Unions and USPS Headed for Arbitration?

Negotiations between the Postal Service and the unions representing postal workers ended at the midnight deadline last Saturday without an agreement. With prospects appearing dim, the deadline was extended until Tuesday, Nov. 23. Because the Post Office is designated an essential service by law, postal employees are not allowed to strike if negotiations fail. Instead, the Postal Service and unions representing over 324,000 employees will go to an arbitrator who will make the final decision. The arbitrator does not have to consider the economic condition of the USPS in making his decision, but the economic situation may be an 800 lb. gorilla in the room.

The current recession and migration to digital communications have resulted in the greatest loss in mail volume since the Great Depression. The mail has gone from 213 billion pieces in 2006 to 170.6 billion in the fiscal year ended last September. This represents a net loss of $8.5 billion for 2010. And mail volume is expected to decline to 150 billion pieces by 2020.

The Postal Service does not operate with government subsidies, but relies entirely on the sale of stamps and services for its operating funds. As a quasi-government agency, however, it must follow operating rules established by congress. That has occasionally made the USPS a political football. One suggestion for cutting operating costs has been to eliminate Saturday delivery. That could save $3.1 billion annually. The Postal Regulatory Commission will consider that idea and give its recommendations to congress next month.

It will be interesting to see if politics will be put aside long enough to give the USPS a chance to operate within congressional mandates and at a cost acceptable to the public.