Sept. 8 (Bloomberg) -- Unions representing the U.S. Postal Service’s 560,000 workers built political clout through campaign contributions and a grassroots presence in every community in the nation.
“For many years, it was the entry to the middle class for minorities and women who couldn’t get through the glass ceiling,” Gene Del Polito, president of the Association for Postal Commerce, which represents postal customers, said in an interview.
Now the unions, and their Democratic allies in Washington, may be the biggest obstacle to the Postal Service’s plan for financial solvency, which calls for shedding 220,000 employees by 2015, including 120,000 who would be fired.
The Postal Service, a $65 billion business operating with a week’s worth of cash, said Sept. 6 it may have to stop mail delivery by August unless Congress and President Barack Obama’s administration agree to steps such as ending Saturday service and breaking union contracts that bar layoffs for most postal workers.
The cost of labor, including retiree benefits, represents 80 percent of expenses for the Postal Service as mail volume declines in an era of e-mail and instant messages. Unions for postal workers are trying to resist concessions, as have government employees in states facing deficits.
Giving Up Gains
“Postal unions, once so strong, find themselves, like others, having to give up past gains in bargaining or risk tremendous job losses,” Gary Chaison, a labor professor at Clark University in Worcester, Massachusetts, said in an interview. “As government workers with significant lobbying power, they were able to negotiate major job protections, and then lobby to have Congress approve the cost of their agreements.”
The American Postal Workers Union, with 250,000 members employed by or retired from the Postal Service, is the biggest union that bargains with the agency, based on current employees. In May, it ratified an agreement with a two-year wage freeze and the elimination of some cost-of-living adjustments.
“In the postal realm, it almost is a family affair,” Cliff Guffey, president of the union, said in testimony Sept. 6 at a Senate committee hearing. “We’re trying to work together to save the post office.”
The union feels “a bit betrayed” by the service’s latest cutback plans, he said.
$7 Million Contributed
Unions for postal workers contributed $7 million in the 2010 elections, 90 percent to Democrats, according to the Center for Responsive Politics, a Washington-based research group. That’s as much as was given by the National Education Association, representing teachers, and was exceeded among unions only by the $8.8 million from the Service Employees International Union, whose members include health-care workers and janitors.
Democrats in the House urged this week that the Postal Service honor labor agreements that prohibit firing most workers.
Asking Congress to let the service break a months-old contract would be “neither fair to Postal Service employees nor helpful to the Postal Service’s credibility in future negotiations,” Representatives Elijah Cummings of Maryland, the top Democrat on the House Oversight and Government Reform Committee, and Stephen Lynch of Massachusetts, wrote in a Sept. 6 letter to Postmaster General Patrick Donahoe.
Rural, Urban Unions
In addition to Guffey’s union, workers are represented by the National Rural Letter Carriers’ Association, the National Association of Letter Carriers, which operates mainly in cities, and the National Postal Mail Handlers Union, which works in mail-processing plants and post offices. The National Association of Postal Supervisors, which represents management, isn’t subject to collective bargaining.
Before the Postal Service Reorganization Act of 1970, the service was a full-blown government agency with representation in the president’s Cabinet.
“It flourished at a time when the growth of mail was so big, a certain amount of slop in the system was tolerated” in terms of expenses, according to Del Polito of the postal trade group based in Alexandria, Virginia, which represents customers such as JPMorgan Chase & Co. and Capital One Financial Corp.
The role of the post office as an indispensable service helped unions win favorable terms even though the law prohibited them from going on strike, Chaison said.
‘Taken Advantage Of’
“If their contracts were rejected, it would appear as if they were being taken advantage of without a right to strike,” he said.
The introduction of competition into mail services from United Parcel Service Inc. and FedEx Corp. put new pressure on the postal unions, Alan Robinson, executive director of the Center for the Study of the Postal Market based in Silver Spring, Maryland, said in an interview.
Compared with 80 percent at the Postal Service, labor represents 61 percent of costs at UPS and 43 percent at FedEx. UPS has unionized truck drivers; FedEx drivers aren’t union members.
Mail volume will decrease 2 percent this fiscal year, for a drop of 22 percent since 2006, Donahoe said Sept. 6.
The rise of the Internet, not the influence of unions, is at the root of the Postal Service’s woes, said Nelson Lichtenstein, a labor professor at the University of California at Santa Barbara.
“The unions became strong because postal work is industrial work, and you need a strong voice to make it livable,” he said in an interview. “The reason the Postal Service is in trouble is because we now have e-mail and other free forms of communication.”
Even the American Postal Workers Union uses social-network sites such as Twitter Inc.’s service, where it has been posting pleas for supporters to lobby against job cuts.
The Postal Service, which has lost money for eight consecutive quarters, may lose $10 billion this year, Donahoe said, adding to last year’s $6 billion loss.
The losses will leave the Washington-based service unable to make required payments to the federal government and puts it at risk of default as it reaches its $15 billion borrowing limit, Donahoe said.
The service is supposed to be self-supporting, and it’s required to deliver mail six days a week to all addresses in the U.S. It’s also required under a 2006 law to make annual $5.5 billion payments to pay for health-care costs for future retirees, a mandate it’s trying to weaken.
The Obama administration said Sept. 6 it is willing to delay this year’s payment, due to the U.S. Treasury on Sept. 30, by 90 days. Donahoe said even with a delay, the service will be unable to make the payment.
The service sent a proposal to Congress last month with changes including cutting 220,000 jobs by 2015, which would require firing about 120,000 people. Unions criticized the plan.
“We will continue to work with the unions,” Donahoe told reporters after this week’s hearing. “We think it was the responsible thing to do to lay out our options.”