Postal Service asks Congress to allow 120,000 layoffs, overhaul benefits

@CNNMoney August 12, 2011: 8:12 AM ET
The United States Postal Services has appealed to Congress to remove collective bargaining restrictions and allow 120,000 layoffs and major changes to employee benefits.

NEW YORK (CNNMoney) -- Hundreds of thousands of postal workers could soon lose their jobs, or face drastic changes to their benefits.

According to documents obtained by CNNMoney, the United States Postal Service is appealing to Congress to remove collective bargaining restrictions in order to lay off 120,000 workers. It also wants congressional approval to replace existing government health care and retirement plans.

The post office claims it needs to eliminate 220,000 positions, or more than 30% of its staff by 2015, but only 100,000 of those positions can be made through attrition. The other 120,000 must come from lay offs, according to the documents.

"To restore the Postal Service to financial viability, it is imperative that we have the ability to reduce our workforce rapidly," the USPS wrote.

The USPS is also asking Congress to change legislation that requires postal workers to get federal health care and retirement benefits. Instead, the Postal Service would replace them with its own benefit plans.

Currently, postal employees participate in the Federal Employees Health Benefits program, the Civil Service Retirement System and the Federal Employees Retirement System. If given congressional approval, the Post Office would replace those with new plans that would save money, while offering comparable benefits to employees, according to the documents.

10 job killing companies

In the documents, the USPS lays out the harsh reality of the situation: mounting losses, declining mail volume due both to the recession and the shift toward digital alternatives, and the need for drastic measures to cut costs.

"The Postal Service is facing dire economic challenges that threaten its very existence and, therefore, threaten the livelihoods of our employees and the businesses and employees in the broader postal industry and overall economy" a document on workforce reduction said.

It's no secret the USPS has been struggling, but it's a move that's likely to put Postal Service unions up in arms. USPS mail volume declined 20% in the four year period through fiscal year 2010 resulting in net losses of over $20 billion.

In fiscal year 2010, the Postal Service suffered a $8.5 billion net loss, compared $3.8 billion the prior year. Last quarter, the U.S. Postal Service posted a loss of $2.2 billion. Its fiscal year ends in September.

In July, the Postmaster General Patrick Donahoe released a long-awaited "post office study" of nearly 3,700 potential closings in all 50 states and Washington, D.C.

In its appeal to Congress, the USPS warns of an increasingly difficult situation -- one that has the long standing organization "facing the equivalent of Chapter 11 bankruptcy." In the document, the Postal Service warns it will be insolvent next month.

"As we continue to review our volume, revenue and financial projections for fiscal years 2012 through 2015, it has become apparent that our financial situation is becoming even more precarious." To top of page

Overnight Avg Rate Latest Change Last Week
30 yr fixed3.80%3.88%
15 yr fixed3.20%3.23%
5/1 ARM3.84%3.88%
30 yr refi3.82%3.93%
15 yr refi3.20%3.23%
Rate data provided
by Bankrate.com
View rates in your area
 
Find personalized rates:
Economic Calendar
Latest ReportNext Update
Home pricesAug 28
Consumer confidenceAug 28
GDPAug 29
Manufacturing (ISM)Sept 4
JobsSept 7
Inflation (CPI)Sept 14
Retail sales Sept 14
  • -->

    Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.