Only 18,000 of 30,000 take USPS buyout - Federal news, government operations, agency management, pay & benefits

November 20th, 2009

Only 18,000 of 30,000 take USPS buyout

By GREGG CARLSTROM

October 26, 2009

About 18,000 U.S. Postal Service employees are expected to take $15,000 buyouts to leave their jobs this year — far fewer than the 30,000 originally hoped for by the agency.

Postal officials say that figure could drop. Employees were required to sign up for the incentives by Oct. 16, but they can still opt out of the program over the next few weeks. Most employees have until Nov. 30 to opt out — but those close to retirement age, called “optionally eligible” employees, must decide by Friday.

When the Postal Service announced the buyout program in August, it projected up to $500 million in savings next year if 30,000 employees accepted the offer. Yvonne Yoerger, a spokeswoman for the Postal Service, said it’s too early to calculate how much money the Postal Service will save from the buyouts if only 18,000 employees accept. The final sum will vary depending on the salaries and seniority of the employees who accept the offer.

Most of the employees who took the offer are close to retirement age, Yoerger said.

Employees will receive the incentive in two payments: $10,000 by Dec. 31 and $5,000 beginning Oct. 1.

This early retirement offer was the most successful yet of four made by the Postal Service in the past 18 months, with a response rate of 6.6 percent.

Few employees accepted previous offers: The last offer, which was extended to 147,937 employees in June, was accepted by just 2,505 employees — less than 2 percent. The previous offer, which concluded in February, was accepted by 2.3 percent of eligible employees.

“I would have liked to have stayed until next year, when I will be 62, but I’ll be put on night shift, and probably next year I would get excessed out of this plant,” said one postal employee. “So when this opportunity came up, I tried to make it work.”

“Excessing” is the practice by which the Postal Service reassigns employees from one facility to another; the agency pays relocation costs for long moves.

But many postal workers said $15,000 simply wasn’t enough money to convince them to leave their jobs. Postal employees lose 2 percent of their annuities for each year before retirement age— and many say the one-time incentive doesn’t come close to making up the money they would lose over years of retirement.

“The Postal Service needs to make a decent offer. People want to go with no penalty. As long as they keep penalizing 2 percent for every year, people are not going to leave,” said a recently retired postmaster from the Pittsburgh area. “They don’t care about the cash, they want to [retire] at 50 and up with no penalty.”

Many postal workers contacted by Federal Times said they wouldn’t think about early retirement until the economy improves.

“With the cost of health care and losing 25 percent in our [Thrift Savings Plan] over the last year, who can afford to retire? Fifteen thousand dollars would cover a few years of health care, but unless you were close to Medicare age, it wouldn’t be enough,” said one letter carrier in Ohio who was not eligible for the buyout. Only employees represented by the American Postal Workers Union and the National Postal Mail Handlers Union were eligible.

Another employee said the incentive, coupled with his income from a side job, would reduce his Social Security benefit if he retired early.

“I didn’t take the deal because I’m only 62 years old,” said one postal employee from San Diego. “The Social Security benefit that I would be getting would be 50 percent less because I have other income. … To get the full benefit, I’ll continue working until age 66.”

And a clerk from Camden County, N.J., said he would end up losing money even though he’s already at full retirement age, which means his annuity wouldn’t be cut.

The clerk said he has banked the equivalent of more than $30,000 in unused sick leave during his career. He would forfeit that money if he retired with the incentive; instead, he said, he plans to wait and retire normally, cashing out his sick leave in the process.

“It seems like it would be a loss to me,” he said.

The Postal Service says it has no plans to offer another round of retirement incentives. Buyouts are extremely rare for the agency: The last time it offered incentives was 1992.

Postal officials won’t rule out another round of early retirement offers, though; they say they still need to reduce labor costs, which account for 80 percent of the agency’s expenses.

The early retirement offers are among many cost-cutting measures the Postal Service is taking. The agency ran a nearly $7 billion deficit in fiscal 2009, which ended Sept. 30. That forced postal managers to trim more than 110 million work hours; the agency is also under a nationwide hiring freeze, and is looking to close hundreds of underused facilities across the country.

Postmaster General John Potter said this month that he expects deficits of more than $5 billion “for years to come.” Potter expects mail volume to fall by between 8 billion and 15 billion pieces in fiscal 2010.

A 15 billion-piece drop would translate to a mail volume of 160 billion pieces — fully 20 percent below 2008 levels.

Yoerger, the postal spokeswoman, said the agency is hoping to eliminate 93 million work hours this year, the equivalent of 53,000 full-time employees.

“[The] reduction comes from a combination of using less overtime and part-time employee hours, fewer contract workers, and the retirements and other attrition,” she said.

Potter has said the agency’s part-time flexible-schedule letter carriers — who work far more hours than guaranteed in their contracts — could see their hours cut in the coming years.

Potter also hopes that a wave of retirements over the next few years will reduce labor costs. Roughly 160,000 postal employees are currently eligible to retire, according to the Government Accountability Office. That number will grow to 300,000 — nearly half of the full-time workforce — by 2013.

Managers say it’s getting harder to find places to cut: In an interview earlier this year, Joe Corbett, the Postal Service’s chief financial officer, acknowledged that “each hour we cut is more difficult than the last.”

The Postal Service is also hoping to renegotiate contracts with more than 500 vendors that provide everything from transportation to cleaning supplies. Virtually all of those vendors have agreed to review their contracts and look for ways to reduce costs. For example, one vendor that provides office supplies that the Postal Service declined to identify changed its delivery schedule to make less frequent trips to postal facilities.

Managers say the negotiations have saved hundreds of millions of dollars, and they hope to save $1.3 billion by fiscal 2011.

The Postal Service expects to release an updated financial plan next month.

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