Alliance Study Examines Drivers of USPS Cost Growth

A June article in the Alliance of Nonprofit Mailers’ Report dug into the current trend of USPS costs outrunning USPS revenues. The report’s findings revealed that the Postal Service may be doing things that an institution with financial challenges like those facing the USPS shouldn’t do.
The following extracts from the Alliance’s report are provided with their permission.
The Alliance found four areas where costs seem ripe for further examination:

Delivery Points
Employees
Transportation Cost
Compensation Cost
Today we'll review "Employees"

Employees

Normally, a declining business would be reducing its employees to both save cost and reflect the new reality. But the USPS workforce continues to grow. In April, it was up 3,633 or 0.57% to 637,979. The more expensive career employees were up an even greater 1.1% or 5,476 to 497,848, as lower-cost non-career employees declined by 1.3% to 140,131. The usual reasons given for continued hiring are more delivery points and more packages. (We addressed delivery points last week). Packages continue to grow and be quite profitable. Competitive products revenue was up 7.3% through April. “The outpacing of non-career by career employees is likely related to labor agreements that enable temporary employees to convert to career, with full pensions and lifetime health insurance.

An interesting sidebar is that postal unions have large political action committees that give a lot to postal oversight committee members. The greater their numbers, the more money they have to give. And some unions have partnered with postal management on legislative initiatives.
“The continuing growth of USPS employees is unsustainable in the face of declining volume and slow revenue growth.

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