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

 

Prospects Dim for USPS Early-Retirement Offers

U.S. Postal Service employees waiting for incentives to retire early shouldn’t get their hopes up.

“It is unclear if USPS will continue to use separation incentives to reduce the size of its career workforce,” says a new Congressional Research Service report, “U.S. Postal Service Workforce Size and Employment Categories, FY 1995-FY2014.”

The Postal Service’s latest five-year plan, updated in April 2013, “included a goal to reduce its career workforce to approximately 404,000 employees through attrition by 2017” which would represent a 17.3% decrease (84,300 fewer employees) from FY2014 staffing levels,” the report says.

USPS staff told the CRS this month that it’s working on a new five-year plan, which the researchers said “might contain new strategies for increasing the cost efficiency of the workforce, including the alteration or removal of workforce reduction goals.” Translation: “Postal officials acknowledged they have abandoned their impossible staff-reduction goal and therefore aren’t likely to offer early-retirement incentives any time soon."

USPS shed about 92,000 career workers from FY2010 to FY2013, with more than half receiving such incentives as Voluntary Early Retirement (VERA) and cash bonuses of up to $20,000. But the only early outs in FY2014 involved 1,380 postmasters, and the number of career employees has actually inched up in the past year.

An ecommerce-fueled rise in the USPS’s package business, slower decreases in traditional mail volumes, and apparent abandonment of a plan to curtail Saturday delivery have made obsolete the goal of shrinking to 404,000 careerists. After teetering on the edge of insolvency a couple of years ago, the Postal Service has recently operated on a slightly cash-positive basis despite backing off on workforce-reduction efforts.

Related articles:

• The Hidden Benefit of Postal Service Retirement
• USPS Employment Levels Have Stabilized 
• 10 Ways E-Commerce Is Reshaping the USPS

 

 

Budget Cuts Are Delaying USPS and Federal Retiree Payments

Government efforts to save pennies always seem to end up costing dollars, as some U.S. Postal Service and federal retirees are learning the hard way. As a result, future efforts to downsize the Postal Service through early retirements may suffer.

USPS’s most successful efficiency tactic in recent years has been reducing its workforce by offering Voluntary Early Retirement (VERA). But reports of disgraceful nine-month waits to start receiving full retirement checks discouraged many other employees from taking the offers.

The federal Office of Personnel Management made remarkable progress last year, reducing the backlog of federal and USPS retirement applications by 55%, the agency reported yesterday. In the first quarter of this year, OPM processed more applications than ever in recent memory, putting it “on track to eliminate the pending case backlog” and to achieve “our target processing time of 60 days.”

But look for more backlogs and delays, OPM warned.

With the help of additional overtime and improved processes, the agency was able to keep pace when faced with a wave of about 21,000 early-retirement applications from postal workers early this year. OPM reported that it “was able to produce an average of 14,000 claims per month in February, March, and April rather than the 11,500 per month plateau envisioned in the strategic plan.”

Then OPM was hit by the sequester – budget cuts that kicked in because Congress couldn’t come to agreement on how to close the federal budget gap. The cuts were automatic, with Congress and the Obama Administration having little ability to preserve spending that would end up saving money.

“Beginning on April 28, 2013, all overtime for employees working in RS [Retirement Services] at OPM was suspended and call center hours were reduced,” the agency said. “The loss of funding through sequestration resulted in a reduction of 20 to 25 percent of case production. Our current processing capability generally matches the receipts each month, preventing us from reducing the inventory, which is needed to reach our goal to process 90% of the cases within 60 days of receipt.”

"Retirees should expect an increase in the time required to respond to inquiries."

The sequester has also prevented the agency from replacing employees and may cause it to lose many of the temporary workers it hired to battle the backlog. (When government employees get jerked around like this, is it any wonder that "good enough for government work" is so often substandard?)

“While it is our hope that process improvements developed over the past year will ameliorate some of the adverse effects of these necessary actions, retirees should expect an increase in the time required to respond to inquiries,” the agency wrote.

If normal funding is restored when the new fiscal year begins in October, the agency estimates it can whittle the backlog down to target levels by March 2014. But that’s a big if.

After all, a previous ill-advised cost-cutting program got OPM into the backlog mess in the first place. Claims-processing staff was reduced a few years ago in anticipation of an automation system that ended up being a total failure.

In any case, postal workers considering retirement will still need to consider how they’ll get by in the months between the paycheck stopping and the full retirement checks coming.

Related articles:

• It's Good News, Bad News For USPS and Fed Retirees 
• For Postal Service Retirements, Slow Going Ahead  
• How Does the Postal Service Discourage Early Retirement? Let Me Count the Ways 
• The Hidden Benefit of Postal Service Retirement

The Biggest Stories of 2012, the Year of No

It's been a year of "no" in this little corner of the universe -- no postal reform, no big paper merger, no more listing on the RISI Top 50, no major bankruptcies. There was even a double negative: no No Print Day.

