Post Office Offers Buyouts

08/31/2009 12:01 am EST

Focus: MARKETS

Terry Savage

Author, The Savage Truth on Money

The recession may be ending, but not for the Post Office. They’ve just announced that 30,000 employees may be eligible for a buyout, that is estimated to save as much as $500,000 a year. That’s a drop in the bucket for a company that expects to lose $7 billion for the year ending this September 30th.

I know it’s unfashionable to connect the Post Office with the government. The US Postal Service has been an “independent government agency” (someone please explain that oxymoron) since 1971. That also happened to be the year that the first collective bargaining agreement was signed with its union of postal workers. Since then its most progressive move has been to offer self-adhesive stamps. 

Have you been to a post office lately, to send a registered letter, for example? If so, you surely indelibly remember the the long line, with only one surly cashier moving in slow motion, while the other employees saunter back and forth behind the counter doing absolutely nothing. 

Ask why no other clerk is at a window, and they’ll smilingly say: “It’s lunch hour.” Yep. That’s when all the customers come in to do their business. And that’s when all the windows would be staffed in a business that cares about profits.

Postal Service employees receive better benefits than most private companies. Check out this link: http://www.usps.com/employment/compbenefits.htm. Here are the basics: In addition to highly competitive basic pay rates, most Postal Service employees also receive regular salary increases, overtime pay, night shift differential, and Sunday premium pay. Overtime is paid at one and one-half times the applicable hourly rate for work in excess of 8 hours per day, or 40 hours within a workweek. Plus, they get a pension, and 401(k) equivalent, and paid health insurance, and on, and on—including union job security. No wonder they think their customers are fools for standing in line.

Now, quick—name a company with $75 billion in annual revenues that will lose $7 billion this year—and has lost money every fiscal year since 2005-2006—and is just getting around to offering buyouts and freezing hiring. 

Yep. It’s the US Postal Service.

Of course, eventually even an “independent government agency” will have to figure things out.  Here’s how the Postal Service is doing it. They’re cutting back on services. They’ve just applied to Congress to eliminate Saturday service. They’ve continuously raised prices (think stamps) as demand for their services has fallen, amidst private replacements ranging from FedEx to e-mail.

Now, extrapolate. Picture American healthcare under an “independent government agency” down the road. Too many people, doing too little. Rising prices. Cutbacks in services. Private alternatives springing up for those who can afford to pay—outside the system.

Is that what we want? Can’t we learn from experience?

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