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Postal Service workers' comp costs rise as headcount falls

Aug. 20, 2014 - 06:00AM   |  
By ANDY MEDICI   |   Comments
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The US Postal Service's workers' compensation costs continue to rise. (Kevork Djansezian/Getty Images)

Even as the Postal Service has cut hundreds of thousands of employees its workers’ compensation costs continue to grow, according to an Aug. 19 report by the Postal Service inspector general.

The Postal Service paid $1.3 billion in workers’ compensation claims and another $67 million in administrative fees in fiscal 2013, according to the report. Despite cutting its workforce by more than 172,000 employees since 2008—from 663,000 then to 491,000 in 2013—workers’ compensation costs have grown 35 percent. The agency currently has about 16,380 workers expected to draw compensation for more than 60 days, according to the report.


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The reasons for the increasing costs include:

■ Fewer light duty or limited duty positions, which provide an alternative to workers’ compensation. Those positions have been slashed because of automation and lower mail volume.

■ An aging workforce, more prone to injuries and slower to recover.

■ Increased costs due to cost-of-living adjustments.

The Postal Service also pays more than the industry standard: The Bureau of Labor Statistics calculates that private industry workers’ compensation in the same occupations cost 73 cents per work hour, while the Postal Service paid $1.16 per work hour in fiscal 2013, according to the report.

The agency could save $477 million if it capped workers’ compensation benefits by time and amount, and required employees to take generic drugs for prescriptions when available, according to the inspector general. However, that would require Congress to pass legislation amending the Federal Employee Compensation Act.

“FECA reform could help control workers’ compensation costs; however, the Postal Service must overcome political, employee, and union challenges to adopt practices that are common in state governments and the private sector,” according to the report.

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