The volume of traffic on this blog clearly has shown the interest among Postal Service employees on possible opportunities for early retirement and incentives. While the leaks last week indicated that an announcement was coming the end of last week, it did not happen. I apologize for giving false hope to Postal Service employees who are looking to taking early retirement.
Now the rumor mill is suggesting an announcement on Monday or Tuesday. As the discussion below indicates, an announcement about early retirements coming early this week fits the Postal Service’s current plan to implement the network restructuring in the second half of June, 2012. Any further delay in announcing early retirement incentives could force the implantation date closer to the end of June or possibly into July.
What Has Not Changed
In trying to understand what Postal employees are likely to hear in the next few weeks it is important to understand the three drivers of the timing of Postal Service announcements of early retirement incentives, reassignments and layoffs.
- The Postal Service’s plan to change the service standard sometime between May 15 and Jun 15, 2012.
- The Postal Service’s plan to close most facilities slated for consolidation by June 30, 2012, with some closing a week or two earlier.
- Union contract requirements for 60-days of notice about reassignments over long distances.
Also news stories are consistent that the Postal Service will cut its employment by around 35,000 through a combination of early retirement incentives, layoffs, and “voluntary” separation of employees who find available positions after the network optimization unacceptable. (Source: Government Employee News and Federal Times)
How the Facility Closure Timing Affects Voluntary Early Retirement announcements
If one assumes that the Postal Service gives employees a month to decide to take an early retirement offer, than the timing of the network restructuring and union contract reassignment notification requirements forces an announcement of a VERA sometime between March 16 and March 23, 2012 depending upon how much time the Postal Service needs to prepare reassignment notices after it knows how many employees accepted a VERA.
The March 16 to March 23 time frame comes from working back from a Friday, June 22, plant closing date. With that closing date, the Postal Service has to provide notice about long-distant reassignments by April 23, 2012 to meet contract requirements and not have employees sitting around in closed plants without a new assignment. To make a reasonable set of assignments, the Postal Service needs to know how many employees are going to accept a VERA before that date, which means the end of the period for accepting a VERA has to come no later than during the week of April 16. This deadline forces an announcement of VERA to a date approximately a month earlier than
If one assumes that the Postal Service provides employees a month to decide whether to accept a VERA offer, then the announcement of a VERA has to come sometime between last March 16 (last Friday), and March 23.
Ideally for Postal Service it would want as much time as possible to adjust reassignments which is what made the rumored March 16 announcement date quite credible. Given the problems of timing, the Postal Service would appear to have little choice but to announce its retirement incentive packages early this week. This fits into what a number of posters have indicated.
Does the Postal Service Still Need to Reduce its Workforce by 35,000?
No. Since the Postal Service announced its network restructuring normal attrition has reduced the Postal Service’s workforce. A good example of the impact of attrition was reported by the Lincoln Journal Star (Lincoln NE) whose March 1, 2012 story quoted Lincoln Postmaster Kerry Kowalski telling employees that:
We were originally looking at impacting 24 positions. But we’ve had attrition since then and subsequently made other changes. And right now, we think the impact will be 16 or 17 individuals will have to move to different positions.
While in this instance as many as 1/3 of the job losses are already banked, there is no guarantee that the same is true elsewhere. However, it is reasonable to assume that the Postal Service expects that around 15-20% of the 35,000 reduction in head count, or between 5,250 and 7,000 employees would leave the Postal Service on their own. This reduces pressure on management to encourage employees to retire or find reassignments.
What Will the Incentives Be?
The challenge for the Postal Service is offering incentives that are large enough to actually get people to retire yet small enough that it can afford to pay them.
In a story earlier this year, the Federal Times noted that a $20,000 buyout offer attracted 1,800 takers in 2011 as part of an effort to eliminate 7,500 management and administrative positions. The story suggests that even a relatively small incentive is sufficient to induce managers to retire rather than face a reassignment process or firing. Also, it also suggests that if the Postal Service can find an incentive that will induce about a quarter of the 35,000 employees it wants to lose to retire, it should be able to find a way to reduce its workforce without too many layoffs.
The question then is what incentive can the Postal Service offer that will convince at least 10,000 Service employees to retire with most of these early retirees coming from members of the APWU and Mail Handlers Union.
Many Postal Service employees would like incentives similar to what Ford has offered to its UAW member employees. Under its contract with the UAW, Ford offered early retirement bonuses of $50,000 to eligible production workers and $100,000 to skilled-trades workers. This is not going to happen. Incentives of this size are not permitted by federal law and even if it were legal the Postal Service does not have the cash to make such an offer.
Information leaked suggests that the incentive will take one of three forms:
- The Postal Service will offer a $20,000 cash incentive divided into two payments, one paid upon retirement and the second paid in October of 2012. This is similar to the incentive that it offered management employees last year
- The Postal Service will offer no added cash but will add 2 years credit for CSRS employees and 5 year credit for FERS. There is some question as to the legality of adding years of service credit but if it is legal, offering additional credit increases the pool of employees eligible for early retirement incentives and would help the Postal Service meet its head count reduction goals.
- The Postal Service will offer different incentives to CSRS and FERS employees. CSRS employees will be offered 3 years of service credit plus $20,000 to be paid over two years. FERS employees will be offered the opportunity to retire early but will be given no incentive to do so.
Based on what has been leaked so far, it would appear that the Postal Service will offer as generous an incentive package as it can offer to its most senior employees (i.e. CSRS employees). It is less clear what FERS employees will be offered at this time.
Who Will Receive Retirement Offers Now
Right now, the Postal Service will focus its incentives on crafts and non-craft positions directly impacted by the network optimization. This includes members of the APWU and Mail Handlers Union, Supervisors of mail processing and retail operations, and EAS employees that are employed in mail processing facilities. It is possible that EAS employees at Area and district offers may also be offered incentives to retire in order to free up positions for plant management employees that are too young to accept early retirement incentives.
Employees that will not be eligible for early retirement incentives now will include city and rural carriers, and employees at Postal Service headquarters. Some posts on the web indicate that incentives for city carriers will be offered to NALC members during the late summer with the timing of the retirement incentive announcement depending upon conclusion of the NALC arbitration. There is too much uncertainty about NALC early retirement incentives to make any further comment now.
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