The hot topic this year for Dead Tree Edition readers has been retirement: Nine of the 10 most-read stories dealt with efforts (or lack thereof) to downsize the U.S. Postal Service workforce by getting more employees to quit.

Here's a brief recap of the year's highs and lows:

• Most popular article: By a landslide it was USPS Planning Retirement Incentives To Help Downsizing, Donahoe Testifies, with 42,000+ page views, more than double that of any other story.
• Most commented article: 8 Reasons USPS Productivity Is Declining: The Employees Speak Out, with a whopping 74, including many insightful responses from the Postal Service's front lines.
• Most influential article: Some would say it was Greenpeace Sticks It To Toshiba: Company Has No Paper Policy because an embarrassed Toshiba pulled the plug on its hypocritical No-Print Day the next day, but I suspect that was a coincidence. My vote is for 10 Questions About Toshiba's No-Print Day, which nine days earlier brought Toshiba's greenwash effort to the attention of a fairly small audience, but an audience that quickly spread the word to more influential writers and

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."

Postal Workers Are Putting Off Retirement

Note: PostalNews Blog has a different interpretation of the recent USPS employment statistics that is worth noting. It points out that thousands of employees have gone from part-time to full-time. The number of part-timers, meanwhile, is decreasing faster than the number of full-timers. So much for the goal of having a more flexible USPS workforce.

Talk of early-retirement incentives for U.S. Postal Service employees may have temporarily backfired: Career employees of the U.S. Postal Service have apparently been retiring in record low numbers

The number of full-time employees shrank by only 1.6% in the past year, according to a statistical report USPS released Friday. That’s a minuscule net attrition rate in an organization that is hardly hiring any new full-time employees, where half the employees are 50 or older, and where nearly half the employees are eligible to retire.

The net loss of only 8,141 full-timers between June 2011 and June 2012 is a far cry from the decrease of nearly 22,000 the previous year and more than 38,000 the year before that. The irony is that the Postal Service has placed increased emphasis on downsizing its workforce to cope with declining revenues.

The low attrition numbers back up what many USPS employees have been saying for more than a year: They are delaying retirement in hopes of bagging some incentive money.

Bill Would Address Federal and Postal Retirement Snafus

The longstanding problems of inaccurate pension estimates and slow pension payments for Postal Service and federal employees may finally be addressed by Congress.

Sen. Mark Warner

Sen. Mark Warner (D-VA) has proposed an amendment to the postal-reform bill in the Senate that would require monthly reports on the accuracy and timeliness of pension estimates, the backlog of retirement applications, and the status of the retirement systems modernization project.

He would also set Jan. 31, 2013 as the date “by which all Federal payroll processing entities will electronically transmit all personnel data to the Office of Personnel Management.”

Warner’s proposal is one of 39 amendments to S.1789, the 21st Century Postal Service Act, on which the Senate is scheduled to vote Tuesday (April 24). Update: Warner's amendment was included in the version of S.1789 the Senate approved on April 25 and sent to the House.

It’s no coincidence that Warner wants to make his proposal part of a law intended to improve the U.S. Postal Service’s finances. Dead Tree Edition and others have long contended that low-ball pension estimates and the months-long waits for retirees to receive benefits are major hindrances to USPS’s cost-cutting efforts. (See, for example, How Does the Postal Service Discourage Early Retirement? Let Me Count the Ways.)

USPS Planning Retirement Incentives To Help Downsizing, Donahoe Testifies

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.

USPS' Mess and NewPage's Saga: Dead Tree Edition's Best (and Worst) of 2011

Articles about the U.S. Postal Service’s struggles were the most-read features of Dead Tree Edition in 2011, while NewPage's downward spiral into bankruptcy protection was also a popular topic.

Once again, the 10 most popular articles were all about the Postal Service, led by USPS Retirement Mess: A Major Barrier to Downsizing and Obama Hints At Changes To Postal Service Workforce, each with nearly 20,000 page views. The irony is that many people mistakenly thought the first article was criticizing postal unions (I was actually praising them for addressing a problem that management seems to be ignoring.) and that nothing much has come of Obama’s hinting.

Readers actually spent the most time – nearly 1,000 hours – reading Postal Service, White House Engaged in 'Intense Discussions'. Nothing much seems to have come from those discussions, either.

The article receiving the most comments – a whopping 49 – was Postal Service Has Too Many Employees and Pays Them Too Much, Mailer Groups Say. A lot of postal employees wondered why USPS has so many supervisors, why they’re working overtime when there are supposedly too many workers, and why U.S. mailers are complaining about the best bulk postage rates in the world.

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.

