Washington – The U.S. Postal Service wants Congress to help it make significant cuts to employee benefits as part of a plan to balance the agency’s books, according to a draft plan obtained by HuffPost.
The proposal would cut an estimated $18 billion in employee compensation over a decade by shaving paid leave, raising workers’ share of pension contributions, and shifting new employees into 401(k)-style retirement plans.
The change to pension contributions would amount to a cut in take-home pay for hundreds of thousands of workers, at a savings for the agency nearly $7 billion. While excluding new employees from a pension plan is common practice for private corporations these days, it would mark a significant shift for a federal-sector job long seen as a stepping stone to the middle class.
REDUCED EMPLOYEE LEAVE
The change in employee leave policy would combine vacation with sick days, likely resulting in fewer overall days off for workers. That element is estimated to save the agency more than $5 billion.
The proposals obtained by HuffPost were marked as preliminary and subject to change. Postmaster General Megan Brennan is expected to present a business plan to the House Oversight Committee this summer.
The Postal Service said its board of governors was developing a 10-year plan to put the agency “on a sustainable path forward.”
FORCED MEDICARE ENROLLMENT
That path forward, in addition to the benefit cuts, includes a proposal requiring retired employees to enroll in Medicare. The move, dubbed “Medicare integration” was included in previous legislation that didn’t pass.
CUTS TO DELIVERY
The agency is also hoping Congress will allow it to make “frequency delivery changes” – an apparent reference to dropping to five-day delivery, a controversial idea Brennan floated at a congressional hearing this spring. The major postal unions, as well as many members of Congress on both sides of the aisle, have been vocal opponents of delivery cuts.
INCREASED USE OF TEMP WORKERS
The Postal Service also wants to expand its “non-career workforce” – temporary workers who are not eligible for the same pay and benefits as permanent employees.
The Postal Service has already added 37,000 non-career employees since 2007, shedding nearly 200,000 career employees through attrition. The agency currently has around 500,000 career employees.
Jim Sauber, chief of staff at the National Association of Letter Carriers union (NALC), called the proposals “grossly unfair,” saying the agency should be “thinking strategically” about areas to grow its business, rather than trying to make cuts. NALC represents 270,000 active and retired workers.
“Attacking the employees and reducing services is not a strategy for long-term success,” Sauber said. “It’s a strategy for failure.”
While many of the proposed changes are unlikely to go anywhere politically, it shows the thinking of the agency’s leadership as it faces pressure to reverse years of (phony) operation losses.
A 2006 law that forced the agency to set aside billions annually in advance funding for retiree health benefits – a requirement unique to the Postal Service – is largely to blame for the agency’s financial troubles. Private sector companies generally fund retiree health care on a pay-as-you-go basis.
The Postal Service is an independent government agency but it runs like a business – its operations are entirely funded by the sale of postage and other products – but its ability to raise prices or change services is limited by law.
Democrats and union representatives have long said the health benefits pre-funding policy is a deliberate effort to sabotage the Postal Service, arguing the red ink would inevitably become a pretext for worker benefit cuts.
The Postal Service is legally required to serve the entire U.S. population and is generally forbidden from significantly raising prices on regular mail, which brings in most of the agency’s revenue. Although package delivery has grown, people are sending less and less mail. At the same time, population growth is forcing the agency to serve more and more locations.
Unions have urged Congress to remove the prefunding requirement and give the agency more leeway with postage rates before undertaking cuts to delivery or compensation. Such moves, they say, would only deteriorate the quality of the agency and its jobs, making it less viable over the long haul.
Last year, the Trump administration concluded its own study of the Postal Service, recommending leeway for postage prices, cutting pay and restricting collective bargaining.