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Monday, September 05, 2011

Post Office To Go Bankrupt Without Bailout ; Labor Contracts 80 Percent Of Problem

The New York Times reports that the United States Postal Service is on the verge of becoming totally bankrupt and may have to shut down without a bailout. They also report that 80 percent of the problem is caused by a no-layoffs clause in the unions’ contracts.

At the same time, decades of contractual promises made to unionized workers, including no-layoff clauses, are increasing the post office’s costs. Labor represents 80 percent of the agency’s expenses, compared with 53 percent at United Parcel Service and 32 percent at FedEx, its two biggest private competitors. Postal workers also receive more generous health benefits than most other federal employees.

In a nutshell:

Mail volume has plummeted with the rise of e-mail, electronic bill-paying and a Web that makes everything from fashion catalogs to news instantly available. The system will handle an estimated 167 billion pieces of mail this fiscal year, down 22 percent from five years ago.


Meanwhile, the agency has had a tough time cutting its costs to match the revenue drop, with a history of labor contracts offering good health and pension benefits, underused post offices, and laws that restrict its ability to make basic business decisions, like reducing the frequency of deliveries.

Business is down 22 percent in five years and yet they are forced to continue employing people they do not earn enough money to pay.

That is a recipe for disaster and a bailout might keep them going but unless those no lay-off clauses are nullified, then that bailout will just postpone the inevitable.

It isn't like people are going to start using the postal service more, in fact, just the opposite will happen in this day and age, it will be used less.