Despite Ice-Cold Demand, USPS May Drag Holiday Expectations – InsideSources
It’s starting to look a lot like Christmas… at least in the mail. The U.S. Postal Service is busy making its holiday shipping plans, and the agency has its work cut out.
In a bizarre twist, the US mail carrier may end up with too many workers and cargo capacity for packages. According to a report by consultancy ShipMatrix, package carriers (including the Postal Service) will be able to handle around 110 million packages per day during the holiday season. But consumer demand will only average 92 million packages a day, leading to excess capacity and costs unless carriers keep their networks nimble.
The Postal Service can drag its red ink by right-sizing operations and embracing smart hiring.
La Poste has already announced that it will hire 30,000 seasonal workers for the December rush. This is a significant change from the agency’s usual practice of hiring 35,000 to 40,000 seasonal workers and an encouraging sign that the service is taking demand forecasts into account. However, these new workers are unlikely to be truly “seasonal”. The agency recently announced that “the Postal Service has converted more than 100,000 part-time employees to full-time positions since the start of 2021.”
These full-time conversions put a great strain on postal finances, as career employees earn about twice what corresponding non-career employees earn. This pay gap is no small issue, given that labor costs make up about three-quarters of USPS expenses.
Recent “reform” legislation may have shifted retiree healthcare costs to other (struggling) federal agencies, but this fiscal hot potato probably won’t make much of a difference. About 90% of postal labor costs are in the “compensation and benefits” (non-retired) category, and employee unions know how to move the funds around. Unions such as the National Postal Mail Handlers Union and the American Postal Workers Union confidently enter negotiations with the Postal Service knowing that, under federal law, intractable standoffs between unions and the service will automatically force the agency to a binding arbitration process. . That means a mediator is certain to grant at least some concessions to the union, a process the American Postal Workers Union admits is friendlier to them than the private sector’s labour-management standoffs.
In short, the Postal Service creates a pipeline where “seasonal” employees are placed in higher paying permanent positions, costing the agency a pretty penny. This franchise conversion pipeline makes it much more difficult for the agency to scale back its network when demand declines, putting the service at a distinct disadvantage against private sector competitors.
The Postal Service can solve its holiday delivery dilemma by hiring truly temporary help when needed. Even if the agency over-hires or under-hires for a vacation period, this imbalance will not harm the agency fiscally for years. By contrast, an inflated full-time payroll equates to a permanent lump of coal for taxpayers.
There are also other ways the service can maintain a lighter footprint. A 2021 report by the Postmaster General notes that “of nearly 13,000 (financially weak) underwater post offices, a quarter are within three miles of another post office and more than the half within five miles”. The service could close these post offices without sacrificing access for nearby consumers.
The American Postman is determined to meet demand this year and help Santa get some rest. He can certainly do that without leaving taxpayers out in the cold.