let Me Count the Ways, Why Does USPS Make Retiring Difficult When It Has So Many Excess Employees?, and The Postal Service's Early-Retirement Snafu for more on how the Postal Service’s poor communications have undercut its previous efforts to downsize by offering early-retirement incentives.)

“I am receiving numerous inquiries about the retirement incentive,” former APWU president Bill Burrus wrote a few days ago. He urged the union’s current leadership to designate a knowledgeable officer or staff member to help members who have questions about the early-out incentive.

“This is an important time in their lives and they are in need of timely answers to their questions,” Burrus wrote. And they won’t get those answers from the Postal Service. As Cheney notes, USPS offers no retirement counseling to employees taking early retirement until after the decision to retire is irrevocable, which postal unions claim is contrary to federal regulations (not to mention common sense).

Take the Money and Run, Burrus Tells Postal Workers

The U.S. Postal Service's proposal to downsize its workforce with an employee buyout received support Saturday from a long-time adversary.

William Burrus, former president of the agency's largest labor union and long a vocal critic of USPS management, urged fellow APWU members not to hold out for a better offer than the $15,000 incentive announced this week.

"If you intend to retire my advice is to 'take the money and run,' there is zero possibility that the amount will be increased," Burrus wrote in his blog today. "And for those who hope that a similar offer will be made in the future, I suggest that the odds are heavily against another incentive any time soon."

For the Postal Service, the time has never been better to offer clerks, mechanics, drivers and other APWU-represented employees an early-out bonus, the retired labor leader wrote, because "consolidations and service standard changes will make it possible to process a changing mix of mail with fewer employees."

Downsizing Diminishes USPS's Role As A Source of Opportunity for Blacks, New Book Says

Downsizing of the Postal Service’s workforce is undercutting the service’s historic role as an opportunity provider for African Americans, according to a new book by a postal-worker-turned historian.

Philip F. Rubio’s There’s Always Work at the Post Office: African American Postal Workers and the Fight for Jobs, Justice, and Equality is “a history of black postal workers, their activism and influence on the post office and its unions, as well as the significance of government employment in the making of the black community.” The book starts in the 19th century but focuses especially on the major role played by African Americans in the crucial wildcat postal strike of 1970.

Especially telling is this passage from an interview with APWU president William H. Burrus Jr.: “'The post office has been unique . . . . We shaped America,' notes Burrus, who warns that 'our country will lose something' without universal service: 'It will also put an end to the relationship between the people of color and their opportunity to climb up the ladder of success in our country. . . . The postal service has permitted millions of African Americans . . . to better themselves.'”

Rubio worked 20 years for the Postal Service, first in the Denver Bulk Mail Center and then as a letter carrier in North Carolina, before heading to graduate school and becoming a professor at North Carolina A&T State University.

The book cites 2008 statistics showing that the USPS’s workforce was 21% African American, 8% Asian American, 8% Hispanic, and more than 37% female.

‘That diversity came about primarily as a result of the fight led over the years by African American postal workers for jobs, justice, and equality at the post office,” Rubio concludes.

The Reinterpretation of William Burrus

Many postal workers have jumped to the defense of APWU president William Burrus as a result of my article, Mathematically Challenged: Burrus Proposal Doesn’t Add Up for USPS. But if many of these defenders are correct, they should be angry at Burrus for garbling the message and distracting people from the real issue.

Of the scores of comments submitted to this site and several postal-news sites, many stated that what the union president meant to say is that the U.S. Postal Service can sort un-presorted letters for 1 to 3 cents apiece (depending upon the commenter), while mailers get First Class presort discounts of up to 10.5 cents each. But that’s not even close to what Burrus actually said.

It’s also contrary to the Postal Service’s own data earlier this year estimating that the presorting of First Class letters saves it far more than 3 cents. But some of Burrus' defenders have raised legitimate questions regarding whether those cost estimates match current USPS practices.

