July 26, 2016
An independent arbitrator, Stephen B. Goldberg, awarded a very sweet 40-month labor contact to the American Postal Workers Union. “We have gained many positive results in these difficult times,” APWU President and lead negotiator Mark Dimondstein said. “We, as a union, should be proud of the results.” Here are some of its highlights:
Length of the Agreement
May 21, 2015 – September 20, 2018 (40 months)
Career Employee General Wage Increases
There will be across-the-board pay increases of 3.8% for career employees over the life of the Agreement:
Cost of Living Adjustments (COLA)
The COLA for career employees is maintained under the current formula. Cost of living adjustments will be made in March and September of each year of the Contract.
PSE (Postal Support Employees) Wage Increases
PSEs (who do not receive COLA raises) will receive wage increases as follows:
In addition to these general wage increases, PSE wages will be increased by fifty cents per hour over the life of the Contract as follows:
No Lay-Off Protections for Career Employees
The no lay-off protections of Article 6, for employees with more than six years of service, remain in full force. In addition, no lay-off protection is extended to all career employees who are on the rolls as of July 8, 2016. This protection covers the 32,000 postal workers recently converted to career who have not yet achieved the six-year threshold of no lay-off protection.
Job Security Provisions
Professor Emeritus Goldberg in his Opinion acknowledged that the USPS financial situation is weak, which would argue for lower rather than much higher compensation, but said that he is limited to comparisons with comparable jobs in the private sector:
“The evidence clearly shows the Postal Service to be in a difficult financial position. This is due in substantial part, albeit not entirely, to the diversion of First-Class Mail to electronic communications, coupled with an expanding delivery network to which the Postal Service must deliver fewer mail pieces. Because of the loss of much of its First-Class Mail revenue, the Postal Service asserts that it must, as a matter of survival, increasingly focus on new services and products such as the packages and parcels delivery market. Just as the First-Class Mail market is shrinking due to electronic competition, the market for the delivery of packages and parcels is expanding as a result of the shipping of purchases made on the Internet. The packages and parcels delivery market is, however, extremely competitive, with several large nationwide delivery services seeking to expand their market share, often competing with each other and the Postal Service on price to do so. All of these factors, according to the Postal Service, require it to keep its labor costs under control.
The Union concedes that the Postal Service is facing significant financial challenges, but points out that the PRA is clear in requiring the Arbitration Panel to base its award solely on the comparability of Postal Service wages and benefits to those in the private sector, not on the Postal Service’s financial condition. To be sure, the Union voluntarily made financial concessions in the 2010 Agreement, at a time when, it asserts, the Postal Service’s financial condition was far worse than it is today, but that, the Union asserts, does not authorize the Arbitrator to impose wage and benefit concessions in the 2015 Agreement. The Union concludes, and the Postal Service does not disagree, that the Arbitrator has no choice under the PRA, but must base his wage and benefit award solely on comparability, not on the financial condition of the Postal Service. (footnote 3)
In rendering this Award, I acknowledge the financial problems affecting the Postal Service, but accept, as I must, the primacy of the statutory comparability standard in fashioning an award on the wages and benefits of APWU-represented employees. I also note that even greater freedom on my part to determine an appropriate level of wages and benefits would be insufficient to provide a meaningful solution to the Postal Service’s financial problems. For, as substantial a portion of Postal Service expenses as are employee wages and benefits, representing upwards of 80% of total Postal Service expenses, with APWU labor costs accounting for 22 – 25% of total expenses, other costs loom large in the Postal Service’s current financial difficulties. Many of these are long-term legacy costs, especially retiree health care and pensions, which are statutorily mandated, as is the retiree health benefits prefunding obligation, which has significantly contributed to the Postal Service’s recent deficits. None of these Congressionally imposed costs are subject to collective bargaining or to change in interest arbitration. Nor is it clear that this Panel can address cost issues related to universal service, frequency of delivery, pricing, and new revenue producing services. All that is clearly within the Panel’s authority are the wages and non-statutory benefits of employees covered by this collective bargaining agreement. These are not insignificant issues, but regardless of what is done here, it cannot substitute for Congressional action on comprehensive postal reform legislation.
