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.

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.