One of the best what-he-really-meant-to-say defenses of Burrus came from “uncommonsense”, a commenter who acknowledged that Burrus’ challenge to Postmaster General Jack Potter is “a publicity stunt” with “no serious evaluation of costs/benefits”. (Rather damning praise, I’d say.) Here is uncommonsense’s valuable history lesson:

"In 1999 the OCR machines that the USPS was running had the ability to read about 20% of the letters ran through them. They had a throughput capacity of 30,000 letters per hour and required 2 trips through the machine to sort to the first breakdown and only allowed 94 different breakdowns. Most of the mail that ran through this machine had to have images of it sent to human keyers on terminals at one of 55 REC sites to provide the information to barcode the mail piece.

"Today, because of faster computers and more advanced software, the equipment that the USPS is running is able to read and apply barcodes to about 97% of the letters ran through it and sort the mail pieces to over 200 possible breakdowns, ALL on the first pass @ 40,000 letters per hour. An equivalent breakdown in 1999 would have required 3 passes through the OCR @ 30,000 pieces per hour and many human keyers. So in one hour with 2 operators and a keyer, the USPS can now process what used to take 4 hours 2-3 operators and many keyers. The new equipment is also much less expensive to maintain then the old MLOCR was.

"Now, 3% of letter images are sent to human keyers at one of 2 REC sites. Despite adding Flats and Parcel images to keyer duties, technology has allowed the USPS to eliminate 53 out of 55 REC sites.
Since USPS costs for bar coding and sorting letters has decreased so much since 1999 why have the work share discounts not also decreased?"

An anonymous commenter chimed in with this spot-on observation: “Presort mailers prepare the mail to the exacting specifications of the USPS Domestic Mail Manual in order to claim any worksharing discounts. If there is an issue with the mail handling once received - we are doing what the Postal Service told us to! If it needs to change, it's a Postal Service task.”

Another commenter added, “It's the silly Post Office rules that waste money. I have seen carrier-routed mail returned to the SCF in order to co-mingle it with other mail. Why can't the carrier just case it in? Think of the man-hours, and transportation costs that this takes. All of this is because management has the silly notion of having all the carrier's mail ready to deliver when they arrive in the morning.” (In defense of the Postal Service, using otherwise underutilized mail-sorting operations to do work that takes a burden off the delivery operations might actually make economic sense.)

The picture that emerges from these comments is that, while the size of presort discounts on letters might once have been justified, they are no longer consistent with the Postal Service’s costs. Put another way, the commenters are indicating that automation and excess mail-handling capacity have shrunk the cost difference between handling presorted and un-presorted letters.

I’m not saying they are correct. Some of their cost calculations are clearly wrong – for example, some included only salaries while ignoring benefits, facility costs, etc. But the arguments of “uncommonsense” and some of the other commenters have far more logic and plausibility than Burrus’ vague, ill-conceived proposal.

Burrus muddied the waters by proposing an obvious money loser for the Postal Service – remove First Class presort discounts that average 8.9 cents per letter and pay APWU members 10.4 cents instead to do the sorting. He tried to make his sloppy math more favorable to the Postal Service this week by throwing in a bonus – free sorting of parcels – along with his usual big-mailers-are-vermin bluster.

But the proposal is still too vague to be taken seriously. Among many flaws with the Burrus plan is that it would decrease the demand for First Class mail by raising prices. So with APWU members getting their 10.4 cents on fewer letters but still having to sort parcels for free, would they end up having to take a pay cut?

In an attempt to move the discussion away from character assassination and conspiracy theories, Dead Tree Edition offers these observations and ideas:

• Rather than trying to keep excess employees busy by incenting mailers to mail in a less efficient manner, which is in essence what Burrus is proposing, downsizing the workforce via meaningful early-retirement incentives would be more productive. (See What the Postal Service Left Out of the Early-Retirement Deal.)  Presorting address data before a mailing occurs is inherently more efficient than sorting the actual mail pieces.
 
• Presorted letters are highly profitable for the Postal Service, as evidenced by its eagerness to offer the Summer Sale on Standard mail and the Fall Sale on First Class. USPS’ problem is not that it doesn’t charge enough for letters, it’s that it doesn’t have enough letters to charge for. Anything that would reduce the volume of letter mail, as would Burrus’ proposal, would be counterproductive for the Postal Service and its employees.

