Compensation Comparison Chart

Thanks to my readers I was able to create a chart comparing Postal Service compensation to compensation at FedEx Express and United Parcel Service.  As all readers know FedEx Express is non-union UPS is organized by the Teamsters and the Postal Service is organized by one of four craft unions.  The Postal Service compensation figures are from 2009 and were provided by the Postal Service to reporters prior to beginning of negotiations with APWU and NRLC.

The comparison's are a bit disingenuous for the APWU includes a number of maintenance crafts that are higher paid then the most employees that sort mail.  Therefore a fairer comparison would compare the average compensation of employees that sort mail or work at a retail counter with the wages paid UPS and FedEx inside workers.   

The comparisons illustrates why the compensation levels negotiated with the APWU for new employees and non-career positions have much lower wages.   It is clear that the new wage structure should bring APWU members that sort mail or work a retail counter to an average compensation level that will fall between what FedEx and UPS now pay.   If one assumes that UPS and FedEx employees see increases in compensation in the next few years, either due to contract provisions or increases reflecting improving business at both firms, then it is possible that by the end of the contract, APWU average compensation will likely be closer to what FedEx will pay its employees than what UPS will.

In many ways, Mailhandler union members face a worse comparison that APWU members.   Few of their employees are in maintenance and other positions that generate higher salaries.   Therefore, their average salary is likely further above market rates than APWU members.   Therefore, the contract that they will negotiate next fall will likely have all of the changes in work rules and pay schedules that the APWU just agreed to.  They may find it more difficult to negotiate any protections for current employees that the APWU did.

For members of the NALC and NRLC unions the comparison is a bit more complicated.   Their current compensation falls between UPS and FedEx compensation levels.   However, Postal Service is seeing its volumes decline while UPS and FedEx volumes are growing.  Also determining what is a fair wage for the delivery portion of the service depends on an estimate of the value of the delivery service alone and the division of revenue for all activities other than delivery and delivery.   Only after that is conducted would it be clear whether the compensation paid to Postal Service carriers is at, above, or below market rates. 

The difficulty of doing a comparison with compensation of the NRLC members most likely explained why the NRLC was not willing to continue to negotiate.  They most likely face a lower risk of an adverse ruling in arbitration than APWU members as the economic case of the Postal Service is much more complicated in that negotiation.

Comments and suggested additions to this table are requested.   They will be added to the table and posted when received.

Economy Can Handle Fewer Postal Workers

One of the arguments that postal labor unions will make to try to stop some of the changes that the Postal Service wants to introduce will be the impact on employment.  The employment argument resonated while the economy was shedding jobs.  In a weak job market, excess postal employees would have difficulty finding jobs.

This appears to no longer be the case.   The February figure reported today by the Bureau of Labor Statistics showed positive signs for jobs that reinforced reports of the previous two months. Sector by Sector data shows that almost all of the decline came from construction employment that is  easily explained by the snow storms that occurred during the week when the data was collected. Manufacturing employment rose.   Government employment declined with most of the decline occurred at the local level at public schools and at the national level at the Postal Service. Other good signs were the results of surveys that indicated that people are no longer settling for part time jobs because they cannot find full time jobs and a spike in temporary jobs which usually is precursor of growth in full time jobs.

This reports suggests that the Postal Service could shed jobs at a rate faster than attrition over the next 10 years and current employees who are asked to retire early or take severance should be able to find jobs in the private sector in the near term and public sector in one or two years when tax revenue begins to rise again.  Most encouraging for Postal employees are growth in sectors that could use employees with the strong work ethic of postal production employees and the management skills that postal supervisors, postmasters and higher level managers have.

As the economy can handle a decline in Postal Service employment, it may be time to begin thinking about accelerating the proposed changes in the operating and retail networks that will both cut costs and improve service.  In doing so, the Postal Service may help preserve its market position with those business-to-consumer correspondence, advertising and parcel delivery customers that are critical for its survival over the next decade.   While the Postal Service cannot stop the impact of broadband access and increased preference for digital receipt of documents by businesses and households, focusing on these two items first reduces the risk of accelerating the shift to digital delivery that exists with switching to 5-day delivery or annual exigent rate cases raising rates by 2-4% above the rate of inflation would have.

Accelerating these changes has major obstacles due to the effect that they will have on members of the American Postal Workers and Mailhandlers unions and among supervisor and Postmaster management associations.   These changes will reduce their membership and require changes in work rules to increase the share of part time employees to reflect the nature of work in an operating network that will work to minimize the time that any piece of mail spends inside a plant.  The shift in retail to contract stations will reduce the need for traditional postmasters as the number of corporate retail outlets shrink.

To overcome these obstacles the unions and management associations as well as the Postal Service need to think creatively as the changes give employees the best long-term prospects for secure jobs and customers a clearer path forward to plan their continued use of mail.   No industry undergoing competitive changes similar to what the Postal Service now experiences did so simply through reducing workforce and changing work rules through attrition.  In all industries, employees bearing the pain of transformation were given significant financial incentives that allowed change to occur at a rate faster than what attrition would allow.

Unions and management will need to determine the incentives that will be required for full time employees to leave employment that could be applied on a location-by-location basis as the new networks are implemented as well as the incentives that may be needed nationwide to raise the share of part-time employees to 30% or more.   These incentives are the plan B that unions need as soon as they realize that stonewalling change is not a viable negotiating or political strategy.


In addition to similar incentives, management associations need to think about working with management to transform job descriptions  For examples postmasters could incorporate management and financial responsibility for contract retail outlets. Having two competing management silos for corporate and non-corporate retail outlets do not seem to be a sensible way to improve the competitiveness of the Postal Service's retail products in communities that have both types of outlets.  The addition of this new responsibility could require upgrading the salaries of postmasters and some supervisors to reflect the increased responsibility.

Neither the Postal Service nor unions are discussing their negotiating strategy publicly and management associations are concerned about the road ahead.   Neither side can afford to allow the negotiations and /or arbitration process to drag out as the long term prospects of postal jobs and Postal Service requires quick resolution of the difficult issues at hand.

Job Cuts or Wage Cuts

According to Hellmail, TNT, the Netherlands postal operator, and its unions are expected to agree to a new offer for its contract soon. The agreement results in pay cuts of between 2 and 3.5% and layoffs of less than 1,000 employees. Much of the pay cuts will come from a proposed reduction in Sunday pay.

Prior to the agreement TNT had placed on the table the possibility of laying off 11,000 employees. This proposal was made after the Union had rejected a 15% pay cut in March, 2009.

The driver behind the contentious negotiations is the rapid drop in mail volumes at TNT. TNT like all postal operators have been hurt by both a severe recession and declining demand due to electronic competition.

TNT's contract may present a framework for upcoming negotiations that the United States Postal Service have with their unions. The Postal Service faces similar economic and competitive challenges to what drove TNT to offer sizable pay cuts, threaten massive layoffs and eventually agree to modest layoffs and small cuts in pay.

The Postal Service differs in that it has not previously made as extensive an effort to streamline and optimize its network and has less flexibility in the use of full-time and part-time employees. Therefore it enters the upcoming round of labor negotiations needing significantly more contract changes that what TNT was willing to accept. Without binding arbitration, the US postal unions and the Postal Service, just like TNT and its unions, would have to make the choice between cutting jobs and cutting real compensation levels.

With binding arbitration, the outcome is less certain. However, given the difficulty of selling eliminating long-standing contract provisions to their members, postal unions and the Postal Service are likely heading toward an arbitrated contract agreement where an arbitrator will be asked to make the choice between jobs and compensation.