USPS Labor Inflexibility

July 12, 2010

U.S. Postal Service management has repeatedly told Congress that it needs greater labor flexibility to reduce costs. Despite increased automation and workforce reductions, labor continues to account for 80 percent of the USPS’s cost structure.

As we’ve pointed out, the USPS has a serious union problem. One issue is that collective bargaining agreements make it difficult for the USPS to hire part-time workers. Hiring workers who can work less than 8-hour shifts would give managers needed flexibility to address seasonal and weekly fluctuations in workload. 

The USPS inspector general recently pointed out that the USPS’s utilization of part-time workers is below UPS, FedEx, and its international counterparts: 
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. 
Note that Deutsche Post is privatized and the Royal Mail might soon follow.
Replacing expensive full-time employees with part-time employees would also generate savings. A new study from the Heritage Foundation finds that USPS employees earn considerably more in wages and benefits than comparable private sector workers:
Postal employees earn more than their observable attributes suggest they should…postal employees earn 15 percent to 20 percent more per hour than comparable workers in the private sector. Postal employees receive substantially more employer contributions to their health care plans relative to the private sector (74percent) than federal employees in public administration (22 percent), and have about the same increased odds of enjoying an employer provided pension. 
Past studies have confirmed that postal employees receive a substantial compensation premium versus the private sector.
The Government Accountability Office also points out that the USPS covers a higher proportion of employee premiums for health care and life insurance than most other federal agencies. USPS workers participate in the federal workers’ compensation program, which generally provides larger benefits than the private sector. And instead of retiring when eligible, USPS workers can stay on the “more generous” workers’ compensation rolls. 


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