Parsing Labor Costs

Dec 02 2019
OIG Blog Category: Labor 25 Comments

By its very nature, the U.S. Postal Service is a labor-intensive organization. In fact, labor makes up three-quarter of total postal costs — or $57 billion.

Controlling these costs is essential to the long-term viability of the postal system. That’s why our latest white paper attempted to determine where labor costs are increasing, where they have shrunk, and how have they changed over the past 10 years.

First, the good news. Between fiscal years 2009 and 2018, overall labor costs fell 14 percent when adjusted for inflation, although mail volume declined 17 percent. At first blush, it might seem labor costs should have dropped more dramatically given this decline in mail. That is, aren’t fewer workers needed if the workload is getting smaller?

Well, there are reasons costs won’t always decline in lockstep with volume. For one, some costs don’t change much in response to changes in mail volume. For example, mail carriers need to cover their entire route regardless of the amount of mail in their bag. In addition, delivery points are growing even as mail volumes are declining. And more delivery points often mean more carrier costs – a dichotomy that will require strategic cost-control initiatives.

Other areas of concern:

  • Rural carrier costs are increasing, due to the large increase in the number of rural delivery points. Managing rural delivery costs in the face of declining volumes will be a big challenge for the Postal Service.
  • Overtime costs increased substantially in all major labor categories, and this area requires additional attention.
  • Labor costs and use of overtime varied over the country. This is an area where additional study may lead to lessons learned that can be applied to the higher cost areas.

What ideas do you have on containing labor costs? What other costs or areas should be analyzed?

Comments (25)

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  • anon

    The USPS should employ full-time only employees, unless an employee prefers part-time. Get rid of "temporary". After all, how accurate is "temporary" for someone who has worked full-time for the USPS for 14 years, just so that person cannot earn benefits and time toward retirement? This would save the USPS money via increased efficiency. When a city carrier assistant is required to go from route to route, office to office, city to city, it is grossly inefficient. Even though the mail may be cased and ready to go, what if the carrier has never been in that area of the city before? What if it's a rural carrier associate and more than half the boxes and roads are not marked? What if they have only delivered in LLVs and then are expected to make time in the FFV? Make all CCAs full-time carriers who want to be full-time. Make all CCAs part-time carriers who want to be part-time. A full-time, flexible carrier could be hired for every five carriers, within an office, or within multiple offices. If carriers of retirement age want to reduce hours to part-time status, let them, instead of losing them all together. We need to be flexible to survive, right? Just the improvement in morale alone will contribute to millions of dollars in savings. Allow postmasters and station managers to take part in the hiring selection. They will be more likely to accept the new employees and work to make them successful. Institute a pass/fail test at the end of Academy training (where savings will also be realized due to decreases in turnover). If they don't pass, they can apply again for a different position in the same craft with no repercussion. This will allow removal of the 90-day probation period. If they were worth hiring, they are worth treating like a person. This will also help managers do everything they can to assist the new employee, instead of wasting time and resources on figuring out how to get rid of them. Instead of rewarding managers for increased efficiency, over which they have little control, so they yell and belittle carriers, compensate carriers for being more efficient. The system now may afford management flexibility, but with it comes sloppiness, like a loose shoe. Sloppy, loose shoes do not fit, and they are dangerous. Try on a better fitting pair of shoes throughout the Greater Indiana District for a year and see what happens.

    Feb 19, 2020
  • anon

    We dont have enough people. And we cant seem to keep workers. And we are tired, so tired. Our customer is Amazon, that is who we work hardest for. Many workers see what managers must do and refuse to move up. Very few believe it's better to fail than falsify. The pressure to get it done with less equipment, less time, fewer employees is too much. But the pallets keep coming. Safety is lost, productivity is lost, morale is lost...we are lost. What are we? An unfunded public service? Inspect what you expect.

    Feb 05, 2020
  • anon

    Also, why are carriers carrying mail for several days to addresses where houses or businesses have been torn down? Or even warning cards and forward cards if that address has no mail that day? It could be left at the office. One less thing to take time away.

