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Following in the footprints of the failed American steel and auto industries, the U.S. Postal Service (USPS) is the latest union casualty.

The problems of the USPS are many. First, we are in an era when snail mail is on a natural decline due to email, text messaging, etc., an external circumstance about which little or nothing can be done. It is just a matter of the times.

However, the biggest problem facing the USPS is internal – how it is structured and functions on a daily basis. And this speaks specifically to its labor unions.

There is no question as to the fact that the USPS must downsize. In fact, plans are already in place to do just that which includes closing of small inefficient Post Offices plus reducing its labor force. But that is not all that is in its plans. It now wishes to reduce its service to the public. I know it sounds crazy but the Postal Service wishes to cut operating costs by reducing service. And that reduction in service is two-fold:

1. Eliminating Saturday mail delivery and,
2. Changing top mail delivery service from 1-3 days to 2-4 days.

But since Congress oversees the USPS, it must get Congressional approval before it can put any major changes into effect.

And while eliminating Saturday mail delivery may seem reasonable to some in order to reduce costs, this next part of its plan is totally unreasonable – that of reducing its top mail delivery of 1-3 days to 2-4 days. USPS’s reason is to allow mail sorters an additional day to sort mail during week daytime shifts as opposed to nights and Sundays.

At present, most mail is sorted during night and Sunday shifts, periods when differential pay is in effect. On the other hand, week daytime shifts are not subject to differential pay, therefore operating costs are lower. So, what is the problem with this part of the proposed USPS plan?

For starters, from a business perspective, and the USPS is supposed to be operating as an independent business, reducing service to customers should be the last thing to do. Secondly, differential pay cannot be justified considering the business is losing money and is on the verge of bankruptcy.

If differential pay was eliminated, mail sorters could continue to sort mail at night and on Sundays as per the present, and the 1-3 day mail delivery system could remain in effect. And, operating costs would be reduced. If this sounds unreasonable, consider that numerous major companies do just that. For example, Lowe’s and Home Depot employ people around the clock, seven days per week but pay no differential pay. But, for further justification, let’s examine the USPS’s present financial status.

It should come as no surprise to anyone who listens to or reads the news that the USPS has been operating in the red for some time, and is expected to lose another $7 billion this year alone. In addition, it has more than $88 billion in unfunded liabilities including retiree health and pension benefits. Plus, it has had to borrow $13 billion from the government.

Technically one might say the USPS is bankrupt. And if it were truly an independent operating business, it would be. But as long as Uncle Sam is waiting in the wings to bail it out every time it experiences a bump in the economic road, it will have no reason to make logical or reasonable financial decisions.

Even so, why isn’t elimination of differential pay on the USPS’s list of proposed changes since surely its management has thought about it? There can only be one reason – the unions.

All Postal Service work and pay conditions must come through negotiations with the unions. And that means that even if management wished to eliminate differential pay, it could not do so without union approval. And since it is not on the table for consideration by Congress, one can reasonably conclude they either are not up to the fight or consider service to the public secondary to its own compensation.

What private company could stay in business if it operated that way?

To make matters worse, the USPS reportedly has more than 700,000 employees, second only to Walmart, the world’s largest retailer. Average salary is an astounding $83,500, a 30% premium over the private sector. As such, it’s easy to understand that 80% of its costs go to staffing. Compare that with 53% for unionized UPS and 35% for non-unionized Fed Ex.

Clearly, the fate of the USPS rests in the hands of Congress. And if they are serious about saving the agency they will put all options on the table. And one of those options will be to eliminate all differential pay. Another will be to allow the agency to go into bankruptcy and let private sector companies bid for the business. If that were to happen, can you just imagine how much lower the operating costs would be?

Will Congress do the right thing? We will just have to wait and see. But one thing is clear; the U.S. Postal Service is the latest union casualty.

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3 Comments on Postal Service Latest Union Casualty

  1. Calvin Canada says:

    Mr.Canada,
    I just want to tell you I really enjoyed your website and blogs. I hope that you will continue to post more. Lord knows, this administration will supply you with much to write about.

    Thank you for your efforts to help save these United States of America. Take care and God bless you. I will keep you in my prayers.

    Very appreciative,
    Calvin Canada

  2. Lia Dejesus says:

    I am so grateful for your article post. Great.

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