USPS seeks to cut 120,000 jobs: What will be the impact?

Aug 12, 2011

It was reported that "the financially strapped U.S. Postal Service is proposing to cut its workforce by 20 percent and to withdraw from the federal health and retirement plans because it believes it could provide benefits at a lower cost." What sort of impact will this have on the organization, its workers and the rest of the country?

Join federal workforce reporters Lisa Rein and Eric Yoder as they discuss the move and what it means for the future of the U.S. Postal Service and more, today at noon ET.

Have a question? Ask now.

Hi, everyone. This is staff writer Eric Yoder. The postal proposal certainly is an eye-opener, in terms of what it might mean for jobs and benefits there, plus the future of how mail is delivered in this country.

How will this affect the recycling industry, since most stuff that comes by usps seems to go straight in the blue bin (unless it has to be shredded)? These are green jobs on the line.

hi there, i think the recyling industry has probably already been affected by the downsizing at USPS and is really more a function of how much mail Americans are sending

Will they cut down the amount of days they deliver mail? I know they talked about stopping Saturday deliveries, but could this extend to a larger period of time?

The Postal Service proposed eliminating Saturday service about two years ago, but the idea has been kicked around for many years. The interesting thing is that Congress has not moved to make this change, probably because it is politically perilous. There are postal employees and many post offices in every congressional district. USPS says it could save about $3 billion a year with five-day service

How will their withdrawal from the civil service retirement program affect those employees already retired?

The postal plan would not make any changes for those who are already retired. They would continue to receive the same benefits they currently are receiving. However, should basic benefits for federal retirees be changed, for example, by denying a COLA or changing to a different COLA formula, USPS would follow that change.

Correct me if I am wrong, but aren't FedEx, UPS, and other "package shippers" prohibited from handling regular mail? I know that the Constitution mandates Congress to "establish Post Offices" and that politically it would be harmful to their election funds for them to fully privatize the post office, but it is clear that in our current society, the USPS is not fiscally a "going concern". Why not eliminate the current agency and let contracts for delivery of mail, and/or lease operations to private business?

Carriers like FedEx and UPS actually have contracts with USPS to ship some mail, but they cannot do door-to-door delivery, that's true. You're right that the Postal Service model is a hybrid that can be pretty confusing. It is regulated by Congress but stays afloat through mail revenues. Yet Congress has deemed mail delivery a universal service. Mail must be delivered to everyone even if a route is not profitable. The private sector can cherry pick the most profitable routes.

Is there any precedent for congress to void a contractual agreement between a corporation and a labor union?

Not that I'm aware of in the private sector, although you have to note that the postal service is not truly a private sector entity, being a quasi-governmental corporation. Anyone out there with a history lesson on this that they could share?

Usually when people want to argue why the USPS should not exist they point to how efficiently and competitively priced UPS and Fed-Ex are... However, no one mentions that the least expensive shipping option from either will cost you at least in the $6-7 dollar ball park range. That's assuming they haven't tacked on any "Fuel surcharges" or "Residential Delivery Fee" (That's right- a fee to deliver to a home residence). Is First Class mail greatly under-priced? Should the USPS be allowed to charge Fuel Surcharges and other fees as well for parcel items during times of high fuel prices? I think that would immediately help with their financial situation and give them the ability to react to the competitive landscape quickly. I blame Congress for kicking this can down the road. They should give up their FREE government mailing benefit..the USPS would gladly refuse their allotted 1% a year of operating income in exchange for NOT delivering political mailers for free.

I don't think that free mailing for Congress is a significant contributor to the postal service's problem. That's a fly on the back of the elephant. The real problem is that first class mail, which is the most profitable form, is in a steep decline due to electronic bill paying and other migration to electronic formats of communications that used to be sent through the mail, and which would generate stamp revenue going in both directions. But certainly, sending a letter to Aunt Maude at $7 a shot would be a lot less practical than at 44 cents.

Under the current policy, USPS is not allowed to tack on surcharges. One of their issues is the slowness of the process through which rates are set. It takes many months, if not years, and thus is not responsive to things like higher fuel prices. Also, under the 2006 postal reform law, there are caps on the amount that prices can be increased.

Has the post office specified from were in the USPS they are going to get these cuts from such delivery, clerks or sorting?

Presumably the cuts could come from all areas; The Postal Service wants to close thousands of post offices, which affects postmasters and clerks. But since mail volume is down across the board it looks like they want to scale back other jobs too

Please address the issue of the the USPS Pre-funding of the retirement system. It's been said that without this congressional mandated multi-billion $ payment, the USPS would actually be in the black.

