The US Postal Service is planning to reduce payroll by 20 percent. That’s a nicer way of saying 20 percent will join the unemployment lines. The Postal Service is citing increasing costs from employees and declining mail volume.
Notably among the costs cited were retirement and healthcare. It was only in 2007 that Congress mandated it pay over $ 5 billion a year into its retiree funds.
ATTLE — 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.
The layoffs would be achieved in part by breaking labor agreements, a proposal that drew swift fire from postal unions. The plan would require congressional approval but, if successful, could be precedent-setting, with possible ripple effects throughout government. It would also deliver a major blow to the nation’s labor movement.
In a notice informing employees of its proposals — with the headline “Financial crisis calls for significant actions” — the Postal Service said, “We will be insolvent next month due to significant declines in mail volume and retiree health benefit pre-funding costs imposed by Congress.”
During the past four years, the service lost $20 billion, including $8.5 billion in fiscal 2010. Over that period, mail volume dropped by 20 percent.
The Postal Service is not directly financed by the government, and, therefore, must finance itself.
However, because of labor laws and government regulation, it is not allowed to set its own prices, wages, or even hours. So any reforms to allow it to operate efficiently has to be met and approved in Congress. Given that, it is no wonder that its private sector competitors provide a superior service and make a profit. The Postal Service is handcuffed and cannot direct its own internal policies for long term planning.
Hooray for Big Government!
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