    Feb 09, 2020
  • anon

    I agree with you J. The simplest ideas are always shut down or that's not possible. Imagine the time saved and safety injuries that could be avoided by moving mailboxes to the sidewalk or end of driveways. So many obstacles could be avoided like the number one injury from dog bites or the slips trips and falls from steps and porches that have not been maintained. To me it's a lack of common sense. If you are under pressure for time or otherwise it usually results in mistakes or injury. Safety is preached but not applied. Tools are outdated or not available. Wellness is preached but not applied. If you cant treat your employees well, they leave even if they have to take a pay cut. CCA positions have a high overturn rate due to overwork and lack of protection in the first 90 days. Why have them and invest all that redundant powerpoint training? Training could be reduced to on the job training with a trainer who actually has the time to train properly. Make all employees regular. They may actually stay. Give map directions to new hires that may not be familar with a route on a actual printed out map, mark parking points on map and show the direction of loop instead of throwing them out to a route and saying you need to be done in 2 hours and dont get hurt. Some loops need revisted for parking points. Whats more important? If you park at their point or if all the mail gets delivered? Understandably do not park in fire lanes, next to a fire hydrant, in front of stop signs, or in a handicap spot, but why park on point that makes you walk 3miles to get back to that point? Personally I think it's just as easy to deliver by street than loops. How about having the maintenance department pretrip and designate the vehicles each morning ? This would save carrier time and not have to wait 30 minutes to de ice doors, windows, etc. Make sure all vehicles have proper equipment accident kits etc. It seems to me reforming and redefining departments is what is desperately needed but can they do it without taking years to get it done? Anything is possible. Or is that too much to ask? What could possibly go wrong?

    Feb 09, 2020
  • anon

    Seems the distribution centers could case the mail, ship it off to whatever office and get carriers on the street earlier. That may help in getting routes done by 4pm daily. Create a designated department just for parcel deliveries and if all else fails, ask the public to move mail boxes to end of driveway or sidewalks. Overworked employees lead to less production, that's a given. Call offs etc.

    Feb 04, 2020
  • anon

    I think it would be beneficial to look into the costs of paying companies twice as much as what the hcr contractors are getting from them. Look into what the Postal service is paying them as compared to what the contractor is actually making from them. Negotiate straight with the driver they hired and eliminate THOUSANDS if not MILLIONS on all of those routes combined.

    Jan 27, 2020
  • anon

    Warning about sick building syndrome potential due to the removal of HVAC preventative maintenance routes that had been preformed by usps maintenance department. It's only a matter of time untill peoples health becomes adversely affected due to this new supposed cost cutting policy.Also note that inline water filters installed for water fountains will also no longer be changed under the new policy also opening up another health risk for employees.

    Dec 05, 2019
  • anon

    Abolish excessive wasteful spending by removing antiquated delivery modes. There is absolutely NO reason to go door to door, it's just plain stupid and extremely wasteful. If increases employment, route size and accidents. With postage prices continually rising, the USPS should be able to hire someone that can figure out how to switch door to door deli9very with NDCBUs, this alone would save millions. Get rid of the AMS manager jobs that pay over $80,000.00 because most of those clerk jobs were abolished but the manager job wasn't?????

    Dec 04, 2019
  • anon

    Absolutely need to have an audit of the entire facility repair procedures. FROM contractors practically running the show with regards to price gouging/poor quality and/or incomplete work. They (contractors) know that the postal service has a broken system when it comes to checks and balances on paid repairs. There are vague repair orders these companies show up with and do the work(mostly) and management signs the work is done without even knowing what was proposed/vs paid for/versus actually completed in a manner that is industry standard for the specific repair. Ie: a “general contractor” was paid to do a carpet removal and tile installed in its place. Proper procedures were not followed as far as industry standards for this type of removal/replacement and the floor is a disaster...speaking with multiple usps project managers regarding this did absolutely ZERO to recoup the loss... as a station, our management requested not to use them again and their is a monopoly on repairs by this company ONLY because they respond quickly, but do a really bad job in EVERY area of repair they have done in the past 6 years or so. uSPS money is going up in smoke due to these contracting companies EXPLoITIng our broken system and lack of shared info with the sites on what exactly we are paying them to do. Also properly staffing the postal field maintenance positions will cut back on delayed urgent and usually simple repairs due to having (1j building maintenance person assigned to a city that has over 8 facilities to repair... we have repairs now that have been sitting since August.....need total overhaul NOW!!!!!!! Losing money by the minute and yet The things the buildings to need money spent on our being diverted due to lack of funds...

    Dec 04, 2019
  • anon

    The Golden Cost Benefit rule has no other application, which does not minimize its operating cost must be closed. On the other hand where there is excessive overtime is because the planning does not work

    Dec 03, 2019
  • anon

    An area to decrease labor costs for rural carriers is stop all the 2nd trip, hub and spoke and extras. Before Christmas season started 1 carrier had earned $2000 extra in less than 3 months. Indianapolis plant and Terre haute needs looked into. You all complain about increased spending. This area is a big problem that could save thousands

    Dec 03, 2019
  • anon

    While craft positions have declined since 2006 primarily due to mail volume decline, EAS positions have increased substantially. It seems many of local managers duties are divvied up to EAS employees elsewhere. I've observed several supervisors in my area have been detailed to Louisville where they watch RIIMS data on large flat screen televisions. They get mileage to drive to Louisville every day. What's worse is a craft employee fills in for the temporarily vacant supervisor position. Now the short staffed craft is even more shorthanded. Of course this leads to more overtime. It also often leads to grievance payouts because management doesn't want to follow article 8 of the national agreement when it comes to overtime.

