Postal Service mulls 20 percent workforce cut

The U.S. Postal Service is contemplating asking Congress to enact legislation that will allow it to rapidly lay off 20 percent of its workforce, according to internal documents.

A USPS discussion draft says that the service can only afford to employ 425,000 workers by 2015 and that it needs to lay off 120,000 workers and have 100,000 workers leave the service voluntarily to reach that level.

USPS is facing insolvency in September due to massive retirement system pre-payments it is required to make. Officials are prepared to brief congressional staff in the coming days on possible paths to solvency that go beyond an existing USPS request to avoid the pre-payment.

“Unfortunately, the collective bargaining agreements between the Postal Service and our unionized employees contain layoff restrictions that make it impossible to reduce the size of our workforce by the amount required by 2015,” a USPS discussion draft titled “Workforce Optimization” states. “Therefore, a legislative change is needed to eliminate the layoff protections in our collective bargaining agreements.”

USPS is also seeking to opt out of the federal government’s retirement system and health plan and to establish its own benefits, according to another draft document. For new hires, the plans would “reflect private sector trends,” the document states, suggesting a lower level of benefits.

The layoffs and benefit proposal come on top of USPS proposals to eliminate Saturday mail service, close 3,700 locations and consolidate processing facilities.

Postal employees were told that "workforce flexibility" proposals are being explored in a notice labeled "financial crisis calls for significant actions." Employees were told the proposals are in the "exploratory stage."

Sens. Tom Carper (D-Del.) and Susan Collins (R-Maine) and Rep. Darrell Issa (R-Calif.) all have introduced postal reform bills that could move next month.

A Carper aide said Thursday that the “latest proposals from the Postal Service again underscore how serious their financial predicament is — they are on the brink of total financial collapse and we cannot allow that to happen. Sen. Carper is open to considering any idea that can prevent the Postal Service from going bankrupt.”

“He is waiting to get the details on the two proposals before determining whether or not he would support them. He is particularly interested in learning whether these proposals would be fair to employees and effective in reducing the Postal Service's costs,” the aide said. 

"These new ideas from the Postal Service are worth exploring," Issa said. "Options for reform and cost savings that will protect taxpayers from paying for a bailout, now or in the future, need to be on the table."

The bills from Carper and Collins look to ease the burden of the Postal Service's scheduled September pre-payment for retiree healthcare — in part by giving USPS access to what both senators and the service believe are overpayments into a separate retirement system.  

Some outside of government also promised to take a closer look at the proposal.

Art Sackler of the Coalition for a 21st Century Postal Service said the USPS ideas would "undoubtedly be controversial," but praised the service for taking an aggressive look at its finances.

"There are eight million private sector jobs that depend on the Postal Service, and these jobs may be threatened if action isn’t taken soon," Sackler added in his statement. 

But union leaders are already denouncing the tentative layoff and benefit changes.

"The issues of lay-off protection and health benefits are specifically covered by our contract," said Fredric Rolando, president of the National Association of Letter Carriers. "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 that would allow the USPS to recover massive surpluses in its CSRS and FERS pension accounts,” he said.

He pointed out that USPS-NALC negotiations are set for next week and that the union plans to bargain in good faith. 


—Bernie Becker contributed to this report.

This story was updated at 8:15 p.m. and 9:09 p.m.

This post originally misstated how legislation from Sens. Carper and Collins would approach the Postal Service's September pre-payment.