United States Postal Service Negotiates Incentive Plan; Save $500 Million

In a decision to save hundreds of millions of dollars in labor-related costs, the U.S. Postal Service negotiated an agreement with two of its employee unions to offer select employees a financial incentive to retire or resign before the end of the fiscal year. The one-time offer is a strategic move to accelerate targeted staffing reductions for employees represented by either the American Postal Workers Union (APWU) or the National Postal Mail Handlers Union (NPMHU).

Because the number of addresses grows by 1.5 million each year, letter carriers represented by the National Association of Letter Carriers and the National Rural Letter Carriers' Association were not extended this offer.

Advances in mail processing technology and the continuing recession have led the Postal Service to more aggressively match work hours with work load. The majority of employees eligible for the incentive work in mail processing facilities.

The incentive provides eligible employees $10,000 to be paid during the first three months of Fiscal Year 2010, creating salary and benefit savings for the next nine months. The same employees will receive a second payment of $5,000 in Fiscal Year 2011. Fiscal Year 2010 starts Oct. 1, 2009. As many as 30,000 employees could take advantage of the incentive offer. Savings to the Postal Service could be as much as $500 million next year.

The employee incentive offer is the latest in a series of cost reductions the Postal Service has made this year. Cost savings during 2009 are expected to total more than $6 billion, including the following actions:

• Cutting more than 100 million work hours, the equivalent of 57,000 positions;
• Halting construction of new postal facilities;
• Closing six district offices;
• Negotiating an agreement with the National Association of Letter Carriers that adjusts letter carrier routes to reflect diminished volume;
• Instituting a nationwide hiring freeze;
• Reducing authorized staffing levels at postal headquarters and area offices by at least 15 percent;
• Selling unused and under-utilized postal facilities;
• Adjusting Post Office hours to better reflect customer use; Consolidating mail processing operations; and
• Freezing salaries of all Postal Service officers and executives.

"This decision reflects our desire to provide a fair and equitable opportunity for some of our longest-serving employees," said Anthony Vegliante, chief human resources officer and executive vice president. "It is important to the Postal Service that we take appropriate measures to address our current financial situation."

The Postal Service receives no tax dollars for operating expenses and relies on the sale of postage, products and services to fund its operations.

An independent federal agency, the U.S. Postal Service is the only delivery service that reaches every address in the nation, 149 million residences, businesses and Post Office Boxes, six days a week. It has 34,000 retail locations and relies on the sale of postage, products and services, not tax dollars, to pay for operating expenses. Named the Most Trusted Government Agency five consecutive years by the Ponemon Institute, the Postal Service has annual revenue of $75 billion and delivers nearly half the world's mail.