    Dec 03, 2019
  • anon

    Crack me up...Rural costs are going up...Rurals do not get overtime.. Rurals get cheated at mailcount (yes this is true but you never ever checked on mailcounts, so how would you know). package volume goes up and rurals deliver for free... No....Rurals are contributing to keep costs down and you know it...

    Dec 03, 2019
  • anon

    Cut the Postmasters jobs. Over paid and no longer necessary.

    Dec 03, 2019
  • anon

    We have not had overtime pay for years at our post office.Even when we should get it at at Christmas time hours are just adjusted to conform.

    Dec 03, 2019
  • anon

    In my local area (Charleston, SC) overtime is given away like candy at a parade. I've been on the Rural RDWL for 5 years now and I work a majority of my Saturdays off. Personally I've probably worked 30+ Saturdays this year alone. Along with many other carriers on overtime! I see it's a problem and other areas where money is wasted hand over fist but management and other higher up seem to have no concern fixing those areas of waste or paying us the overtime so we work when told to.

    Dec 03, 2019
  • anon

    In our office, (we don't have any city carriers) the carriers walk around and talk all morning. Some carriers are unable to case mail and visit at the same time. An aux route that should take an hour to get to the street USUALLY takes 2-3 hours. The carriers are given "mental health" days off routinely. Carriers often get evaluated time for their route and then an RCA goes on a "green card" (to get paid hourly) to do the rest of the route so regular can go home early. Have 2 rcas that take 15 hours (combined) to deliver 70 parcels on sundays. There is TOTAL INJUSTICE and lack of knowledge on our PM part. She routinely uses 20-24 hours on a single route. Keeps rcas happy and rolling in the $$. This is an EXTREME loss to the USPS, Wouldn't it be nice if someone would actually question her lies and make her accountable! Shes a thief. Im sure we have TONS of PM doing this. salary of $80,000-$100,000 (without bonuses) to do WHAT???? We should have 1 PM for every 5 offices. They could be in 1 office Monday, another Tuesday etc etc just look at the cost savings!!

    Dec 03, 2019
  • anon

    You are positively correct. We have a postmaster that does the same thing and she is constantly trying to screw you out of hours. Maybe, just maybe we have the same postmaster who doesn't have a clue and has never delivered a piece of mail in her entire career. You would thing they would promote long time carriers from either the city or rural that has at least the knowledge of how what it takes to deliver mail.

    Dec 04, 2019
  • anon

    Rising labor costs are directly related to direct marketing mail and the low cost to mail these in the first place. The simple solution is to double the cost for the low quality mailings such as thin, slick plastic based mailings. Even if the mailings drop by 50%, the marginal revenue remains the same but yet labor costs drop significantly. I’ve been a Letter Carrier over 25 years in Columbus, Ohio and thus have a very good understanding of USPS. Regards, Mitch Crawford

    Dec 03, 2019
  • anon

    Maybe the whole scheduling system should be changed, recent studies have shown employees who work less have higher morale, when you’re working your carriers 6 days a week every week they get exhausted, making them less likely to be able to go 110% everyday. Most offices run a 7 day work week as is for amazon. Why don’t we split the week? Like 4 ten hour days would be a set of carriers then, 3 12 hour days. You’d have to change the amount of pay accordingly but I think you’d get a lot more productivity.

    Dec 03, 2019
  • anon

    In times whereby labor cost are being questioned, we should also question whether the postal service should continue giving bonuses to management for the work production of city and rural carriers labor.

    Dec 03, 2019
  • anon

    Symptoms of Management Skills Deficit: -Volume Counts Decrease; Labor Costs Increase -Facilities Operating Costs Increase; Retail Revenues Decrease -Customer Complaints Increase; Overtime Increases -Increase in Errors on Daily Reports -Increase in Scan Misses -Increase in Network Server Traffic

    Dec 03, 2019
  • anon

    Mail volumes are either falsified or adjusted down to reduce clerk hours.I don't think the post office knows how much they really have.Carriers everyday work mail that should be worked by clerks.To get our mail in a timely matter we have to distribute our own mail.

    Dec 03, 2019
  • anon

    Start with the top down, to many chiefs an not enough Indians so to speak. Rural carriers are running on skeleton crews.

    Dec 02, 2019
  • anon

    Perhaps you might look at having 25% of employees in management positions. What other companies have that type of ratio ? Cut one half of management over time @ $80,000 salary × 62,500 managers save 5 billion per year. To much dead weight @ the top & in the middle that never see actual workers in their day to day jobs & are not needed

    Dec 02, 2019