Because we don’t have enough economic troubles right now, the US Postal Service announced that they may cut 120,000 jobs and pull completely out of the federal health care plan, in an effort to cover a budget shortfall.
The layoffs would be achieved in part by breaking labor agreements, a proposal that drew swift fire from postal unions. The plan would require congressional approval but, if successful, could be precedent-setting, with possible ripple effects throughout government. It would also deliver a major blow to the nation’s labor movement.
In a notice informing employees of its proposals — with the headline “Financial crisis calls for significant actions” — the Postal Service said, “We will be insolvent next month due to significant declines in mail volume and retiree health benefit pre-funding costs imposed by Congress.”
During the past four years, the service lost $20 billion, including $8.5 billion in fiscal 2010. Over that period, mail volume dropped by 20 percent.
Apparently, the postal service often makes dire predictions like this before contract negotiations. I doubt that 120,000 postal employees will be laid off in one shot. However, there’s at least a couple things to take seriously here. First, the decline in mail volume is real. Practically every company with a monthly bill encourages their customers to pay automatically or online. That significantly reduces mail output. The move of Netflix to streaming from mail service is probably a big blow. The rise of email over personal letters is another factor. The postal service has become a way to get Amazon orders out and to get birthday cards with $10 wedged in them from grandparents to grandchildren. It has become a less crucial communications factor in American life. And because the postal service operates under a mandate to serve every home in America, even ones in the most rural outposts, which simply cannot be reached without a federal subsidy, their budget is more and more difficult to reach.
Incidentally, the postal workforce has already reduced by 212,000 over the past 10 years. So this is more of a long-term trend than a sudden crisis. But it turns out that the biggest challenge for the postal service is a technical anomaly that requires it to pre-fund retiree health and pension benefits 75 years in the future. No other agency of the federal government has this requirement, and it represents the bulk of their budget problems. Unlike practically any company in America, their pension fund is overfunded by $75 billion, walled off in an account that cannot be touched for operations.
The Postal Service wants this requirement to be changed. And that would solve almost the entire problem. But I suspect that the ripping up of collective bargaining requirements that restrict mass layoffs will be the more attractive option for House Republicans. How cutting 120,000 jobs would make sense in this current labor environment is unfathomable.