In sum, I join previous Arbitrators and Postal Service Interest Arbitration Panels in recognizing the limits on our authority, and in calling on Congress to take appropriate action to deal with the regulatory and legacy cost issues that stand in the way of the Postal Service achieving long-term fiscal health. That being said, the Panel shall abide by our statutory duty to determine the level of compensation and benefits that is necessary for APWU-represented employees in the Postal Service to be treated similarly to employees performing comparable work in the private sector.
Footnote 3–Nor, the parties agree, is this conclusion altered by the Postal Accountability and Enhancement Act of 2006 (PAEA), even though that Act imposed a fundamental shift in the Postal Service’s business from a break-even model in which costs were passed through to customers to a profit-or-loss model that requires the Postal Service to successfully manage its costs. In brief, the cost-control mandate of the PAEA does not alter the application of the comparability mandate as the governing standard for determining Postal Service compensation and benefits.”
It is puzzling that Goldberg acknowledged that postal workers are paid more than the private sector and have much lower quit rates, but he nonetheless decided to give them an award that essentially matched the recently negotiated contract between USPS and the rural letter carriers.
“Initially, I am persuaded, as the Postal Service asserts, that the package of economic benefits received by bargaining unit employees – retirement benefits, retiree health care, paid leave, low employee health care contributions, and a no-layoff provision – are superior to those typically available to private sector employees. Another factor which stands out are the quit rate data, which show that career Postal Service employees voluntarily leave their jobs at a rate far lower than do private sector employees. Despite APWU arguments to the contrary, I consider this as powerful evidence that APWU-represented employees consider their jobs with the Postal Service to be superior to the alternatives available to them elsewhere.”
“While this Arbitration Panel is not bound to adopt the USPS-NRLCA wage and benefits agreement, and while I recognize that the USPS-NRLCA Agreement applies to a smaller, more homogenous unit of employees doing different work from APWU represented employees, I nonetheless assign considerable weight to the USPS-NRLCA Agreement in determining the content of a wage and benefit package for the employees here involved. Interest arbitrators often look favorably at recent voluntary agreements, especially with the same employer, as evidence of what the parties would have agreed to if their negotiations had been successful. I follow that line of reasoning in assigning substantial weight to the NRLCA Agreement, negotiated under the same comparability standard applicable to these proceedings, as evidence of what would be appropriate for the APWU bargaining unit despite its differences from rural carriers.
In sum, having considered all the evidence and arguments, particularly the USPS-NRLCA Agreement, I have determined to award similar compensation and benefit provisions to the APWU-represented employees involved in this case as were negotiated in the USPS-NRLCA Agreement.”
The arbitrator also decided not to disturb the cost of living adjustment that the APWU has enjoyed since postal reorganization, but is rare in the private sector.
“The Postal Service sought the elimination of the COLA provision that has been a part of the APWU Agreement since 1971. In support of its position, the Postal Service provided unrebutted evidence that COLA provisions are rare in private sector bargaining agreements today. It also asserted that a significant cause of what it views as a wage premium for postal employees has been the impact of COLA provisions over time. The absence of COLAs in private sector agreements does not, however, in itself warrant removing the COLA from this Agreement. As for its alleged contribution to a wage premium, that is part of a much broader inquiry into the existence of such a premium. In view of the 45-year history of COLAs in both voluntary and arbitrated contracts between the Postal Service and the APWU, I will not disturb the COLA in the 2015 Agreement, other than, as was agreed to in the NRLCA contract, to update its base month to July 2014.”
In sum, 80 percent of postal costs are determined by collective bargaining that often goes to arbitration in which one person determines the outcome in a closed process.