 • Under current law, any significant reduction in First Class presort discounts would require decreasing the price of un-presorted letters (that is, the 44-cent First Class stamp). Otherwise, the inflation-based price cap on First Class would be violated.

• If indeed presort discounts on First Class letters are larger than justified, there might be a way to shrink them without hurting mailers or driving business away from the Postal Service – dropship discounts. Business mailers get 4.3 cents for dropshipping Standard letters to Sectional Center Facilities but nothing for First Class, even though dropshipping clearly saves the Postal Service money. Introduction of First Class dropship discounts (which would have to clear some legal barriers) could compensate mailers for the shrinkage of presort discounts and cause them to mail in ways that are more efficient for the Postal Service.

• For the record, I am not "speaking on behalf of the Far Right" (Burrus' description this week of those who defend business mailers) and have not made anti-union statements (just criticisms of a specific union official's proposals). If I were part of the Far Right, I never would have written articles like the recent one ridiculing Rush Limbaugh or have published the ghost-written piece, How sleepy is the giant?.

• Maybe “uncommonsense” should replace Burrus as the APWU’s spokesman.

Mathematically Challenged: Burrus Proposal Doesn’t Add Up for USPS

Such a deal! A labor union is offering to charge “only” 10.4 cents per letter to do work for which mailers are in essence only charging the U.S. Postal Service an average of 8.9 cents.

The offer from the American Postal Workers Union would also require a substantial increase in postage rates that would drive profitable business away from the Postal Service and harm its customers.

Here’s the “challenge” issued by William Burrus, president of APWU, last week to Postmaster General Jack Potter:

"Discontinue the exorbitant postage discounts that are offered to large mailers -- which are currently as high as 10.5 cents per letter -- and allow members of the APWU to perform all mail-processing functions at the rate of 10.4 cents for every letter and flat," Burrus said in a statement.

What the Burrus Challenge Means
The 10.5 cents refers to the difference between a 44-cent First Class stamp and the 33.5 cents paid for a one-ounce First Class letter presorted to the 5-digit level. But more than half of all presorted First Class letters pay a higher rate than the 5-digit level, resulting in an average rate of 35.1 cents, according to USPS. That’s an average postage discount of 8.9 cents off the single-piece rate.

By increasing the price of all presorted First Class letters to 44 cents, the Burrus proposal would be raising those rates by an average of more than 25%. Businesses would respond by shifting even more communication from mail to email, offering larger incentives for online billing, and finding other means of reducing their First Class mailings.

The price increases would decrease the volume of such mail by more than 6%, according to Postal Service studies that have been criticized as understating the price elasticity of First Class demand. USPS would save only 11.6 cents per letter on the lost volume, according to data USPS recently submitted for the “Fall Sale”.

A Billion-Dollar Mistake
So here’s what the math means: Presorted First Class letters currently contribute an average of 23.5 cents (35.1 minus 11.6) toward the Postal Service’s fixed costs. With Burrus’ proposal, the contribution margin would shrink to 22.0 cents (44 minus (11.6 +10.4)). Throw in the lost volume, and his challenge would decrease the contribution from presorted First Class by more than 12%, or well over $1 billion annually.

Such a financial loss would put pressure on the Postal Service to downsize even further, threatening the livelihoods of some APWU members.

Burrus’ simplistic challenge glossed over some other inconvenient facts:

• Price Cap: Annual increases in First Class rates by law are capped at the rate of inflation, resulting in no increases next year and only 5% in a high-inflation year. With presorted letters constituting more than half of all First Class mail and single-piece (44-cent) letters more than a third, there’s no way to implement Burrus’ plan without violating the cap even in a high-inflation year.
• Other Costs: Burrus says that APWU members would sort the letters for 10.4 cents each, but there would be other costs as well -- supervisors, maintenance of machinery, heating and lighting of buildings, etc.
• Work-Sharing Discounts: Study after study has shown that work-sharing discounts in general and the discounts for presorted First Class in particular are a good deal for the Postal Service.
• Mailers’ Cost Advantage: It is inherently easier and cheaper to sort bits of data than physical letters. That’s what presort is about – sequencing the addresses in an optimal manner for the Postal Service before the letters are even produced. No matter how hard they work, APWU members cannot achieve the same results as mailers at anywhere near the same cost.

