Postal Service Cannot Avoid Layoffs

The Postal Service seeks to cuts its full time employees by 228,000 in the next two to three years.  A review of attrition rates over the past three years indicates that layoffs are unavoidable.  Even with early retirement incentives, layoffs will likely be between 120,000 and 130,000.  Without these incentives they would be even higher.
Attrition of Employees over 50
Attrition of Postal employees over 50 comes from retirement, death, and voluntary and involuntary separation from the Postal Service  Early retirement incentives were offered to different groups of employees in 2009 and 2011. So the attrition rates below include the impact of these incentives.

Assuming that the Postal Service offers similar incentives to eligible employees, it should see a reduction in full time career employee among employees who are 50 or older today by around 94,000.  The Postal Service should see total full time employee count by 100,000 if those under 50 leave Postal Service employment at historical levels.   This quick analysis confirms Postal Service statements that it would have to lay off at least 120,000 employees in the next few years as it restructures its service.

The Importance of Early Retirement Incentives

By looking at one-year attrition rates, the importance of incentives becomes clear.  Attrition rates of those over 50 rose between 2009 and 2010 reflecting the impact of the early retirement incentives for 150,000 employees that went into effect in the fall of 2009.  As could be expected attrition rates fell in 2010-2011 as early retirement incentives pushed up retirement by a year for some employees.

Attrition rates for employees over 65 appears to suggest that the incentive may have had a real impact for these workers as it induced more retirements than would otherwise occur without having much impact on retirement decisions of employees who continued to work after the incentive expired.

Attrition rates for those between 50 and 60 actually dropped after an early retirement incentive was offered which suggests that the incentive may have only had the effect of convincing employees who were likely to leave for other employment to leave a year earlier and may not have had much of an impact on the number of Postal employees in that cohort over a longer period.

About the author