Today the Postal Service announced a major restructuring of how it provides retail services in rural communities. The change will affect some 17,728 Post Offices. While most news reports focused on the cuts in hours, the plan also makes major savings by replacing career Postmasters with lower paid part-time employees. This plan is likely to remove rural Post Offices as a political roadblock to postal reform.
The Postal Service’s plan, known as PostPlan, has four elements that dramatically restructure management of both rural and urban Post Offices. However, the impact is likely greatest in rural post offices that only have one retail window. There are three major types of changes in the plan
- Classification of Offices by Workload Which Also Determines Retail Hours
- Management of rural retail operations
- Compensation of retail employees
- Hours Rural Post Offices Are Open
Classification Offices by Workload and Retail Hours
The Postal Service’s PostPlan reduces the number of categories of small post offices from seven to four. The four new categories determine both the number of retail window hours and the type of employee who will likely work in the office. The four new categories are as follows:
- Level 2 - offices opened 2 hours a day and staffed by a non-career employee
- 1,851 offices on the list provided by the Postal Service (1,975 offices in a National League of Postmasters presentation)
- Level 4 – offices open 4 hours a day and staffed by a non-career employee
- 6,832 offices on the list provided by the Postal Service (6,879 offices in a National League of Postmasters presentation)
- Level 6 – offices open 6 hours a day and staffed by a part time career Postmaster
- 4,300 offices on the list provided by the Postal Service (4, 313 offices in a National League of Postmasters presentation)
- Level 18 – offices open 8 hours a day and staffed by a full time career Postmaster
- 4, 561 offices in a National League of Postmasters presentation
Management of Rural Retail Operations
The Post Plan divides rural post offices into three categories.
- Remotely Managed Post Offices (Levels 2, 3, and 4) will be staffed by either non-career employees orpart-time postmasters called career Evaluated Postmaster (EPM).
- Post Offices (Level 18) are post offices that are managed by a Postmaster with responsibility similar to what a postmaster has today
- Administrative Post Offices (Level 18 and above) are post offices that are managed by a Postmaster and responsible for managing remotely managed post offices.
Remotely Managed Post Offices (RMO’s) are basically rural stations or branches of an Administrative Post Office (APO). In general, Administrative Post Offices will manage up to 10 remotely managed post offices, although the exception rules noted above suggests that there will be cases when an Administrative Post Office is responsible for more than 10 offices.
Not all Level 18 Post Offices in the PostPlan are currently classified at a level 18 level. Postmasters currently working in offices classified at lower levels will get an increase in compensation to reflect the level of work that the office does.
Administrative Post Offices (AMO’s) are classified as a Level 18 or higher Post Office depending on the workload at the particular office. The Postmaster of this office will be responsible for this office as well as a number of remotely managed Post Offices. Due to the increased responsibility, the Postmaster will receive compensation at a higher level than the Level of the office would otherwise indicate.
Compensation of Rural Post Office Employees
- Non career employees (Level 2 and 4 offices)
- $11.76 per hour wage
- Annual Leave – 1 hour per 20 hours worked per pay period.
- No health insurance unless 2014 and then only if they work the minimum of 30 hours per week minimum under the Affordable Care Act
- Can apply for vacant Postal Service positions
- Career Evaluated Postmaster (Level 6 offices)
- $12.30 per hour wage
- Current postmasters working in these offices will retain their current benefits including leave and health insurance
- New employees will receive leave and benefits that apply to part-time postmasters at the time they are hired
- Current and new employees can apply for other Postal Service positions according to current Postal Service rules
- Postmasters (Level 18 and above)
- Postmasters in these positions will receive compensation and benefits according to the agreements with Postmasters announced on May 9, 2012.
- Salaries remain at 2010 levels through the end of fiscal year 2012,
- The contract increases salary at the minimum and maximum steps but it is not clear from public information how these increases are affected by the current pay freeze.
- Employees will see an increase in their share of health benefit cost.
The reductions in compensation levels will come in the new Level 2, 4, and 6 offices. Salaries in level 2 and 4 offices will now be lower than what the Postal Service pays postmasters for working in any office and lower than Postal Support Employees working in retail outlets that are staffed by members of the American Postal Workers Union retail clerks. In addition, benefits offered to employees in level 2 and 4 offices are less than benefits currently available to employees currently working in these offices.