Washington insiders tell me Burrus is a savvy player who knows what to say to get politicians’ attention. So why would he put forth a proposal that would hurt his own members and that probably would be impossible to implement anyway?

With his announced retirement next year, perhaps he’s more interested in getting sound bites than in proposing long-term solutions. And perhaps he realizes that no one on Capitol Hill will take his challenge seriously anyway.

Potter certainly didn’t. Less than 24 hours after Burrus issued the challenge, Potter announced that there will be no increases in postage for First Class and most other mail during 2010.

Maybe the timing was only a coincidence. Or maybe it was Potter’s way of saying to Burrus, “Don’t let the screen door hit you on your way out.”

Related Articles:

• When business is down, kick the customers: Burrus doesn't want the Postal Service to meet with its largest customers.
• Why Potter Is Freezing Postal Rates, And What It Means For 2010
  

The Postal Service's Early-Retirement Snafu

Better communication, not additional incentives, is all the Postal Service needs to entice more employees to retire early, a union leader says.

The USPS is providing incomplete benefit estimates to eligible employees, according to Don Cheney, a long-time leader of the Auburn, Washington APWU local who has worked extensively on early-retirement issues for the past six years. In some cases, USPS is providing eligible employees with early-retirement estimates that are at least $1,000 per month too low, says Cheney, who has written several articles about USPS retirement programs for PostalReporter.com

USPS is also failing to counter the common misconception that most eligible employees would be penalized if they take early retirement, according to Cheney.

Noting the importance of early retirements to USPS’s downsizing efforts, Dead Tree Edition reported last week that only 3% of eligible employees have accepted the latest offer because they want to avoid a penalty. But the penalty applies only to employees in the pre-1983 retirement plan known as CSRS, which is less than 20% of the workforce, rather than to the newer FERS plan, Cheney says.

“The U.S. Postal Service failed to promote the unique advantages of VERA [voluntary early retirement] to FERS employees,” Cheney says. “FERS was designed to be a flexible and portable retirement system.”

For example, USPS is not telling FERS employees about the annuity supplement they can receive from age 56 to 62, he says. That normally requires 30 years of service, but the early-retirement program reduces that to 20 years. And because the Postal Service has skimped on retirement counseling, most employees don’t realize that money in their Thrift Savings Plan accounts can be “withdrawn as an annuity at any age without an early withdrawal penalty.”

Postal workers who try to get more information about VERA benefits face a Catch-22 situation -- a USPS notice that for VERA it “cannot verify whether employees are on the eligibility listing or discuss individual questions/concerns until application for early retirement is submitted and approved.”

“Once an application is approved, it is past the deadline to withdraw!” Cheney told Dead Tree Edition. “Who is going to risk applying for VERA under these circumstances without knowing in advance what their FERS annuity supplement is going to be, what deposit must be made for military service after 1956, their eligibility to keep their insurance benefits, etc?”

When an early-retirement package was offered to APWU members six years ago, postal workers came to Cheney for help because he was president of the Auburn local. He remembers one woman in particular.

“People in personnel could not answer her questions. So I read everything I could about FERS. Like FERS-eligibles today, she could not get from USPS an estimate of her FERS annuity supplement, although she was . . . eligible for it. Six years later, FERS-eligibles still get the run-around when they ask about their FERS annuity supplement.”

Recent Cheney articles about early retirement include ones countering the notion of a penalty for early retirement and another claiming that USPS lacks an automated system for calculating VERA benefits.

It's not every day that a union leader says, basically, "You don't need to give us more money, just tell us what we're due."

The atrociously low response to early-retirement offers is evidence enough that the Postal Service needs to rethink its efforts. If even half of what Cheney says is true, the Postal Service is missing out on a seemingly easy, humane, and cost-effective way to carry out a much-needed thinning of its ranks.

See the follow-up article "What the Postal Service Left Out of the Early-Retirement Deal"
about the enhanced early-retirement package the Postal Service announced for some employees in late August of 2009.