• on Jul 19th, 2013 in Labor | 43 comments

    Matching workforce to workload has been a long-term struggle for the U.S. Postal Service. In its banner years, when volume was increasing, the Postal Service often found it difficult to quickly reduce workhours to offset seasonal dips in mail volume. Over the past 6 years, as volumes have steadily declined, the Postal Service has done a better job of matching its work hours to its workload. It has its lowest number of career employees in 25 years and productivity has seen steady cumulative improvement.

    Yet finding that perfect match remains elusive. In recent years, the difficulties are evident in an increased use of overtime hours. In a recent audit report, our auditors found three districts with their highest overtime rates during the past five years, and one district where employees received the highest overtime dollars. In this latter district, the Postal Service paid seven mail handlers between $65,000 and $76,000 each for overtime workhours in FY 2012, resulting in their salaries more than doubling. Overall, overtime hours accounted for more than 7 percent of total workhours in both fiscal years (FY) 2011 and 2012. The rate is well above the Postal Service’s target rate of 5 percent. The Postal Service’s paid overtime costs have been steadily increasing the past 4 years. They totaled $3.5 billion in FY 2012 compared to $2.5 billion in FY 2009.

    The Postal Service uses overtime hours to provide flexibility and meet operational requirements without having to increase overall staffing levels. This has been a useful tool over the past few years, as the Postal Service has consolidated and closed facilities, and seen the departure of thousands of employees. Overtime usage has allowed the Postal Service to quickly adjust its workforce as it transitions to a leaner network and makes the necessary organizational changes.

    Still, the OIG found opportunities for tighter controls on overtime usage. The OIG review of the four districts determined that the Postal Service could reduce overtime usage by establishing a plan to address staffing vacancies, better aligning workforce to workload, and implementing plans that align mail arrival times with carrier schedules so carriers aren’t waiting on mail to arrive at delivery units, then spending overtime hours delivering the mail.

    Please share your thoughts on the Postal Service’s use of overtime. Is it the best tool for managing workhours during consolidations, closures, and realignments?  If not, are there better tools and approaches? What steps do you think the Postal Service could take to  minimize use of overtime pay?

  • on Jun 10th, 2013 in Labor | 11 comments

    The national agreements between the U.S. Postal Service and two of its unions give the Postal Service greater flexibility to use non-career employees for clerk and mail handler duties. The Postal Service pressed for the new employee categories in its separate labor negotiations with the American Postal Workers Union (APWU) and the National Mail Handlers Union, because it wanted greater workforce flexibility in scheduling and aligning employees with the work available. The Postal Service expects this will allow it to reduce labor costs, which currently make up about 80 percent of total costs.

    With the APWU, the Postal Service has already begun to utilize the two new employee categories created under their National Agreement, which include postal support employees and non-traditional full-time employees. The provision on new employee categories in the National Mail Handlers Union’s agreement does not take effect until August, but it will allow for similar type of workers to be used. These workers will start at a lower hourly wage and will have limited benefits.

    The number of Postal Service career employees has declined steadily over the past decade. As of early 2013 the Postal Service had just over 500,000 career employees, down from 729,000 in Fiscal Year 2003. Recent buyout offers have spurred a wave of retirements and moved the Postal Service closer to its goal of further reducing its workforce by 150,000 employees by 2015. Unlike previous reduction-in-workforce efforts, the Postal Service now has the flexibility to hire part-time employees. By shifting more work to lower-paid employees with less expensive benefits, the Postal Service is hoping to move the needle on its labor costs.

    A recent OIG audit report on the use of part-time employees in processing operations found that the Postal Service is increasing its use of these part-time positions, but it has not hired them to the fullest extent allowed by the contract. It could have saved more than $30 million in labor costs last year if it had hired postal support employees up to contract limits.

    Time will tell if the new workforce flexibility significantly reduces labor costs. But our early audit work suggests savings are available. What is your experience with the changes in the types of employees and how they are used? Is mail processed as efficiently, more efficiently, or less efficiently using postal support employees and non-traditional full-time employees? Have there been any unexpected effects (positive or negative) of the changes? Has overtime usage increased or decreased as a result of using part-time and non-traditional full-time employees?

  • on Jan 7th, 2013 in Labor | 5 comments
    U.S. Postal Service employees are covered by the Federal Employees’ Compensation Act (FECA), which provides workers’ compensation benefits to civilian federal employees who sustain work-related injuries or an occupational disease. The U.S. Department of Labor Office of Workers Compensation Programs (OWCP) administers workers’ compensation and provides direct compensation to providers, claimants, and beneficiaries. The Postal Service later reimburses OWCP in what is known as “charge-back billings.” The Postal Service is the largest FECA participant in the federal government. It paid $1.2 billion in workers’ compensation claims and $67 million in administrative fees in charge-back year 2011. In addition, its estimated total liability for future workers’ compensation costs is about $17.5 billion. The Postmaster General noted in testimony last year that when the Postal Service revalues its liability to reflect current interest rates, it creates significant non-cash fluctuations in its bottom line. For this reason and others, the Postal Service has pushed for comprehensive FECA reform legislation. Providing gainful employment within medically defined work restrictions is in the best interest of both employees and the Postal Service. The Postal Service uses its limited duty program to assign available work for those employees who are temporarily unable to perform their regular functions. Limited duty employees retain the discipline of going to work every day and recuperation may also be accelerated if they are as active as possible. Early return to the regular job is the ultimate objective of the limited duty program. However, with diminishing mail volumes and limited resources for proactive case management, the Postal Service faces significant challenges in providing adequate work. The Health and Resource Management (HRM) staff and other officials play an important role in administering the injury compensation program and reducing related costs by returning injured employees to work as soon as possible and, in part, pursuing third-party liability. The Office of Inspector General (OIG) intends to assess whether the Postal Service’s HRM staff, supervisors, and other officials have all the necessary resources to successfully return employees back to work. And if not, what tools do they need to facilitate the return to work process. What practices are working or should be changed to more effectively administer the Postal Service’s injury compensation program? Share your comments in our blog section and follow the link to take one of the three surveys on this topic, depending on your employment position.

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