Recently, Congressman Dennis Ross wrote on his Facebook page that 80-82% of USPS operating costs is labor. Normally, estimating figures in a public forum is no problem. But when the Chairman of a House Subcommittee covering the U.S. Postal Service starts doling out numbers they should be accurate and not pulled out of thin air. Also, if I’m not mistaken the other operating costs figures cited by Ross for UPS and Fedex are at least 10 years old. Perhaps the “postal reporter tweeps” can weigh in on these figures.
At any rate, recently in USPS’ financial report it reported:
Personnel costs, including compensation and benefits, retiree health benefits (including the PSRHBF requirement), and workers’ compensation costs represent approximately 79% of total operating costs. As a result of management initiatives, work hours during the first half of 2011 were reduced by 16 million hours. This is in addition to reductions of 75 million, 115 million, and 50 million work hours in fiscal years 2010, 2009, and 2008, respectively. Although significant actions have been implemented to decrease personnel costs, many are fixed by statute, regulation, or contract and, therefore, beyond the sole control of management. Wage rates and work rules affecting bargaining employees are contractually negotiated and are fixed for the duration of the labor contract; retirement benefits are determined by law, rather than by management; and health care premium costs continue to rise well above the rate of inflation.
Courier, Express, and Postal Observer wrote in response to Rep. Dennis Ross’ UPS, FedEx and USPS Comparison:
Comparing Labor Cost Proportions at the USPS, UPS, and FedEx
Comparing the proportion of labor costs at the Postal Service with the proportion of labor costs at FedEx and UPS is a nonsensical exercise. It tells one little about what the appropriate proportion would be for an efficient or properly capitalized Postal Service.
Focusing on unionized labor costs may be an easy political target for a Republican member of Congress. However, Congressman Dennis Ross would find his time better served if he now focused his time on examinging, the Postal Service’s financial goals, its capital structure and capital needs of the Postal Service. By making this shift, Congressman Ross would make a real contribution to postal reform. His efforts would for the first time address one of the key failures of both the Postal Reorganization Act and the Postal Accountability and Enhancement Act, the failure to adequately recognize that “accounting break-even” is not an appropriate fiancial goal and that an under-capitalized Postal Service is an inefficient Postal Service.
Other reports over the years on the costs comparison:
Dr. Joel Popkin:
According to economist Joel Popkin in his testimony to the Postal Commission in 2003 regarding 80% of USPS revenue is spent on the workforce:
The first is the widespread popular characterization –spin, if you wish– of labor costs as representing 80 percent of the total costs of USPS. That is blatantly incorrect. Publicly available USPS records (summarized since 1984 in Chart A) show that wages and benefits allocated to workers covered by collective bargaining represent 56.8 percent of total costs. Costs associated with workers covered under APWU bargaining agreements, largely mail processing and retail station clerks, accounted for only 26.0 percent of USPS costs in the 2002 fiscal year. In addition, the data in Chart A show that over the past couple of decades the labor share of postal costs has declined, the share of the APWU most dramatically.
If more emphasis was placed on the $50-75 Billion USPS prefunding dilemma perhaps the operating costs debate will take a back seat.