U.S. Postal Service Says Labor Contract Would Save $3.8 Billion

The U.S. Postal Service, which has reported losses for five consecutive quarters, would save $3.8 billion over four and a half years under a labor agreement with one of its labor unions.

“We’re doing everything within our authority to put the Postal Service on a path to profitability,” Postmaster General Patrick Donahoe said today about a contract reached with the American Postal Workers Union. “Labor costs are forever reduced in this contract.”

Donahoe spoke to reporters at the agency’s Washington headquarters the day before he is scheduled to testify before the House Oversight and Government Reform Committee, whose chairman Representative Darrell Issa, a California Republican, has called the contract a “missed opportunity” to cut costs.

Of the $3.8 billion in savings in the contract, $180 million comes from having workers contribute more to their health-care expenses, Donahoe said. He said the savings won’t cut the 80 percent of the postal budget devoted to labor costs.

To contact the reporter on this story: Angela Greiling Keane in Washington at agreilingkea@bloomberg.net

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net