Herbert King sorts mail in Chicago. (Brian Kersey / Getty Images)
The U.S. Postal Service may resort to early retirements and buyout offers as a way to slash its staff by 66,000 employees this year and another 51,000 next year. Combined, the planned cuts over the next two years amount to more than one-fifth the agency's workforce.
Office of Personnel Management Director John Berry said last week that Postmaster General Patrick Donahoe alerted him a week earlier that USPS could offer both early retirement and buyout incentives to encourage employees to leave.
Chief Financial Officer Joe Corbett on Feb. 16 outlined for reporters the Postal Service's ambitious plans to pare down its workforce in the next five years by 155,000 employees — ultimately leaving a workforce of 402,000 by the end of fiscal 2016.
Normal attrition removes roughly 30,000 employees a year, so it appears likely the agency will have to resort to either early retirement offers or buyouts or both to reach its downsizing targets. The agency's labor contracts generally prohibit layoffs.
Corbett told reporters in a conference call that early retirement incentives are under consideration, but he did not discuss the possibility of buyouts.
"We'll announce our path forward soon," Corbett said. Asked later whether buyouts are on the table, a USPS spokeswoman said she had no additional information.
By the Postal Service's count, 283,000 workers are currently eligible for regular or, if offered, early retirement.
The Postal Service released its five-year plan after posting a net loss of $3.3 billion for the first quarter of fiscal 2012, usually its most profitable quarter because of the holiday shipping season.
The proposed workforce reductions are be part of a comprehensive strategy to save more than $22 billion annually by 2016. Other pieces of that strategy include:
• Ending most Saturday delivery.
• Allowing the Postal Service to create its own health coverage in place of the Federal Employees Health Benefits Plan.
• Dropping the legal requirement for the Postal Service to "pre-pay" about $5.5 billion annually into a fund to cover future retiree health benefits.
If these goals cannot be achieved, Corbett warned, the Postal Service will need taxpayer help to survive.
In addition to the 117,000 employees the agency aims to shed between October 2011 and September 2013, the agency aims to trim 38,000 in 2014 through 2016 for a total of 155,000 for the five-year period.
Corbett also defended the mail carrier's bid to create its own three-tier health plan for current workers, new hires and retirees. The agency plans to unveil details of the plan soon, Corbett said.
Opposition in Congress
Congress so far has balked at allowing USPS officials to pursue their cost-cutting agenda. More than half the members of the House have signed a resolution opposing an end to Saturday delivery. And pressure from Senate Democrats led the Postal Service late last year to freeze closings of any post offices or processing plants until mid-May. Their objections have also helped block action by the full Senate on the bill that could eventually allow the shift to five-day delivery.
"The picture here is perfectly clear: Unless Congress acts quickly and significantly to provide the Postal Service with the tools and resources it needs to modernize its business model, this American institution will be insolvent within months," Sen. Tom Carper, D-Del., one of the bill's sponsors, said in a statement issued after the five-year plan's release.
Some Republicans, however, contend that the agency isn't doing enough to economize.
"Unfortunately, too much of the Postal Service's plan is still an accounting fantasy," said Rep. Darrell Issa, R-Calif., chairman of the House Oversight and Government Reform Committee, which oversees the Postal Service. Issa has sponsored a bill that would give the Postal Service the freedom to lay off employees after existing labor contracts expire. He has also been critical of the Postal Service's bid to end the "pre-payment" requirement for retiree health care, arguing that it ensures taxpayers will not need to pick up the bill for future coverage.
Many observers doubt that lawmakers will approve any postal reform legislation until after the November election.
"Congress is not terribly active recently at making any tough decision," said Lee Fritschler, a public policy professor at George Mason University who previously served as chairman of what is now the Postal Regulatory Commission.
The president's plan
As part of its fiscal 2013 budget request, the Obama administration offered its own postal rescue plan last week.
Besides allowing the shift to five-day delivery, the White House would also provide the Postal Service with more than $25 billion in cash relief through a refund on almost $11 billion in surplus contributions to the Federal Employees Retirement System and the deferral of more than $15 billion in retiree health care prepayments due by 2013.
firstname.lastname@example.org?subject=Reader Question">STEPHEN LOSEY also reported on this story.