• on Jul 5th, 2010 in Labor | 37 comments
    One area identified in the Postal Service’s action for the future is to increase workforce flexibility. A larger, part-time work force would give postal management the flexibility to increase or decrease employees depending on mail volume. Although this change is not as drastic as closing postal facilities or switching to 5-day delivery, it raises questions about what a part-time postal workforce would look like. The Postal Service has fewer part-time employees than any other international postal operation. Currently only 13 percent of its workforce is part-time. Meanwhile, Deutsche Post employs a 40 percent part-time staff, while the United Kingdom’s Royal Mail employs 22 percent. Local competitors also have a higher percentage of part-time employees. For example, UPS employs a 53 percent part-time workforce and FedEx remains around 40 percent. Generally speaking, the Postal Service is behind the average American private sector firm, which employs a 30 percent part-time labor workforce.

    Is there a downside to employing a larger part-time workforce? Critics argue that part-time employees are less loyal to their employers, and as a result, they increase ”quasi-fixed” costs associated with recruiting, training, and oversight. However, recent findings call these assertions into question. A study in the Annual Review of Sociology found that part-time employees are just as likely as full-time employees to view their jobs as a “central life activity” and to be “equally committed to their organizations.” Moreover, the study also mentioned that employees’ demand for part-time jobs has increased since the 1980s, as the American workforce has increasingly desired job flexibility. Increasing the number of part-time postal employees would make the Postal Service more flexible in the face of declining mail volumes, seasonal fluctuations, and market volatility. For more information visit Newsweek story on part time workers. UPS info blog. A look at FedEx labor unrest. What do you think about the Postal Service’s idea to increase its part-time workforce? This topic is hosted by the OIG’s Risk Analysis Research Center (RARC).

  • on May 3rd, 2010 in Labor | 11 comments
    The Federal Employees’ Retirement System (FERS) is one of the retirement programs of the U.S. government, and benefits are extended to U.S. Postal Service employees. FERS is administered by the Office of Personnel Management (OPM). Congress established the guidelines for OPM to set contribution rates and can alter them by passing new law or amending an existing law. Postal Service employees who began their careers after December 31, 1983, are automatically enrolled in the FERS. For Postal Service employees, a majority of FERS funding is accomplished through Postal Service contributions. The rest is paid by postal employees. During fiscal year 2009, the Postal Service contributed $3 billion to FERS or 11.2 percent of the salaries for FERS employees. As of September 30, 2009, the Postal Service reported a fully funded FERS pension plan that exceeds liabilities by $6.8 billion.

    It’s no secret the Postal Service is in a financial crisis after a $3.8 billion loss in 2009, and a projected $7 billion loss for 2010 after approximately $4 billion in cost reductions. In January 2010, the OIG reported that the Postal Service had been overcharged for FERS’s sister retirement plan, the Civil Service Retirement System or CSRS, by $75 billion. There is a complication that may reduce the FERS surplus in the future. President Obama recently signed a bill granting credit for unused sick leave for FERS retirees. The exact effect on the pension liability is unknown, but it doesn’t take an actuary to understand that it creates an additional future obligation. If the Postal Service has met its current financial obligations for FERS, should it be relieved of its future contributions? What do you think? This topic is hosted by the OIG’s Office of Audit Financial Reporting team.

  • on Mar 15th, 2010 in Labor | 21 comments
    March 18 marks the 40th anniversary of one of the most momentous events in postal history — the postal strike of 1970. The night before, postal workers in New York voted 1,555 to 1,055 to go out on strike in protest of a House committee vote to limit their wage increase that year to 5.4 percent on the heels of a 41 percent increase in Congress’s own pay. The wildcat strike and picketing were effective in shutting down postal operations in New York and quickly spread to about 30 other cities. Within days about 152,000 workers in 671 locations were on strike. It was illegal for federal workers to strike, or even to advocate a strike, but union officials said they had no control over the action. The strike shut down New York’s financial industry, kept 9,000 youths from receiving draft notices, delayed the mailing of census forms and tax refunds, and generally disrupted the country’s communications. Injunctions and heavy fines were levied on union leaders; but the membership paid no attention. President Nixon called out 24,000 military personnel to distribute the mail, but they were ineffective. While the president asserted there would be no negotiations until the workers returned to work, Secretary of Labor William Usery did engage in negotiations that brought the strike to an end after 2 weeks. By all accounts, the strike was extremely successful for the unions, and it set the course of postal affairs for decades to come. No postal worker was ever disciplined for the walkout. Negotiators agreed to a 6 percent wage increase retroactive to 1969, and an additional 8 percent contingent on enactment of the Postal Reorganization Act. The bill had been languishing in Congress, but by April 16, 1970, agreement was reached. It not only provided the 8 percent pay raise, but also allowed postal workers to reach the top of the pay scale in only 8 years — in contrast to the 21 years previously in effect. After the first contract, pay for the newest worker had surpassed what a 21-year veteran had made 3 years earlier. Although the agreement directed the large increase towards high-cost areas like New York, where the strike began, it was effective across the nation, even in low-cost areas where compensation had been ample. The practice of uniform wages continues today at the Postal Service; even though the federal pay system introduced locality pay in 1990. The binding arbitration feature of the Act could also be traced to the strike. According to a union history, binding arbitration was included in the bill “in lieu of the right to strike,” though of course no federal employee has ever had such a right. This feature of the law has meant that the Postal Service has never been able to exert control over its labor costs. Unions also insisted that the Postal Service would not be called a government corporation, to guard against any implication that workers would lose the security of their federal jobs. The strike also set in motion lasting changes in the postal labor movement. Union heads that had tried to control the strike, and were willing to compromise with government leadership, lost credibility. A city carrier, Vincent Sombrotto, was in the forefront of rank and file members in New York insisting on the strike. After the strike, he led a movement to open up union elections and eventually headed the National Association of Letter Carriers for 24 years. Coincidentally with the formation of the Postal Service, five distinct unions of postal clerks, mail processors, maintenance, and motor vehicle workers merged into a new American Postal Workers Union, which provided a more unified voice for labor in political and collective bargaining negotiations. This topic is hosted by the OIG’s Risk Analysis Research Center (RARC).

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