USPS’s next battle

Aug 01, 1998 9:30 PM  By

When the U.S. Postal Service and its two major unions begin contract negotiations on Aug. 25, the unions will demand their share of revenue from the January 1999 postage increase. Fortunately, mailers need not worry about labor stoppages; by law, the postal unions can’t strike. But if the USPS and its new Postmaster General, William Henderson, give in to union wage demands, catalogers may have to worry about another, steeper rate hike down the road.

The negotiating unions are the American Postal Workers Union (APWU), which represents more than 360,000 postal clerks, or 46% of the postal work force, and the National Association of Letter Carriers (NALC), which represents 320,000 letter carriers, or 41% of the USPS work force. At press time, neither union representatives nor the USPS would reveal what figures they plan to bring to the bargaining table.

But since labor accounts for 80% of the Postal Service’s costs, the link between wage levels and rate hikes is clear. “Our first priority is economic and getting a good settlement,” says John Potter, USPS vice president, labor relations. “We want to make sure we can accomplish our financial plans and strategies for more frequent, smaller rate increases.”

Surpluses but no windfalls Despite the modest size of the January postal rate increases (2.9% on average), the recently concluded rate case was controversial because the USPS has posted three consecutive years of $1 billion-plus surpluses. These surpluses, coupled with the rate hikes, place the unions in a strong bargaining position. And Potter notes that the compensation for postal workers is “directly linked” to rate increases. “But everybody understands that in order for the Postal Service to compete, we have to have a competitive rate” for wages, he says. “I do see the need for a raise that’s fair to our employees, while allowing the Postal Service to continue with its rate strategy. But I don’t see any huge windfall for the unions.”

Try telling that to the unions. “You can rest assured that when the negotiations open, the first thing we’ll do is remind the PMG, the postal governors, and the public that we made these profitable years possible,” says APWU spokesman Tom Fahey. “We think it’s time for our people to get their fair share of the surplus the Postal Service has generated. Under our current and previous contracts, we haven’t kept up with inflation.” In 1994, union workers received a pay raise of 1.2%-2.8% per year over the four-year contract.

While the NALC is expected to focus negotiations on fundamental issues such as wages and grievance procedures, the APWU may make job security a negotiating point as well, given that the USPS has increased its outsourcing in recent years. For instance, the Postal Service last year awarded a $1.7 billion contract to Emery Worldwide Airlines to create a Priority Mail network, operating 10 Priority Mail processing plants along the East Coast, with Emery employees getting jobs that the APWU claims its members might have had.