Eric addressed this in a previous answer....

With congress fearful of losing voters by allowing plant and PO closings, could they consider privatization as a way of not having to deal with the problem?

Turning the work over to contractors is one model but the issue for the Postal Service is really that there is less work to be done since mail volume is down. But the agency has come with an "out-sourcing" plan called the "Village Post Office," which would turn traditional post offices into mini-retailers inside existing stores: A gas station, a big-box store, etc. Those clerks would not be postal employees


Current or retired postal workers: We'd love to hear your story. If you'd like to share it with a reporter, please contact Krissah Thompson at to talk about how these changes to the USPS will affect you. 

Absent in this discussion is the congressional mandate that the Postal Service "pre pay" for pension costs. What I am hearing that without the requirement to write a check for 5 billion dollars to the U.S. Treasury at a minimum, is that the USPS actually is profitable. While I don't know much about this requirement, it would certainly have direct bearing on the situation. Congress has already spent our social security and apparently the postal workers pension money as well. Now they want to welch on those. No way to run the government.

Actually, that is far from absent in the discussion--that has been a major issue that USPS has raised time and again. However, there is a lot of disagreement on that issue. USPS claims that it has overpaid by as much as $75 billion, but by another estimate, from OPM I believe, it actually has underfunded retirement. So without a consensus, it's fairly easy to see why Congress has refused to provide relief. In the present budget environment, can you imagine Congress authorizing the Treasury to write USPS a $75 billion check under any circumstances?

USPS is making bad business decisions. They understaff the post offices. Only one clerk is available often and this creates a constant line whenever a customer wants to mail a package of do other business. In addition USPS is top heavy. They need to consider reducing their management before reducing their staff.

What you're seeing here is a very vicious downward spiral. They can't afford to fully staff the desk, so they cut back on clerks. Fewer clerks means longer lines, which means dissatisfied customers who divert their business to other channels--for packages, something like UPS, for important deliveries where tracking is necessary, FedEx, and for routine letters, bill paying and so on, to electronic delivery. Loss of that revenue means that USPS has to cut back further on service, which costs them still more customers, and so on downward.

They have reduced management staff in recent years but that alone simply is not enough to solve this problem, they say.

The Post Office is one of the few things mandated by the Constitution. And Congress has limited the ability of the Post Office to react to existing realities. Now the Post Office is busy losing vast sums of OUR money, but has offered a plan to meet the needs of the system. The ball is now in the Congressional court. Hope they do not do their usual and punt.

Yes--Congress needs to figure out how to deal with the Postal Service's problems and so far it has punted on the issue. A number of bills have been introduced by Republicans and Democrats that would make various changes to save money.. Some would eliminate Saturday service, another would allow the Postal Service to break its labor contracts and streamline the agency's ability to close post offices..

The post office is not losing vast sums of your money, however. It is self-sustaining by law.

Is this simply just another example of tea party Republicans attempt to eliminate labor unions, such as Wisconsin vs. Teacher Unions? If successful, what would be the fallout to every other Union in the country?

I don't think this is politically motivated; it is coming from the Postal Service itself to address what is a realistic financial crisis. What will be interesting to watch, though, is how Congress approaches the question of breaking the unions.  With such a divided Congress there will be vast disagreement between Democrats and Republicans on this issue.

Just last week I was in a discussion on how odd it was that the Postal Service could not raise rates as it saw fit, and how often over the years Congress has refused increases. How absurd a constraint. After all,it's not like Congress gives our tax dollars to fund the Service. The organization runs on stamp revenues, i.e., user fees.

As I mentioned above, it's both Congress and the regulatory process that hamper flexibility in rate setting. Freeing USPS to act completely as a business would have big implications. For example, it probably would have already filed Chapter 11 bankruptcy, and possibly could have broken the no-layoff provisions in the contracts on that basis. It also likely would mean differential pricing--44 cents for a letter to go across the street, $1 to the next state, $3 to go beyond bordering states, or whatever. That would be the end of the concept of universal service that the reader above values so highly.

