The Budgetary Woes of the USPS

[JME2]

From Yahoo

WASHINGTON – The financially strapped U.S. Postal Service will run out of money this year without help from Congress, Postmaster General John Potter warned on Wednesday.

"We are facing losses of historic proportion. Our situation is critical," Potter told a House subcommittee.

The agency lost $2.8 billion last year and is looking at much larger losses this year said Potter, who is seeking congressional permission to reduce mail delivery from six days to five days a week.

Potter also urged changes in how it pre-pays for retiree health care to cut its annual costs by $2 billion.

If the Postal Service does run out of money, the lingering question, Potter told the House Oversight post office subcommittee, is which bills will get paid and which will not.

He said ensuring the payment of workers' salaries comes first, but other bills may have to wait.

Potter first raised the possibility of delivery cutbacks in January, but the idea has not been warmly received in Congress.

"With the Postal Service facing budget shortfalls the subcommittee will consider a number of options to restore financial stability and examine ways for the Postal Service to continue to operate without cutting services," subcommittee chairman Stephen F. Lynch, D-Mass., said.

Lynch said the financial stability of the Postal Service is "critical to the American expectation of affordable six-day mail delivery."

Even if the agency succeeds in reaching its planned cost cuts of $5.9 billion, there could still be a $6 billion deficit in 2010, Potter said.

"Without a change we will exhaust our cash resources," Potter said. "We can no longer afford business as usual." He estimated that delivering mail five days-a-week instead of six would save $3.5 billion per year.

Asked if layoffs would occur, Potter said it is possible, but he hopes avoidable.

Last week, the post office said it planned to offer early retirement to 150,000 workers and is eliminating 1,400 management positions and closing six of its 80 district offices across the country in cost-cutting efforts. Potter said he expects 10,000 to 15,000 workers to accept the early retirement offer.

Dan Blair, head of the independent Postal Regulatory Commission, suggested that other savings are possible through closing small and rural post offices — something Congress has resisted in the past. He added that it may be necessary to increase the limit on the amount of debt the post office can carry.

The post office had a $384 million loss in the first quarter of the fiscal year — October through December — which is usually the busiest period because of the holidays.

Officials said the recession has contributed to a mail volume drop of 5.2 billion pieces compared to the same period last year. If there is no economic recovery, the USPS projects volume for the year will be down by 12 billion to 15 billion pieces of mail.

Over the past year the post office says it has cut 50 million work hours, stopped construction of new facilities, frozen salaries for executives, began selling unused facilities and has cut post office hours.

Last year's high fuel prices also sapped funds from the post office, which operates more than 200,000 vehicles. Every one-cent increase in the price of fuel costs the post office $8 million.

Blair also noted that Congress could consider appropriating money to help the post office. Currently the agency does not receive a taxpayer subsidy for its operations, although Congress does subsidize overseas voting and free mail for the blind.

William Young, president of the National Association of Letter Carriers, stressed in his testimony that the agency is not seeking a taxpayer bailout, "but we are here to ask the Congress for help."

"At this moment, the survival of the Postal Service — a venerable institution that is literally older than our country — hangs in the balance," Young added.

Lawmakers also raised questions regarding recent news reports which said Potter is paid as much as $800,000-a-year.

That is not correct, Potter said. He said his salary, set by Congress, is $263,575. He said the news reports were also counting his retirement fund, the cost of his security detail and a $135,000 bonus which would be paid over 10 years after he retires.

The bonus is based on improved delivery rates and customer satisfaction, he said. Under the current financial conditions, Potter said, he would not be eligible for a bonus this year.

Carolyn Gallagher, chairwoman of the postal governing board, said postal executives are paid only a fraction of what executives in similarly sized businesses receive.

[AMT]

Man... that sucks. Shep, you work for the USPS don't you? Any word from the inside?

[consequences]

We have no bodies, and every day seems to require us to make still more bricks without straw.

Frankly, I hope a lot more than 10-15K of the oldsters take early retirement. If we can just replace them 1 for 1 with young schmucks who can work a full forty hour week and don't have years of accumulated sick leave, it will mean a lot less overworking of my tired ass.

[Jaepheth]

How many people really need their mail delivered six days a week?

Why not cut delivery to 2 or 3 days a week, and if people need their mail on an off day, they can go pick it up themselves at their local post office?

[Qwerty 42]

How many people really need their mail delivered six days a week?

Why not cut delivery to 2 or 3 days a week, and if people need their mail on an off day, they can go pick it up themselves at their local post office?

This makes good sense.

The USPS is, in a way, running into the same problem on a smaller scale that the newspaper industry is. I don't know how much of its revenue comes from letter delivery, but just about everyone in this day and age would prefer to do that via e-mail. While packages must be shipped, they face competition there from UPS, et al.