Related articles:

• How Does the Postal Service Discourage Early Retirement? Let Me Count the Ways: VERA programs would have worked better if the Postal Service had given employees accurate and timely estimates of their retirement benefits.
• Does the Postal Service Really Want Early Retirements?: Don Cheney, an expert on USPS retirement benefits, charged this week in an editorial for PostalReporter News that the Postal Service laid the groundwork for weakening no-layoff clauses by bungling employee communications related to VERA offers.
• Postal Service Can No Longer Afford Money-Saving Tactics, Study Says: VERA offers that lead to positions being eliminated are a good deal for the Postal Service, but it no longer has enough cash to offer them. (Here's an opportunity for Congress to ride to the rescue: Provide funds for early-retirement incentives as a way of minimizing USPS layoffs.)

The Downsizing of the Postal Workforce Slows

The dramatic downsizing of the U.S. Postal Service's workforce has slowed considerably in the past year, according to USPS documents.

The number of career employees decreased by only 25,409 in the 12 months leading up to June 2011, according to a USPS document released this week, versus 44,145 in the previous 12 months and 36,326 in the year before that. That means the annual net attrition rate declined from 7.0% to 4.3% in the course of a year.

Much of the slowing attrition rate occurred in the 151,385-employee “Clerks/Nurses” category, which lost 7,839 workers in the past year versus 23,368 the previous year. Attrition also slowed for mail handlers, whose ranks decreased by only 1,871 versus 4,576 in the previous period.

More than 20,000 USPS employees, mostly clerks and mail handlers, accepted a $15,000 early-retirement incentive in late 2009. Many postal employees have left comments on Dead Tree Edition and other Web sites indicating they are ready to retire if they are offered a package.

But as the Inspector General recently pointed out, the Postal Service's "current financial state" prevents it from offering such buyouts despite the long-term savings that would result. (See Postal Service Can No Longer Afford Money-Saving Tactics, Study Says.)

The ranks of city carriers declined 4.5% and of rural carriers declined 1.8% in the past 12 months; both decreases were in line with the previous year.

But the number of headquarters employees took a big hit because of a recent early-retirement incentive for administrative employees, decreasing 11.7% after increasing 5.8% the previous year. The ranks of supervisors and managers thinned by 8.5%, more than the 5.9% decline the previous year.

The use of casual employees has come back into favor. Their numbers rose 38% in the past 12 months after a 58% drop from mid-2008 to mid-2009.

With about 80% of the Postal Service’s costs going toward salaries and benefits, most USPS efficiency moves are focused on reducing the size of the workforce. In just three years, the number of career employees has declined by nearly 106,000, to a total of 563,492 in June.

Union contracts inhibit layoffs, and employees tend to make a career of the Postal Service – as evidenced by half of the workforce being 50 or older. That means attrition through retirements has been the largest source of employee downsizing.

Related articles:

• It's Good News, Bad News For USPS and Fed Retirees: "The long wait to receive full retirement pay is a stumbling block for efforts to downsize the U.S. Postal Service through attrition." 
• Do We Really Need New Laws To Get More Postal Employees To Retire?: "What we probably need to do is bite the bullet one time and figure out how we’re going to retire people that are over 55 and have over 20 years of service," Congressman Darrell Issa said four months ago.
• How Does the Postal Service Discourage Early Retirement? Let Me Count the Ways: "In recent pension estimates for employees considering early retirement, USPS has been leaving out information about a significant benefit."

Postal Service Can No Longer Afford Money-Saving Tactics, Study Says

Two of the U.S. Postal Service’s most successful methods for cutting costs – early-retirement incentives and automation – are no longer viable strategies because of USPS’s cash crunch, according to a report released today.

“Overall, offering more early retirements for eligible employees would create additional cost savings,” says the report from the USPS Office of Inspector General on USPS's cost structure. It noted a Postal Service statement indicating that savings from buyouts of more than 20,000 clerks and mail handlers two years ago have already doubled the $15,000-per-retiree payouts.

“The problem, however, is how to incentivize further buyouts that the Postal Service cannot afford to offer in its current financial state.”

Largely because of investments in automation and other efficiency improvements, the Postal Service’s labor productivity has improved by 10% in the past decade, according to the report. That has come despite the cards being stacked against the Postal Service -- in the form of decreasing volume, increasing delivery points, and benefits costs that are skyrocketing largely because of Congressional mandates.

But with spending constraints implemented two years ago, USPS’s capital investment has dropped to less than half of its depreciation costs and is one-third to one-sixth the level that is typical for private competitor UPS.

“A continuing freeze in capital investment, while saving the Postal Service in the short term, may paradoxically lead to higher costs in the future, as it defers projects that could potentially improve productivity, such as information technology (IT) upgrades, network rightsizing, and the purchase of energy efficient vehicles. Rightsizing the network to meet decreasing demand is vital to the future viability of the Postal Service.”