"The issues of lay-off protection and health benefits are specifically covered by our contract. Each of them has historically been covered in collective bargaining between NALC and USPS. The Congress of the United States does not engage in contract negotiations with unions and we do not believe they are about to do so. Of course, pension benefits for federal employees, including postal employees, are set by law. But rather than advocating pie-in-the-sky proposals, we believe USPS and Congress should focus on pending legislation (H.R. 1351) that would allow the USPS to recover massive surpluses in its CSRS and FERS pension accounts. Under the bill, which has 181 co-sponsors from both parties, the surpluses would be used to cover the unfair burden of pre-funding future retiree health benefits—a burden that no other company or agency bears and which accounts for 100 percent of the Postal Service's losses over the past four years. Contract negotiations for NALC open Thursday, August 18. USPS is free to bring these issues to the table. If they do so, we will bargain in good faith. " Frederic Rolando, President, National Association of Letter Carriers 8/11/11

Thank you Mr. Rolando. This summarizes the postal union' position for our readers. Glad you wrote in.

Is this a real proposal by USPS, or a game of chicken, where the USPS is throwing out a proposal that will have a massive effect on employment, hoping Congress will come up with additional $?

It could be an opening gambit in the Postal Service's effort to get Congress to take up legislation that has been pending for months but has gotten no traction, what with the debt ceiling crisis and the subsequent FAA crisis. Postmaster General Patrick Donohoe has been actively lobbying Congress and editorial boards for months. He is pressing for relief from the health fund prepayment. So there is definitely some strategizing by the Postal Service at work here, I think--but the problems the agency faces are real.

The Constitution requires Congress to "establish Post Offices", but how to run them is a different story. The truth is that first class mail is going the way of the dinosaur. Email, Facebook and cell phones have made "instantaneous" communication de rigeur. I pay all of my bills on-line, and most billers now offer "incentives" to switch to on-line bill delivery, saving them printing, handling and postage expense.

And there's the postal service's problem in a nutshell. That, along with the requirement that it charge the same price for delivering across the country as across the street.

This cannot be permitted to happen. I have never liked the idea of the "USPS" anyway. Let's go back to the United States Post Office, where profit is not expected and an essential national service is maintained at usable levels and at only negligible cost to consumers, the way it used to be. This downsizing mentality that now infects both the public and private sectors has got to stop. It isn't good for a country that so badly needs growth.

If the postal service doesn't break even, the only way service can be maintained is to directly subsidize it with tax revenue--or more precisely, for the country to go deeper in debt by issuing more bonds.

The PMG is certainly playing this anti-union card to membersof a very right wing congress in hopes of getting their support.

It's true that the Postal Service's finances will be approached by Republicans and some Democrats in Congress in the same way as the debt ceiling when the question of government subsidies is on the table. Some think the Postal Service should be saved; others argue that it needs to rein in its costs, particularly labor costs

Prepaying future retiree health benefits for the next 75 years and doing it in only 10 years is what is killing the USPS. It's not labor cost. It's not loss of mail volume. It's not mismanagement. In the last 4 fiscal years revenue has exceeded costs (other than the onerous prefunding ordered by Congress) by $611 million.

Along with the retirement overfunding issue, this is another of the issues that the postal service raises. It has asked for relief from this too but Congress has not complied. For one, this requirement was only imposed less than five years ago, and it's unusual for policy like this to change direction that fast. Labor costs, though, are 80 percent of the postal service's total expenses. This contributes to those costs, certainly.

Incidentally, USPS says it now has $42 billion to its credit from the payments already made and would like that back. What do you think the odds are on that?

What area of jobs will be hit most? Letter carriers? Mail clerks? postmasters? Any idea?

Hi, I'm sorry I don't know enough about the plan to fully answer this.

I always thought that the Service part of USPS was exactly that: to provide a service to the American people. That means sending a letter across the country or to the top of a mountain for the same price. That means sending your Netflix DVD out and getting another one back in 2 days. Service. It's not the US Postal Corporation.

Exactly. it is a service --but also a monopoly and it is supposed to function as a corporation too

We appreciate your questions. As we learn more about this plan and its chances we will be writing a lot more. Don't forgot to stop in at our blog, the Federal Eye

Thanks for joining us, everyone. You've managed to surround these issues very well. We'll be continuing to write about this online and in the paper.

In This Chat
Lisa Rein
Lisa Rein is a reporter covering the federal workforce.
Eric Yoder
Eric Yoder is an an award-winning writer and covers the federal government for the Washington Post. Yoder is co-author of "One Minute Mysteries: 65 Short Mysteries You Solve with Science!" and "One Minute Mysteries: 65 Short Mysteries You Solve with Math!"
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