APWU Ask The President
Question:

What is the true cost of labor? I often hear that labor costs account for 80 percent of postal expenses. Years ago you wrote an article pointing out that the costs for the bargaining unit were only 9 cents out of a 29-cent stamp.

Thank you.

Thomas, Rockford (IL) Area Local

President Burrus:
Thank you for your question and for being sufficiently involved with your union that you are able to anticipate the issues that will arise in contract negotiations. I have written on this subject on several occasions. [Assessing Postal Labor Costs (01/29/08) | News Reports Paint Misleading Picture of Postage Increase (05/14/07) | Negotiations Update (10/04/06) ]

The refrain that “80 percent of postal costs are labor” is repeated often and is used to justify calls to reduce wages and benefits.

However, the commentators who reiterate the claim often overlook several important factors:

They fail to mention that the “wages and benefits” they refer to include compensation for all postal employees — casuals, supervisors, managers, and the entire executive staff, including the postmaster general.

These pundits also disregard recent reductions in the employee complement, which lower the ratio of employee-related expenses to overall costs.

They also neglect to point out that the USPS is a service, with few costs other than the expenses associated with employees performing the service. Unlike businesses that produce goods, the USPS does not incur any costs to purchase raw material.

Observers that cite the 80 percent number often compare postal labor costs to UPS and FedEx, but that is like comparing apples to oranges. Those companies have very large air fleets, which require a major investment. By contrast, the Postal Service does not invest in airplanes or long-range vehicles; the USPS is supplied with air transportation and long-distance truck transportation through outsourcing contracts.

In fact, a close analysis reveals that the compensation packages for work-floor employees at UPS and FedEx are roughly comparable to the pay and benefits our members enjoy.

The standard for postal bargaining unit wages is “comparability” to the wages of employees performing similar work in the private sector. The law makes no reference to a percentage of total revenue, so the 80 percent figure is irrelevant.

It is important to note that the Postal Service and some senators have been promoting Senate bill 1507 again recently. An amendment to the bill would require arbitrators to consider the financial health of the USPS when they issue rulings on collective bargaining agreements.

Arbitrators have consistently considered the Postal Service’s financial situation during contract arbitrations, but making this a requirement would render the collective bargaining process subject to all-out manipulation.

And that is the intent of the amendment’s author: To place workers at a disadvantage and to give the Postal Service’s financial conditions supremacy over all other relevant considerations. For this reason, it is imperative that we prevent S. 1507 from becoming law.