High Costs and High Overtime: USPS Reports Challenge Insight

In its May financial data (see the article on page 8), the Postal Service reported mail processing costs that were 8% over plan and workhours that exceeded plan by 8.5%.  The agency commonly attributes this situation to the workload associated with higher parcel volume.  However, while it’s reasonable that more work hours are needed to handle surging parcel volume, there’s been no indication whether the USPS is concurrently capturing workhour savings because of greatly decreased letter and flat mail volume.

Any effort from the outside to look into this matter is frustrated by the dearth of useful data that’s publicly accessible and the disjointed content provided by what is available in the reports filed periodically with the Postal Regulatory Commission.

Apples and oranges

Four reports filed with the PRC can be examined: the Preliminary Financial Information, filed monthly; and the Active Employee Statistical Summary (“HAT report”), the National Payroll Summary, and the On Rolls and Paid Employees Statistics (ORPES), each covering a single USPS two-week pay period.

The challenge of trying to extract information from these reports starts with their chronological misalignment: the financial data is for a calendar month, unrelated to the two-week pay periods used for the other three.

Moreover, each presents data differently.  The monthly financials report total cost and workhours by function (e.g., “mail processing”); the HAT reports aggregates employee count according to various accounting codes; the payroll summary separates workhours and cost by different internal employee categorizations, and the ORPES shows high-level employee count by a yet another aggregation of employees.

The inconsistent formats of data in the different reports – counting employees in different ways, and not connecting complement with workhours, for example – make determining something as basic as the number of clerk craft employees a challenge.  (Likewise, workhours for postal nurses are reported separately but the number of nurses is included in the count of clerks on the HAT and ORPES reports).

Deliberate obscurity

It’s no secret that the Postal Service has extensive and detailed information about its dozens of categories of employees, their functional and operational assignments, and how both translate into workhours in various activities and the resulting costs.  The agency also has built out sophisticated networks that allow it to monitor workload at every processing facility, including the volume of mail, throughput and performance efficiency by machine or manual function code, and how well a facility is doing at managing its workhours to achieve service on the mail it’s handling.  And more.

Therefore, it’s likely that what’s being reported is what the USPS is required to report, and is not intended to provide further detail that would enable closer observation of how the agency’s human resources are being used to do work.

Returning to the original objective (above), therefore, the reports do not enable an outsider to determine whether USPS operational managers are capturing workload savings because the Postal Service neither is required to disclose the necessary information to do so nor is it otherwise willing to make such potentially awkward information available to outsiders. In other words, such internal operational data is supplied on only a “need to know” basis, and, to the USPS, outsiders don’t need to know.

However, it can be argued that, as a public enterprise, the agency has a duty to disclose to its “shareholders,” i.e., ratepayers, how well it’s managing its operations – specifically how efficiently it’s spending their money to do its job.  Ratepayers are among what’s called the Postal Service’s “stakeholders,” including postal employees, the mailing industry, and Congress, but they’re the only ones who are putting money on the line – so maybe they do have a right to know how well that money’s being spent.

Overtime costs

But back to the original purpose of digging into the data: are the overruns in mail processing costs and workhours tied to overtime?  The challenge to estimate the number of clerks aside, the workhour data is still comparatively clear.

For pay period 12 (May 23-June 5), according to the payroll summary, total straight-time workhours for all career and non-career clerk craft employees were 8,362,032.  In addition, those employees worked 1,434,635 overtime hours (17.16%), including 258,523 of “penalty overtime” (18.89% of overtime).  (Generally speaking, the overtime rate is about 1.5 times the basic hourly rate, while the rate for “penalty overtime” is about double straight time pay.)

Career full-time and non-career postal support employees represented about 80% of total craft workhours, but over 88% of overtime workhours, and over 96% of penalty overtime.  However, the average hourly rate for career full-time employees is about 45% higher than that for PSEs.

None of these reports attribute clerk workhours, in the aggregate or by employee category, to discrete operations, such as manual distribution at a post office, operating mail processing equipment at a plant or NDC, customer service at a retail counter, etc., nor to working with a mail category (e.g., parcels versus letters and flats).  The USPS has such microdata internally, but does not disclose it publicly.

More questions

As a result, what the reports fail to show is whether its reported costs and workhours indicate the USPS lacks adequate flexibility to put employees where needed.  Are contractual work rules enabling appropriate resource utilization?  Are inflexible work rules around schedules and bid assignments resulting in employees usually involved in processing letters and flats being underutilized, while overtime must be used to have sufficient resources to process parcels?  Postal officials have not responded when asked about this on periodic conference calls, but the simple numbers for workhours, overtime, and cost suggest there’s something deserving a closer look – and an explanation.

And if the suspected hinderances do exist, not only should the USPS correct them, but it should acknowledge them to the ratepaying public who’s paying the resulting costs.


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