Costly Postal Policies Dragging Down Santa's Sleigh
The holidays are here and Santa is readying his sleigh. But, this year, the U.S. Postal Service may have a tad more trouble than usual keeping up with the reindeer. America’s mail carrier is hiring 20,000 temporary employees to help get nearly 1 billion packages on doorsteps across the country. The hiring haul, though, is a significant decrease from last year’s goal of 45,000 temporary workers. While agency officials have assured lawmakers and consumers that the USPS can make do because of package sorting upgrades, uneven delivery performance has consumers concerned. The USPS can ensure a smooth ride from the North Pole, but only with the right-sized hiring policies.
The logic of hiring seasonal workers is straightforward enough for most companies. Thousands of helping hands can make or break a logistical network, and the ramp-up in payroll can wind down once the gift-giving (and returning) season has ended. But the USPS is a government agency with dysfunctional hiring policies that discourage temporary employment. Any new “temporary” workers donning the blue uniform will likely stick around for the long haul. The agency recently announced that “the Postal Service has converted more than 100,000 employees from part time to full time, career positions since the beginning of 2021.” These full-time conversions put plenty of pressure on postal finances because career employees earn roughly double what corresponding non-career employees make. This compensation gap is no small issue, given that labor costs are about three-quarters of USPS’ expenses.
Recent “reform” legislation may have shifted retiree health costs to other (struggling) federal agencies, but this fiscal hot potato is unlikely to make much of a difference. About 90 percent of postal labor costs lie in the (non-retiree) “compensation and benefits” bucket, and employees’ unions know how to keep the funds flowing. Unions such as the National Postal Mail Handlers Union and the American Postal Workers Union confidently enter into negotiations with the Postal Service with the knowledge that, according to federal law, intractable impasses between unions and the service will automatically force the agency into a binding arbitration process. That means a mediator is certain to grant at least some concessions to the union, a process the American Postal Workers Union admits is friendlier to them than private-sector union-management standoffs.
Because of these dynamics, it is all-but-impossible for the USPS to leverage temporary employment without there being significant long-term costs. The agency could try and solve this issue by making clear to all parties that temporary positions are truly temporary and will not become full-time positions. This would require a complete about-face from the current policy of converting part-timers to full-time positions, but this reversal can be accomplished with assistance and pressure from lawmakers keen on postal reform.
This strategy, however, will likely fail without focusing on the part-time workers who have already been converted to full-time positions. The USPS can offer generous lump-sum payments to these converted employees to convince them to go back to part-time status and forgo full-time employee benefits. Even if a modest percentage of employees take the agency up on this offer, the USPS would likely see significant long-term savings. The agency can then use these savings to ramp up seasonal hiring without breaking the bank.
While the idea of a buyout may seem far-fetched, federal agencies such as the Department of Defense have used these lump-sum offers to reduce costs while keeping employee morale high. The USPS can do the same to ensure a properly balanced, highly efficient workforce.
America’s mail carrier needs the right mix of temporary and permanent employees this holiday season. The USPS cannot continue to drag down Santa’s sleigh with costly long-term hires.
Ross Marchand is a senior fellow for the Taxpayers Protection Alliance.
