What Happens If the APWU Rejects the Contract?

APWU members now have their ballots for the ratification of the tentative 2010-2015 Collective Bargaining Agreement with the Postal Service.   Like many votes on labor contracts that make significant changes in long-standing work-rules, pay schedules, and compensation levels in industries facing economic change, ratification is not pre-ordained.

Challenging Contract Ratifications

Examples of challenging ratification efforts include both United Parcel Service and Yellow Roadway Corporation.   Unhappiness with a negotiated contract with teamster organized less-than-truckload carriers in the 1970's provided impetus for creation of Teamsters for a Democratic Union.  The 2008 UPS agreement that removed tens of thousands of UPS teamster from the Central States Multiemployer plan, required nearly a year-long public relations effort by the Teamsters union to convince members that members could no longer reject UPS's proposal to set up a separate pension plan just for UPS employees.   Both the 2002 and 2008 contracts also faced opposition due to pay scales for part-time employees who sorted parcels and the number of full time and part-time jobs within sortation centers.   Yellow-Roadway contracts required multiple rounds of negotiations under the threat of bankruptcy and possible liquidation before contracts with major concessions including restrictions in the defined-benefit pension were approved by employees.

The APWU contract has generated vocal opposition from both former APWU President William Burrus and a number of local Presidents. (i.e. NE Massachusetts, Olympia, WA, and Red Bank, NJ)  The opposition even has a Facebook page.

The Process after Rejection

So, given the opposition, it is not unreasonable to ask what happens if the contract is rejected.   While further negotiation is possible, it is more likely the next step would be interest arbitration.   If that occurs the APWU and the Postal Service will select an arbitrator by agreement or by striking from a list provided by the Federal Mediation and Conciliation Service. The arbitration hearings would be scheduled based on the arbitrator’s availability. In the past, such arbitrations generally have been held within a 4-8 month period after the arbitrator's selection.

Likely actions of Parties after Rejection

In arbitration both sides will have to present contract proposals from which the arbitrator will develop a settlement.   The rejection of the contract will likely force the APWU to propose fewer changes in the existing workrules and compensation structure than are contained in the proposed agreement.   Given the 4-8 month arbitration process will delay implementation of any contract changes that the Postal Service believes will reduce its costs, arbitration would force the Postal Service to propose even greater changes in work rules and lower compensation levels than contained in the current agreement.

Results of Arbitration Discretion


What the arbitrator would choose is open to speculation.   APWU members have little clarity regarding whether they would fare better in an arbitration proceeding that follows the rejection of this agreement than what is offered in the contract that they must vote upon.  Each arbitrator looks at the information in front of them independently and contract arbitration following the rejection of a contract by the vote of the rank and file is rare.  The 2007 arbitration that resulted in a NRLC - Postal Service contract followed the rejection of a contract by NRLC rank and file members.  That arbitration decision may provide some guidance as to how an arbitrator will develop his/her decision.

In particular, I would focus on this passage from page 6 of the Fishgold arbitration decision.   "Thus, I informed the parties that they might influence me to make marginal changes to the tentative agreement but certainly not changes of the sort sought by each side in their initial presentations."   If the arbitrator follows this approach in the APWU-Postal Service arbitration, he/she would restrict the APWU and the Postal Service to minimal changes to the contract being negotiated.

While contract provisions similar to what was negotiated would appear to be the most likely outcome of an arbitrator imposed contract, options that are more favorable to management or labor are not out the question.    However, given that an arbitrator would be ruling just before the Postal Service defaults on payments to the Office of Personnel Management and the Department of Labor, the odds of a labor favorable ruling would appear to be longer than a ruling that is more favorable to management.

Congress: The Wild Card

The real wild card in this process is Congress. The pace of legislation will likely preclude Congress from directly affecting an arbitrator's decision or the criteria they must consider in developing a contract but that will not prevent at least the House of Representatives from trying.   More importantly, rejection of the contract would push changes in Postal labor agreements at least 6 months ahead.   This could further sour changes that Republicans in Congress will take any action that resolve the disagreements over retirement obligations in the Postal Service's favor.

Advertising Delivery: A Governmental Function?

In his thought provoking piece, APWU President William Burris summarized the challenge facing the Postal Service and its employees succinctly. I would like to focus on two quotes from his piece that highlight the challenge that he and his membership as well as all postal stakeholders will have to struggle with as Congress rethinks the business model for the Postal Service. Both of these quotes will like be central to one question that Congress will likely to debate: "Is the Postal Service's business still a governmental function?"

His first quote goes to the heart of what will be the policy debate, the core business of the Postal Service and governmental responsibility for ensuring that a provider exists to serve that market.

"Mail is what we process, transport, and deliver, but as the dominance of business mail demonstrates, the Postal Service is in the advertising business." [emphasis from original]

Mail advertising constitutes the bulk of the volume the Postal Service handles in its non-parcel postal products. Even bills and statements contain advertising.

No other advertising delivery business in the United States is government owned. The one possible exception is the Corporation for Public Broadcasting which allows sponsors of program to craft advertisements that are included at the end and beginning of programs.

No other advertising media is regulated to the extent that the Postal Service is regulated. Newspapers and periodicals that use newsstand, supermarket or home delivery are not subject to any regulation regarding what they can charge advertisers or the reading public, and are not subject to regulation as to how, where, and when those delivered to the household must be delivered. There is limited regulation of the broadcast industry but broadcast networks and local stations are free to set prices that they charge advertisers. Cable operators have some regulation regarding what they can charge customers and the range of their service offerings but do not have to submit to a regulatory process like the Postal Service.

The second quote focuses on the issue of business constraints.

"The Postal Service could do so much more to actively encourage citizens and business owners to use the USPS Web site to create customized messages for delivery by the Postal Service. Invitations to weddings or birthday parties; announcements of new business ventures; promotions of products and services — the possibilities are endless, constrained only by the imagination. Why isn’t the USPS advancing this concept rather than relying so heavily on messages developed by others?

We must use advertising as a tool that generates mail. The USPS has the potential to become a full-fledged advertising giant that, with extensive use of electronic media, creates volume."

The Postal Service is constrained to only provide "postal services" as defined by the Postal Regulatory Commission. This constraint prevents the Postal Service from doing what President Burris suggests. The constraints exist because competitors do not want the Postal Service, a governmental entity to compete with the private sector.

Removing the business constraints on the Postal Service that would allow it to enter businesses that relate to the delivery of advertising would create a more vertically integrated process, and possibly a lower cost process from conception to delivery. However, removing the constraint creates a significant policy quandary. If survival of the Postal Service requires it to enter a broader range of businesses related to advertising delivery that puts it in direct competition with private sector firms, should its existence as a governmental enterprise change?

I d0 not think that President Burris or APWU membership is prepared to accept the privatization option that might be required to fully take advantage of the Postal Service's capabilities as a deliverer of advertising. For too long privatization has been tied to cutbacks in jobs and reductions in compensation for APWU members or leadership to accept. However, the current financial challenges of the Postal Service suggest that those cutbacks and compensation reductions may come even without privatization. President Burris' message to his members suggests that it may be the time for the APWU to seriously invest resources to flesh out how a Postal Service free to pursue all opportunities relating to advertising delivery, and for that matter any business that could use the capabilities of postal employees and network of sortation and retail facilities, could improve the long-term prospects of the Postal Service and the APWU members that it employees.