[MKSheppard]

Frankly, I hope a lot more than 10-15K of the oldsters take early retirement. If we can just replace them 1 for 1 with young schmucks who can work a full forty hour week and don't have years of accumulated sick leave, it will mean a lot less overworking of my tired ass.

And that means I can move up from being a backup to a backup (TRC) to a RC.

[Sea Skimmer]

How many people really need their mail delivered six days a week?

Why not cut delivery to 2 or 3 days a week, and if people need their mail on an off day, they can go pick it up themselves at their local post office?

They’ve been talking about killing delivery days for a while; the problem is when you start restricting services like that usage is going to drop off even more. Meanwhile many costs may not be proportionally reduced. Like if those post offices are still open on days they don’t deliver, you just eliminated a big chunk of the possible savings by having to keep people in them and the lights on.

It’s not unlikely that Wednesday or Tuesday delivery will die in the next couple years, but going to just 2-3 delivery days total would just be the end of the postal service.

[lance]

How many people really need their mail delivered six days a week?

Why not cut delivery to 2 or 3 days a week, and if people need their mail on an off day, they can go pick it up themselves at their local post office?

Netflix definitely needs mail to be delivered more than 3 days a week. If it only delivered 3 days a week I would cancel my service.

[Thanas]

Same with lawyers and companies - they need to keep some fixed dates for legal reasons.

[Darth Wong]

We have no bodies, and every day seems to require us to make still more bricks without straw.

Frankly, I hope a lot more than 10-15K of the oldsters take early retirement. If we can just replace them 1 for 1 with young schmucks who can work a full forty hour week and don't have years of accumulated sick leave, it will mean a lot less overworking of my tired ass.

They still cost a fortune even if they retire. All of these companies with huge benefit packages have had demographics looming over them for a long time: they needed constant growth in order to pay for all of the unreasonable promises their unions forced them to make. In the case of the USPS, it is also saddled with special requirements because it is a public service, so it is expected to operate things like tiny rural post offices at a huge loss.

[Ekiqa]

They still cost a fortune even if they retire. All of these companies with huge benefit packages have had demographics looming over them for a long time: they needed constant growth in order to pay for all of the unreasonable promises their unions forced them to make. In the case of the USPS, it is also saddled with special requirements because it is a public service, so it is expected to operate things like tiny rural post offices at a huge loss.

Not looming over them.

If they had paid on time, the money required, and not put it off for years, it wouldn't be so big, and for those in trouble like the automakers, they should have been able to realise that they were in serious trouble.

Not paying a minor payment for 10 to 15 years becomes a BIG payment. Paying out, and budgeting for it, is not a horrible thing, and it would have eliminated such huge clouds of doom.

Unreasonable or not, the companies negotiated and agreed to those.

[Darth Wong]

If they had paid on time, the money required, and not put it off for years, it wouldn't be so big, and for those in trouble like the automakers, they should have been able to realise that they were in serious trouble.

How does this refute the fact that the burden is killing them?

Not paying a minor payment for 10 to 15 years becomes a BIG payment. Paying out, and budgeting for it, is not a horrible thing, and it would have eliminated such huge clouds of doom.

Oh right. They should have just opened up their reserves of free extra cash and poured money into it all those years, so there would be plenty of extra money now. It's so EASY to run a big company in your mind, isn't it?

Unreasonable or not, the companies negotiated and agreed to those.

And this refutes my point ... how?

[Ekiqa]

If they had paid on time, the money required, and not put it off for years, it wouldn't be so big, and for those in trouble like the automakers, they should have been able to realise that they were in serious trouble.

How does this refute the fact that the burden is killing them?

Not paying a minor payment for 10 to 15 years becomes a BIG payment. Paying out, and budgeting for it, is not a horrible thing, and it would have eliminated such huge clouds of doom.

Oh right. They should have just opened up their reserves of free extra cash and poured money into it all those years, so there would be plenty of extra money now. It's so EASY to run a big company in your mind, isn't it?

I obviously know better than them that putting off costs for decades is not smart, and could have been paid for with a very minor price increase in products, possibly coupled with a decrease in executive bonuses.
The burden may be killing them, but if they were smart, intelligent, and knew how to run a business, there would be no burden.

Unreasonable or not, the companies negotiated and agreed to those.

And this refutes my point ... how?

Maybe doesn't refute it, but self-inflicted wounds do not garner any sympathy. In fact, you used to get shot by firing squad for such in the military.

[KrauserKrauser]

You obviously have no clue what you are talking about with respect to executive bonuses and the USPS. Did you read the part in the article where the head of the USPS was saying he makes sub 300k a year and the only bonus he is getting is a couple hundred thousand for his retirement?

