Monday, March 21, 2011

Is Arbitration Better for the Postal Service?

Many of the readers of the blog have raised the questions as to whether the Postal Service would have been better served going to arbitration. In a comment to another post a reader provided a history of  previous contracts that were sent to arbitration,   The picture is not pretty.
  • 1978 -1981 James Healy rules in favor of unions on COLAs (no cap) and partially in favor of management on no lay-off clause, which is changed prospectively to cover only employees with a minimum of six years of service. Total increases of 31%
  • 1984-1987 Clark Kerr rules in favor of unions with penalty overtime over 10hrs, continuation of COLA. Total increases of 13%
  • 1990 – 1994 Richard Mittenthal rules in favor of Transitional Employees and Arbitrator Valtin decided the issue of health benefits which resulted in a 4% increase in employees’ share of healthcare cost. Total increases of 12%
  • 1994 – 1998 Jack Clarke imposed a four-year agreement with COLA Roll-in. Total increases of 6.25%
  • 2000 – 2003 Stephen Goldberg rules in favor of a 3 yr agreement. Total increases of 6.49%
These results are taken from a fact sheet, "A History of Postal Worker Salaries,"  that the APWU developed review the results of all contract settlements including those that were settled through negotiations and those that were settled in arbitration. 
 
The only paper on this topic "Labor Market Outcomes of Postal Reorganization" by D. Richard Froelke, the former manager of collective bargaining for the U.S. Postal Service was published in the book Mail @ the Millennium, edited by Edward Hudgins and published by the Cato Institute.  This paper provides more detail on labor negotiations through the year 2000.   Most importantly, this paper indicates that the problems in wage and benefit levels reflect the continuation of contract provisions and an understanding of pay compatibility that existed in the 1970's that has been nearly imposible to remove in either a negotiated or arbitrated settlement.   The list of arbitrated settlements above, which are described in more detail in the Mr. Froelke's article illustrates that eliminating wage premiums and restrictive work rules in arbitration did not occur even after the Postal Service began presenting significant evidence to an arbitrator regarding the need to control compensation costs.
 
Finally, it is worth noting that many who argued prior to passage of the Postal Accountability and Enhancement Act that steps were needed to constrain wages made recommendations that are not much different than contract provisions in the APWU contract.   For example, Michael Schuyler, Senior Economist at the Institute for Research in the Economics of Taxation made the following recommendations in the paper, "How to Bring Postal Compensation into Line With The Private Sector," a paper published in 2003.
  • Increase postal compensation at the rate of inflation until the postal pay premium is reduced or eliminated.
  • Increase postal pay more slowly than increases in an index of private sector labor costs to gradually reduce the postal pay premium. 
  • Restrain postal wages when the postal worker quit rate is very low or the number of qualified people seeking postal jobs is very high.
  • Vary postal wages by geographic region.
  • Increase the use of part-time and temporary employees who would receive market or above-market compensation but less of a pay premium than full-time career employees.
With the exception of varying pay by geographic region, the APWU contract goes further than the suggestions made by Mr. Schuyler as it imposes, for non-career and new full time employees, a pay schedule and a definition of a full-time job that most likely closely matches market compensation and work rules for the work that APWU members perform.  The cost of getting the market based compensation and workrules for new employees  is a limit on wage increases for current employees to increases that follow his suggestions.   If the Postal Service can increase the pace of retirement of current APWU members, then I am willing to bet he and others that have written about a pay premium would agree that the trade-off represents a reasonable deal for both sides.

10 comments:

Anonymous said...

IN DUE RESPECT TO THE FINE UPS AND FED EX EMPLOYEES, LETTER CARRIERS DELIVER BOTH PARCELS AND LETTERS. THEY ARE IN ALL THE WEATHER ELEMENTS,ARE SUBJECT TO DOG BITES, ASSAULTS (MANY LATELY) AND ARE RESPONSIBLE FOR DELIVERY OF MILLIONS OF DOLLARS OF NEGOTIABLE CERTIFICATES.

Anonymous said...

The APWU Membership should reject the tentative agreement and send their National Negotiators back to the table or Arbitration.

uncommonsense said...

I think it is quite clear that this contract is FAR better for the USPS and its costs than anything it has ever received in arbitration before. The question is whether it could have gotten even a better deal by going to arbitration. I think it is highly unlikely. Arbitrators are a conservative lot and don’t like to stray dramatically from precedent. While the arbitrator decision may have been better than any other arbitration the USPS has ever had it would still have likely been worse for the USPS than this agreement.
What is likely to have happened in ARB.
1-The deal would have likely been for 3 or 4 years not 4.5.
2- COLA’s would have likely stayed. Raises might have been less than 3.5% but pay cuts wouldn’t have happened.
3- A two tier wage scale might have happened but even if it did it would have been 1-4 steps lower not the 6 steps lower that are in the negotiated agreement.
4- A new category of worker would not have been created. Some expansions in the use of the supplemental workforce might have been achieved but any expansions would have been much smaller and less flexible than the 20% district wide expansion negotiated in the agreement.
Net-Net it is likely with the new workforce and pay scales the USPS will achieve hundreds of millions to billions of dollars more per year in savings with this agreement than they could have reasonably hoped to have saved in a negotiated agreement.

uncommonsense said...

make that last sentence...in an arbitrated agreement.

Anonymous said...

Yes, I sure hope this contract saves the USPS billions. I certainly do not want the top execs to go without their outrageous salaries, benefits and perks. The employees will not be able to make ends meet, but who cares about them.Execs cannot lower their standards or live on anything less than that to which they have become acustomed. Screw everyone else.

Anonymous said...

The 2002 Wells Award in the arbitration case with the NRLCA was a total disaster for the Rural Carriers! He made changes to standards the were not even discussed in the hearings! The average Rural Carrier lossed over $6,000 a year because of his corruption!

Anonymous said...

What is it gonna take for the powers that oversee the postal service to take the microscope off the clerks and carriers and put it on the eas employees.USPS has created tens of thousands of jobs where no real jobs exist, yet no one talks about this. Is it postal managements right to waste 8 billion dollars a year on phony jobs because they are eas jobs? When are people gonna wake up? We should have a march in Washington demanding an audit and investigation. Demand they eliminate half of all eas employees!

Anonymous said...

As anonymous at 1:29PM states, the rural carriers have lost alot over the last years. Our pay is based largly upon mail volumn, but no one ever mentions this. Where 10 years ago most of our full time carriers worked 5 days a week, now almost half I believe are working 6 days a week, for less money, doing the same amount of work.

I also believe the article is mis-leading because it shows the increases, but doesn't state that they are over the course of 4 years, making about 1.5% per year. I got better raises in the private sector than I have gotten with the Postal Service. I was just better paid to start out with.

Drewk86a said...

Some call the new wage level and scale a "sell out" of future employees. What future employees? In my P&DC they have not hired a new clerk in over nine years!

Sure, APWU could have held new wages where thay are, but how would that help if employees are not hired?!?

By setting a new starting wage the USPS is likely to hire new employees.

Which is better? A great wage where no one is hired, or a very good wage where people get jobs! Once in the door, they can negotiate for increases for the new hires.

Anonymous said...

All of the cuts that Donahue plans won't do much for the USPS. They find a way to throw away money everyday. In my P&DC we have an MDO that goes overboard for every holiday when he makes the holiday schedule and mandates way too many people. And the OT, it's out of control. If we could get some more staffing ( we are hurting ) there would be a lot saved, yet they would find a way to throw it away in other areas. So what is really accomplished?