About those slides…

The USPS savings “plan” outlined in the document that’s circulating everywhere recently looks awfully familiar- some thoughts:

The reduction or elimination of overtime was a perennial “strategy” proposed by operations managers when I was a budget analyst for the USPS. The problem is that reducing the OT percentage doesn’t actually save any money in and of itself. While it’s true that an employee working overtime gets paid 50% more, the cost for the USPS is about the same as it is for an hour of straight time work. That’s because straight time pay includes the total cost of employee fringe benefits- and you don’t get any additional benefits for working OT.

For a Full Time City Carrier, the year to date average hourly salary works out to $27.80. But when you include the fringe benefits that go along with the employee’s straight time pay, the total cost to the USPS adds up to $45.81 per straight time hour. Pay for an hour of overtime comes to $43.45. So as counter-intuitive as it may seem, overtime actually costs the USPS less per hour than straight time.

The other problem with eliminating overtime is that you have to come up with a strategy for handling the mail you’re currently working on overtime. Better productivity maybe? Sure- but how? (And “just work faster” is not a strategy) Cheaper hours, i.e. non-career workers with lower pay and fewer benefits might help, but there are limitations on that in the union contracts. So there’s nothing magic about overtime- if you aren’t saving total work hours, you aren’t saving any money. And that requires a concrete strategy, not just saying “No more OT!”

Eliminating detail assignments is another classic “strategy” that gets trotted out in times of crisis. It doesn’t usually save much, if any, actual money. Say a postmaster gets detailed to a special project- (planning those four park points per route maybe?). A line supervisor becomes acting postmaster. A letter carrier becomes an acting supervisor (204-B). Another letter carrier covers the bid of the 204-B. A city carrier associate covers the second carrier’s route.

So what happens when the detail is suddenly terminated? The CCA at the bottom of the heap may lose some hours, but everyone else, as career employees, keeps collecting their salaries. The only “savings” are the cheapest hours you have- the CCA’s!

The new wrinkle in this document is the novel strategy of dealing with delayed mail by delaying it further. It will be interesting to see how that works out! And the missing piece is the strategy for surviving the new delivery marketplace where our old, lucrative product, first class mail, is rapidly being replaced by packages- harder to process and deliver, less profitable, and far more subject to the economy’s mood swings.

Obviously, there must be more to the PMG’s new business plan than the infamous slides- but what we’ve seen so far doesn’t bode well for the future of the USPS.