They could have easily increased prices, sure, just lay their customers over a barrel and have at them because the Union wants more money, and I'm sure the customer definitely would not have looked at UPS, FedEX etc for their shipping needs with that in mind. Sounds like a winning business plan, increase prices or the monopolized labor pool will strike and the government more than likely will side with them because, you know, Unions and all, so you're fucked! Thanks for playing!

I hear that smart, intelligent Unions should try not to bleed their parent company dry in case they want jobs in the future. Honestly I hope that the USPS union just straight up strangles the company, then we might get another public sector union busted up due to their own incompetence and greed.

Maybe a better plan would be to recognize that the contracts that were agreed to in the past are currently killing the golden goose and maybe some concessions are necessary, but in your case, who the fuck cares! The government will just bail them out, Money for everyone!

I'm a supervisor in a union shop and whenever I hear someone bitching about their pay I can just let them know what I make and to a person their reaction is "Seriously? That's nuts! How can I make that much more than you?"

[Darth Wong]

Ekiqa, you are full of shit. The promises were made in the first place because employees were unreasonable, and executives buckled. And you have no evidence whatsoever that "executive bonuses" would make even a miniscule dent in these costs. Do you have budgetary data that allows you to make these bold statements about how easily they could have fully funded these ridiculous long-term benefit packages?

You have done absolutely NOTHING to refute the charge that these benefits packages are excessive. You only mumble that the companies could have easily raised their prices in order to pay for them: a completely ignorant and brain-damaged statement in a highly competitive market such as cars or a price-regulated service provider like the USPS.

Typical pro-union idiot: "they could have just raised prices or cut executive bonuses!"

[J]

I obviously know better than them that putting off costs for decades is not smart, and could have been paid for with a very minor price increase in products, possibly coupled with a decrease in executive bonuses.
The burden may be killing them, but if they were smart, intelligent, and knew how to run a business, there would be no burden.

Hint. Pull up all their annual budget reports for the last 20 years. Then look at their payroll costs, revenue sources, pension & healthcare costs and so forth. Have fun. Until then, shut it.

[Ekiqa]

Ekiqa, you are full of shit. The promises were made in the first place because employees were unreasonable, and executives buckled. And you have no evidence whatsoever that "executive bonuses" would make even a miniscule dent in these costs. Do you have budgetary data that allows you to make these bold statements about how easily they could have fully funded these ridiculous long-term benefit packages?

You have done absolutely NOTHING to refute the charge that these benefits packages are excessive. You only mumble that the companies could have easily raised their prices in order to pay for them: a completely ignorant and brain-damaged statement in a highly competitive market such as cars or a price-regulated service provider like the USPS.

I say that the benefits packages are not excessive, because the line employee's were making approximately 1% of the executive's salaries, and that is a fairly generous estimate. In 2003, the average CEO earned 525 times the salary of the lowest worker, of the S&P 500, according to a Washington Post source on wikipedia.
In 2007, the CEO of GM earned $19,761,874 in total compensation.

These union deals were all made when the companies were supposedly profitable, and when the companies started loosing money, the unions would have made concessions if the executives did too. But the execs continued to give themselves raises, hence the unions demanded them too.

These so-called legacy costs, such as the pension plan, were supposed to be funed EVERY year. Despite being in "profitable" times, they did not provide the funding. If they were unable to provide the funding then, they should have either renegotiated at the next contract renewal, and trimmed other costs. But they didn't.

And in regards to the "highly competitive" auto market, if one of the big three raised prices, the odds of the other two not matching that raise are tiny. It's similar to the so-called price competition between gas stations, which always match each other.

Give me more time and I can better reply. I'm going out for the rest of the day, and wont have access until tomorrow afternoon.

About the USPS, I didn't mean to attack them. Their executive salaries are reasonable, as are their bonuses, which are only granted for exceeding criteria.

[Darth Wong]

I say that the benefits packages are not excessive, because the line employee's were making approximately 1% of the executive's salaries, and that is a fairly generous estimate.

That would be a really great rebuttal if there were only 100 employees for each top executive, and we all agreed that the executive salaries were not also excessive. But the fact is that executive salaries, while exorbitant, are also small costs for the overall organization relative to labour costs. GM is not groaning under the weight of the obligation to pay for decades of future guaranteed executive benefits; that is not what's killing their bottom line.

Once again, you have said NOTHING to refute the charge. Nothing more than mindless pro-union tripe and non sequiturs.

[consequences]

We have no bodies, and every day seems to require us to make still more bricks without straw.

Frankly, I hope a lot more than 10-15K of the oldsters take early retirement. If we can just replace them 1 for 1 with young schmucks who can work a full forty hour week and don't have years of accumulated sick leave, it will mean a lot less overworking of my tired ass.

They still cost a fortune even if they retire. All of these companies with huge benefit packages have had demographics looming over them for a long time: they needed constant growth in order to pay for all of the unreasonable promises their unions forced them to make. In the case of the USPS, it is also saddled with special requirements because it is a public service, so it is expected to operate things like tiny rural post offices at a huge loss.

