August 3rd, 2012

Bullied (unionized) postal workers pay for fake “crisis”

People bullied at work recognize when they are being set up to fail. They are typically targeted because of their superior technical or social skills. Objectively they are not poor performers or failures. So, bullies engineer ways to sabotage and undermine the good worker. Then, when the outcome falls short, the target takes the blame. But the entire problem was manufactured by the bully.

Headline: U.S. Postal Service on Brink of Bankruptcy Beneath the screaming chicken little message is the story of the 2006 Postal Accountability and Enhancement Act (PAEA), a mean-spirited and deceiving law. The 2006 bill slid through Congress at a rate unheard of by those of us working to pass a law. It was introduced on Dec. 7, passed the House Dec. 8, passed the Senate Dec. 9 and signed into law Dec. 20. By forcing the USPS (Postal Service) to pay for something it could not afford do, failure is guaranteed. This is bullying on a grand scale.

Sadly, the USPS financial crisis is entirely avoidable if only common sense would prevail. Here’s the background.

Exceptional, crazy law

PAEA required the Postal Service to pay $103.7 billion over 10 years until 2016 to cover the health care benefit costs for future retirees from its 7 million employees for the next 75 years! Those payments, such as the current $5.5 billion installment due July 31 that could not be paid, do not apply to benefit costs of current employees.

No private corporation or government agency operates this way. Corporations famously focus on delivering quarterly dividends for investors. They are unable to accurately anticipate sea changes in health care costs with implementation of the new law in 2014 looming. Though planning is done, no company can anticipate its size in 75 years! Most important, the USPS is NOT a government agency, hasn’t been since 1971 when it has run like a private corporation that must operate on the revenue it generates. The heavy hand of Congress and the G.W. Bush administration combined to close down the USPS.

Bad math

Future costs had to include current employees and ones to be hired based on 2006 staffing levels in the future. Two major mistakes were made. The federal government’s personnel department (OPM) calculated the costs. OPM assumed a 7% inflationary rise in benefits costs, though the accepted average is 5%. Thus, the USPS overpayment is about $13.2 billion.

The second deliberate mistake of this dirty deal is that Postmasters (the CEOs) have cut the payroll by 111,000 in four years, called for the end of Saturday service and closed smaller post offices in rural areas. Therefore, the 2006 staffing level upon which the pie-in-the-sky $103.7 billion payment was based is no longer accurate. Seventy-five years ahead? At this depletion rate, the union haters will have shut down the entire USPS — their goal from the start.

The vast majority of the USPS workforce is unionized. There are at least 10 unions, the two largest being APWU (the folks you see at the counters at post offices) and NALC (the letter carriers). The dual-pronged attack on the USPS started long before mainstream news found the story.

I spoke at several APWU events during the G.W. Bush era. His administration began the push to privatize the USPS. I heard reports that postal workers were “overpaid,” averaging $41,000 per year with benefits. His administration wanted their salaries “marketized.” That meant adjusted downward to WalMart minimum wage standards with no benefits. The unions recognized it as union busting. [Note how this song is the one played today in every state legislature and by more governors than I can count. Back then, it was a novel assault on a venerable institution. And I wrongly considered it an isolated action just the USPS workers.]

USPS not broke, owed billions

The recession did hit the USPS hard. Revenue dropped 10.5% primarily during 2008-2009. That was the only “market-driven” loss. Most businesses suffered.

A 2010 report by the USPS Inspector General found that the USPS had overpaid two pension-related funds. The Civil Service Retirement System was overpaid $75 billion and Federal Employees Retirement System by $6.8 billion. To date, no word on applying the nearly $82 billion to satisfy the unconscionable demand for future benefits.

The talk of bankruptcy is misguided. Turns out that the USPS has a “war chest” of $326 billion to cover unanticipated costs.

If annual PAEA payments were not required, the USPS would be in the black, solvent.

Changes on the horizon?

In April 2012, the U.S. Senate passed S 1789 (21st Century Postal Service Act) that would spread the PAEA obligation out over 40 years. It doesn’t end the PAEA, but ensures death by steady drip, drip, drip. The bill does call for reclaiming the lost pension funds from CSRS and dropping USPS employees from the Federal health plans and going to private insurers.

However, the bill goes to the House and the committee chaired by Rep. Issa, a known enemy of the USPS and its unions.

Until then, Postmaster is reviewing a plan to shut down 3,600 post offices and sever all the workers associated with it. That plan would save a maximum of $200 million. The elephant in the room is the PAEA. It must be completely overridden and the billions contributed to the unnecessary fund returned to the USPS for its survival.

This institutional bullying is fixable. If only it did not involve a political solution.


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This entry was posted on Friday, August 3rd, 2012 at 10:23 am and is filed under Commentary by G. Namie, The New America. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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