The salary offered in level 6 offices appear to be equal to the lowest starting salary in the EAS Salary Structure for Postmasters. Therefore individuals working in these offices who are now paid above $12.30 per hour could see a cut in their hourly wage once the PostPlan is implemented. New employees in these offices will likely see some benefit reductions as well but those reductions are not identified in the National League of Postmasters Presentation that I viewed.
In addition to lower salary levels in Level 2, 4, and 6 offices, the PostPlan cuts labor costs by shifting jobs in the 12,738 offices that are losing hours from:
- full-time Postmaster positions to either part-time career evaluated Postmaster or part-time non-career positions; and
- part-time career Postmaster positions to part-time non-career positions.
To understand the impact of the reclassification can be seen by just looking at 11,528 offices that the Postal Service shows on its list as now open eight hours a day.
- 36% of these offices or 4167 offices will be staffed by an evaluated Postmaster – in these offices savings will come from shifts from full-time Postmasters and lowering the salary of any part-time Postmasters employed
- 64% of these offices or 7,361 will now be staffed by non career employees – in these offices the change in classification will shift the workforce from higher paid full time and part-time postal employees with either a standard Postal Service benefit package or the benefit package offered to part-time Postmasters to non-career employees with lower salaries and a minimal benefit package.
The shift in office classifications will have a significant impact on the income and benefit packages offered to Postal Service employees currently working in these offices in addition to a significant reduction in the number of hours many of them work. As such, employees in these offices have significant interest in taking the early retirement incentives as the alternative is a job that will pay significantly less than what they now earn. Due to the reclassification of rural post offices, employees that are not eligible for retirement incentives face the prospect that even if a significant number of rural postmasters retire, there will be significantly fewer jobs paying what they now earn at the Postal Service than now exist.
Hours Post Offices are Open
The PostPlan sets the number of hours a Post Office is open based on a measure of the workload of the office. The workload measure is used unless one of three exceptions applies. They are:
the Post Office is 25 driving miles from the nearest postal operated retail facility;
the Post Office is one of a group of remotely managed Post offices that are 25 mile radius from administrative Post Office open 8 hour per day; or
the Post Office is part of a group of more than 10 remotely managed Post Offices that are managed from a single Administrative Post Office that includes a Postmaster.
The Postal Service list of offices shows that overall the PostPlan reduces hours in rural Post Offices by 43%. 98.1% of all offices see reductions and 0.5% see an increase in hours. Offices that increased hours are in states like Alaska, Montana and Wyoming which are both rural and cover a large geographic area.
Other statistics on the change in hours are as follows:
The average number of hours per day that a rural office is open drops from 7.67 to 4.38 hours.
Offices that are losing hours lose 3.38 hours per day on average.
38% of all offices losing offices are losing 2 hours a day
56% of all offices losing hours are losing 4 hours a day.
6% of all offices losing hours are losing 6 hours a day.
Initial Evaluation of the PostPlan
The Postal Service’s appears to be an interim plan for managing rural retail services. Rather than closing facilities before it can find a suitable replacement from a private sector contractor, the Postal Service has chosen to reduce hours. Also, the plan does insure that all customers can find a Post Office within 25 miles of their closest Post Office that is open at least 6 hours a day. The plan’s protections for the most rural areas are similar to what Canada Post and Australia Post do in their most remote regions where finding a private sector provider of postal services is highly unlikely.
The initial press and political reaction to the plan suggests that the Postal Service has finally found a way to cut the costs of providing rural retail services that generates positive headlines. So while access to retail services in rural America is being cut by about 43%, the positive halo around the Postal Service’s plan appears likely to remove objections of rural legislators from moving forward with a postal reform plan.
The size in the cuts in Post Office hours will be a problem for rural communities only if the Postal Service does not effectively implement the other half of its rural retail strategy, expanding private sector and local public sector provision of postal services. Members of Congress and local government officials need to keep a close eye on the Postal Service’s effort to expand its use of private sector providers of postal services. In particular, these members should encourage the Postal Service to expand the Village Post Office concept to allow private contractors to provide the full range of postal services including: sale of single stamps, parcel post, money orders, mail box rentals and any new products that the Postal Service develops that are available in corporately run Post Offices.