Is USPS Underestimating the Number of Layoffs Its Downsizing Plan Would Require?

Note: An earlier version of this article contained an erroneous interpretation of federal severance benefits; they only apply to employees not yet eligible for retirement.

The U.S. Postal Service's estimate that its "workforce optimization" plan will require 120,000 layoffs in the next four years may be substantially understating the number of postal workers who would be forced out.

The recently released plan calls for shedding 220,000 career employees over the next four years. It estimates that attrition will take care of 100,000 employees, meaning the rest of the cuts would have to come from layoffs.

The estimate accurately reflects recent trends, when the number of career employees declined by just over 25,000 in a 12-month period. (See The Downsizing of the Postal Workforce Slows.)

But there's a big reason not to project recent trends into the future: the generous severance policy for USPS and federal employees. An employee with 20 years of service, for example, would get at least 30 weeks of severance pay and be eligible for unemployment insurance, according to Courier, Express, and Postal Observer.

Being laid off seems to be a much better deal for postal employees than just quitting or retiring. Those who think they are likely to be laid off in a year or two will be inclined to stay with the Postal Service, so they can collect severance and unemployment, rather than quitting. And even those able to retire, who are ineligible for severance benefits, may find the possibility of collecting unemployment benefits a sufficient incentive to stay with USPS.

Postal workers have a history of responding to retirement incentives. The Postal Service's attrition rate was about 40,000 annually a couple of years ago when many employees were offered early-retirement packages. And many employees have indicated they are ready to retire if another VERA (Voluntary Early Retirement) deal is offered.

So it's only logical to assume that postal workers would also respond to an incentive not to quit.

Related articles:

• How Does the Postal Service Discourage Early Retirement? Let Me Count the Ways: VERA programs would have worked better if the Postal Service had given employees accurate and timely estimates of their retirement benefits.


• Does the Postal Service Really Want Early Retirements?: Don Cheney, an expert on USPS retirement benefits, charged this week in an editorial for PostalReporter News that the Postal Service laid the groundwork for weakening no-layoff clauses by bungling employee communications related to VERA offers.


• Postal Service Can No Longer Afford Money-Saving Tactics, Study Says: VERA offers that lead to positions being eliminated are a good deal for the Postal Service, but it no longer has enough cash to offer them. (Here's an opportunity for Congress to ride to the rescue: Provide funds for early-retirement incentives as a way of minimizing USPS layoffs.)