OIG: USPS Cost-Cutting Strategies ‘Not Sustainable’

Labor Cuts Account for 75 Percent of Savings

04/28/2016The Postal Service has cut labor costs by more than $10 billion since the Postal Accountability and Enhancement Act (PAEA) was passed in 2006, but its cost-cutting strategies are “not sustainable,” according to a recent report by the Office of Inspector General (OIG).

Labor costs declined by nearly 21 percent (when adjusted for inflation and excluding the pre-funding of retirees healthcare) and account for approximately 75 percent of the total reduction in expenses.

But “the tradeoffs among cost control, service quality, and modernization remain a concern for the Postal Service,” the report warned. The report, titled “Peeling the Onion: The Real Cost of Mail,” said cost-cutting measures included:

  • Substituting career workers with non-career employees at an average of 3 percent per year;
  • Decreasing work hours by an average of 2.8 percent annually;
  • Reducing wages by an average 3.1 percent per year;
  • Downsizing and restructuring the network;
  • Reducing the number of delivery routes;
  • Decreasing the use of air transportation;
  • Reducing capital expenditures, and
  • Lowering service quality.

The extensive use of non-career employees, who earn lower pay and receive fewer benefits than their career counterparts, is “problematic,” the report found. While turnover among career postal workers is less than 1.3 percent, the quit rate for non-career workers was 29 percent in fiscal year 2014, “perhaps due to low wages and low benefits,” the OIG said.

The high turnover among non-career employees “raises the question of whether the Postal Service can continue to increase its productivity if it has to deal with training and recruiting new employees constantly,” the report said. “Furthermore, the impact on service quality of increased use of non-career employees is unclear.”

“What is clear is that the impact of cost reductions on customer service has been considerable,” the OIG said. External First Class Measurement (EXFC) scores for a single piece of First-Class mail declined by nearly 6.71 percent for two-day service and by almost 38.60 percent for three-day service compared to the previous year – despite the implementation of more relaxed service standards in January 2015.

It’s the Pre-Funding

The report blames the PAEA-mandated pre-funding of retiree health benefits 75 years into the future as the “primary source” of the Postal Service’s financial problems, noting that pre-funding costs reached $49 billion between fiscal year 2006 and 2015. Eliminating the payments would have reduced total losses by 90 percent.

Nonetheless, “Overall, the Postal Service is doing better financially than sometimes reported in the press,” the OIG observed.

“If the Postal Service is to meet the commercial and universal service needs of America’s growing population, it must continually seek to improve customer service and be allowed to make appropriate capital investments to fully integrate its network with the digital world. Postal stakeholders and management need to develop ways and means for generating adequate revenue so that the Postal Service can build for the future,” the report concludes.

APWU President Mark Dimondstein urged management to rethink its strategy. “This report underscores concerns we’ve been raising for quite some time,” he said. “Cuts to service and jobs are hurting the people of the country and jeopardizing the future of our great national treasure.

“If management takes this report with the seriousness it deserves they will stop delaying America’s mail and make sure the Postal Service is properly staffed so that we can carry out our mission. In the end, the Postal Service is a service, not a business.”

source: APWU

8 thoughts on “OIG: USPS Cost-Cutting Strategies ‘Not Sustainable’

  1. peeling back the onion, they got that right………….this place stinks to high heavens!

  2. Still blame nardo for selling matts drawings. Could have made millions but king stole all of them

  3. Yes,”Bunker”,the day come,in which;there r no more letters,no magazines,no newspapers,and then new books,will be no more;either. Eventually,even tv and radio,will stop being programmed. We will just sit around and wait 4 drones and driver less trucks 2 delivery us parcels and the very latest computer software. Besides,living in such a boring and impersonal world;how humankinds would actually jobs,that will enable us 2,inconspicuously make such purchases?

  4. Just another example of how the USPS can’t do much of anything without screwing it up, thanks to nepotism and the good ol’ boy system they use to hire and promote upper level management that has proven time and time again that they don’t know what the hell is going on.
    It’s always a cliche to criticize those in charge but within the USPS, the faults are enormous and well known nationwide. Reducing quality of service in any business or organization is always a very stupid idea, appealing to those who want a short term windfall with very limited scope of the future, if indeed any such ability exists at all.
    The massive turnover of the new hires is just one more disastrous program designed by those who are too far removed from the process to have any kind of a grip on what is happening at street level. Management personnel who are cozily camped out in district and Area offices and Washington are so many levels removed from the customers it’s ridiculous, and the level of separation between them and local offices is nearly as wide. They simply do not understand anything but mountains and mountains of useless time wasting filing of reports, micromanagement that accomplishes exactly nothing, and demanding the impossible and contractually violated orders to both lower level supervision and the craft.
    Until CCA’s and PSE’s are allowed to become career employees with better wages and benefits, preferably reinstating the PTF craft for city carriers and whatever the equivalent is for other crafts, service will continue to founder, and as attrition takes place with an expected wave of a lot of retirees in the next couple of years, things can only be expected to be much worse.
    USPS management was thoroughly embarrassed at the results of their “Postal Pulse” survey, pushing it hard to all employees, over half of whom, knowing bullshit when they smell it, threw them away unopened. The rest gave such negative scores that management was forced to release the results by a Freedom of Information demand. They of course came out the next day with typical spin, talking about “opportunities” for working with employees, hoping we craft would not recognize their pathetic and insulting attempts to paint the shit with pretty colors.
    It didn’t work. We laughed heartily at that article, let me assure you. Managers, you will never get respect, never get anywhere in your own path to glory as long as you insult the intelligence of your workers, most of whom are much more qualified and smarter than you to do any job within the Service. You managers know damn good and well that with only a handful of exceptions, the only ones who want to get in your world are terrible workers, stupid, snitches and/or relatives and ass kissers. The true hard workers are left where they are because you have to have them to get the real work done while the incompetents are promoted, shifted around, etc. in a game of management musical chairs. This is not hyperbole or myth. I’ve seen it going on over three decades and I know what’s going on.
    The USPS will never be a smooth running organization until an oversight group with no ties to the management or service is formed to routinely audit, investigate and deal with corruption, incompetence and any other form of graft they can find. This group would have to have the power to remove those who need it with no interference from the BOG or Headquarters. If you in management are totally unwilling to follow the contracts, listen to the advice those who do the actual work tell you and put the customer first, you deserve nothing less than the same micromanagement you impose on everybody else.

  5. Meanwhile the staff at hq, the most heavily compensated positions in the USPS, have increased by 65 percent the last few years……………….all the while, while they cry “the sky is falling” financially.

  6. 6 day street delivery is a total waste. Get in the business mode deliver express, priority, parcels that customer pay a premium for time delivery. Quit playing politics
    advances in communication technology has eliminated the need to purchase a stamp, deposit in a postal unit for delivery to a physical street aderess in 2-3 days. History-useless as pryamids.

  7. never any discussion of the 110,000 postal mismanagers being cut. since 2009 they have lost over 90 Billion dollars…..yet give themselves PFP bonus money………a true criminal enterprise. we have a mismanager who worked as a bartender at a dive bar before being hired at PO, now she is a transportation manager, moved from 6 other jobs because she is just a bimbo that gives head who now has truck schedules screwed up…..typical of a postal mismanager. heck the PMG Muffin Megan Brennen was a IOD six months after hire. with fed govt in debt 21 Trillion, when the crap hits the fan they will kick this money loser to the curb….bet on it!

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