Part of my reasoning is that new employees, even if the unions stick to their guns and demand career positions, will draw less than half the pay of the people with 20-30 years who are moving out. If the unions wise up to the current conditions and allow the hiring of more casuals without endlessly bitching about it, the costs reduce still further.

I'm not even going to try to defend the unions in this case, they tend to be a pack of overly territorial short-sighted jack-asses who seem determined to pick the most obnoxious assholes as representatives(although that might just be fact that the fucker on my shift really pisses me off personally).


And for the record, the fact that the prepayment of various retirement benefits into a currently untouchable fund is essentially required by law is a large part of the reason the USPS was so far in the hole last year, and also why I'm pretty sure that getting people to retire will be a net positive. Unless you subscribe to the belief that the people in charge are morons who don't have any accountants working for them, they aren't going to suggest measures that will have a net negative effect.

[Ekiqa]

I say that the benefits packages are not excessive, because the line employee's were making approximately 1% of the executive's salaries, and that is a fairly generous estimate.

That would be a really great rebuttal if there were only 100 employees for each top executive, and we all agreed that the executive salaries were not also excessive. But the fact is that executive salaries, while exorbitant, are also small costs for the overall organization relative to labour costs. GM is not groaning under the weight of the obligation to pay for decades of future guaranteed executive benefits; that is not what's killing their bottom line.

Once again, you have said NOTHING to refute the charge. Nothing more than mindless pro-union tripe and non sequiturs.

At the time they were agreed to, the union deals were NOT excessive. They are excessive now, because so few people are buying vehicles, and as a result, the unions are granting concessions to the automakers.

Maybe I'm so pro-union because I currently get paid bottom dollar as security for a company that is making huge profits. And they advertised as industry leading pay.

[Darth Wong]

I say that the benefits packages are not excessive, because the line employee's were making approximately 1% of the executive's salaries, and that is a fairly generous estimate.

That would be a really great rebuttal if there were only 100 employees for each top executive, and we all agreed that the executive salaries were not also excessive. But the fact is that executive salaries, while exorbitant, are also small costs for the overall organization relative to labour costs. GM is not groaning under the weight of the obligation to pay for decades of future guaranteed executive benefits; that is not what's killing their bottom line.

Once again, you have said NOTHING to refute the charge. Nothing more than mindless pro-union tripe and non sequiturs.

At the time they were agreed to, the union deals were NOT excessive. They are excessive now, because so few people are buying vehicles, and as a result, the unions are granting concessions to the automakers.

Don't be stupid. They were ALWAYS excessive because they were guarantees regardless of future conditions or performance. That is hugely unreasonable and any honest person would know that. Job security guarantees are inherently stupid and unreasonable, and should frankly be outlawed from all CBAs.

Maybe I'm so pro-union because I currently get paid bottom dollar as security for a company that is making huge profits. And they advertised as industry leading pay.

Why the fuck should you get paid good money if you're nothing more than a security guard? That is PRECISELY what's wrong with unions; they expect high pay regardless of whether they actually do jobs which warrant it.

[J]

At the time they were agreed to, the union deals were NOT excessive. They are excessive now, because so few people are buying vehicles, and as a result, the unions are granting concessions to the automakers.

This is quite possibly the dumbest thing I've heard all day, and that includes the diarrhea that came out of Jim Cramer's mouth. THE UAW CONTRACTS HAVE BEEN EXCESSIVE AND UNSUSTAINABLE FOR AT LEAST THE LAST 30 YEARS.

Maybe I'm so pro-union because I currently get paid bottom dollar as security for a company that is making huge profits. And they advertised as industry leading pay.

You're a lowly security guard, did you honestly think you'd have police officer pay? If you did, that's probably why you're being dicked around by your company.

[Darth Wong]

I don't think Ekiqa understands the distinction between simple payment and guarantees of future compensation. If I pay someone $500 to do some work for me today, that is nowhere near comparable to signing a contract guaranteeing that I will pay him $50 every day for the rest of his life.

[Nephtys]

The starting wage for a UAW Janitor is $52,000 dollars a year PLUS ridiculously good benefits. That's insane.
http://www.uaw.org/contracts/03/gm/gm02.cfm

That's pretty close to what starting ENGINEERS get paid. With better benefits. That's pretty disgusting. It's also twice as much money as a janitor working for anyone else gets in Detroit. A twenty million dollar bonus is a drop in the bucket if you have to pay your workers twice as much as average.

[AMT]

Wait wait wait... why shouldn't security guards get a decent pay rate? Most of them have to work hard in stressful conditions, especially those who work manufacturing and office building areas.

Seems somewhat elitist to say that the shoe shiners and security guards of the world are "lowly" and undeserving of a decent paycheck.