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Postal Service Says No to Layoffs

Posted on November 15, 2008

WASHINGTON, DC -- The U.S. Postal Service is denying reports that the agency is planning to layoff 40,000 workers.

A statement released this week by the USPS said: "Efforts to match our workforce to a reduced workload are focused on voluntary early retirements. Voluntary early retirement has been offered to a number of employees and to date, 3,685 employees have accepted the offer."

But the news still isn't good. In fiscal 2008, the USPS posted a loss of $2.8 billion due to lower mail volume and a required contribution to retiree health benefits.

The loss occurred despite more than $2 billion in cost-cutting measures that included the use of 50 million fewer workhours compared to the previous year.

Total revenue in FY 2008 was $75 billion, unchanged from last year. Expenses totaled $77.8 billion, including the $5.6 billion payment required by the Postal Act of 2006 to pre-fund retiree health benefits. Excluding all the retiree health benefit fund payments from 2008 and 2007, expenses were up less than 1 percent over last year. Cost reductions offset nearly all of the impact from rising inflation, of which the major contributors were a $562 million increase in cost of living adjustments paid to craft employees and $525 million in additional fuel costs.

"We expect the new fiscal year to be another difficult one for the Postal Service and the entire mailing industry, as economic factors will continue to reduce mail volume and increase expenses," Postmaster General John Potter told the Postal Service Board of Governors at a meeting last week. "As we continue to reduce workhours and other costs, our top priority remains providing excellent service to our customers. The combination of excellent service and affordable prices makes Postal products a great value."

The USPS announced it will raise shipping prices on Express and Priority Mail an average of 5 percent in 2009. First class rates will likely go up as well in 2009, but the prices won't be announced until next February and won't go in effect until May 2009.