Much of the blame for the Postal Service’s financial problems, the report says, comes from its unusual prefunding of retiree health benefits. Congress established those multibillion-dollar annual payments “to secure the Postal Service’s long-term financial viability” but they “are ironically undermining efforts to keep the Postal Service solvent in the near term."

The report concludes: "The Postal Service is at a critical juncture in its history. Only through a combination of continued cost reductions including a rightsizing of the network to meet declining demand, legislative action to deal with cost burdens, and investing in select projects that continue its long history of productivity increases can the Postal Service return to economic viability."

Related articles:

• Here's How the Postal Service Can Get Back Its Pension and Benefits Overpayments: The Inspector General's report cites this Dead Tree Edition article, which advocates making it easier for USPS employees to retire and offering incentives for employees to switch from full-time to part-time status.
• Donahoe's Answer to Postal Bailout Criticism: The Postmaster General recently explained why USPS "needs relief from Congressional mandates".
• Postal Watchdogs Trying to Unleash USPS Innovation: Many of the new ideas for the Postal Service are coming from two unlikely sources -- the independent Office of Inspector General and the Postal Regulatory Commission.

USPS Workforce Has More Gray Hairs Than the Fortune 500

Please note the June 5 update to this article, It's Official: Postal Service Has More Older Workers Than Any Fortune 500 Company.

The U.S. Postal Service apparently has a larger share of employees who are over 50 than any Fortune 500 company, a new study indicates.

American Airlines leads the big companies, with a workforce that is 39.1% over 50, estimates the RetirementJobs.com study, based on public records.

The number of postal workers over 50 does not seem to be publicly available, but the data that are available suggests USPS has the private sector beat in the older-worker category.

"The average age of postal employees is 53," Patrick Donahoe, who is now the Postmaster General, told Bloomberg Businessweek last year.

That doesn't mean that 50% of USPS employees are 53 or older. A more meaningful statistic would be the median age (brush off your high school math textbooks, folks), but the Postal Service doesn't seem to have released that number.

Another clue to the age of postal workers is this statement from the Postal Service's 2010 Action Plan for the Future: "Over the next 10 years, over 300,000 employees — more than half the current workforce — will be eligible to retire." That indicates that well over 50% of USPS employees are over 45.

And the numbers certainly show that the postal workforce has far more older workers than the Fortune 500 as a whole, where the average of over-50 employees is 25.6%.

"It is important to remember that at this point we do not have information on whether or not these employers have committed to hiring older workers, we simply know that they do or do not tend to already employ older workers — either through new hires or retaining existing employees as they age," RetirementJobs.com says.

Many of the companies that rank high on the list, according to U.S. News & World Report, have "a strong union presence" and have gone through significant downsizing -- just like the Postal Service. "When they have had layoffs and they use seniority as the basis for that, it will appear that they have a preference for older workers," said Barry Bluestone, a Northeastern University political economy professor, in the article.

Downsizing through attrition -- mostly from retirements -- is a major part of the Postal Service's strategy to reduce costs in light of declining mail volumes.

Related articles:

• USPS Retirement Mess: A Major Barrier To Downsizing    
• It's Good News, Bad News For USPS and Fed Retirees
• Mamas, don’t let your babies grow up to be mail sorters

It's Good News, Bad News For USPS and Fed Retirees

The good news is that the time required to finalize an employee's application to retire from the federal government or Postal Service has recently improved by about 15%. The bad news is that some retirees are still reporting that it's taking them nine months, even longer, to get their full annuity payments.

The typical time the Office of Personnel Management takes to process a retirement has dropped from 138 days in August to 117 days now, John Grobe wrote recently for FedSmith. But about 10 people submitted comments to the article saying that their own recent applications have been processed far more slowly.

As Dead Tree Edition has pointed out on several occasions, most recently in Do We Really Need New Laws To Get More Postal Employees To Retire?, the long wait to receive full retirement pay is a stumbling block for efforts to downsize the U.S. Postal Service through attrition.

OPM beefed up its retirement staff last year and eventually hopes to modernize its paper-based retirement processing system. It has made headway against the backlog of retirement applications, but was overwhelmed by the usual end-of-calendar-year spike in retirement applications, Grobe wrote.

OPM is also checking with the Postal Service "on current and future downsizings, so that any rush of retirements . . . can be quickly processed," Grobe added.

Two people who commented on the Grobe article said they retired July 31 of last year and will get their first full annuity checks on May 1.

Another commenter, who received interim annuity payments for more than six months that were less than half of the final figure, wrote, "I was taking money out of savings to meet the bills. I have a spouse who was contributing to the checking account also. Best be prepared, if you are the sole source of income when planning your retirement."

Wrote another "I retired 289 days ago and continue to receive monthly payments of $570 -- which is less than 1/4 of my expected annuity."