Postal Service proposes cutting 120,000 jobs, pulling out of health-care plan

SEATTLE — The financially strapped U.S. Postal Service is proposing
to cut its workforce by 20 percent and to withdraw from the federal
health and retirement plans because it believes it could provide
benefits at a lower cost.

The layoffs would be achieved in part by breaking labor agreements,
a proposal that drew swift fire from postal unions. The plan would
require congressional approval but, if successful, could be
precedent-setting, with possible ripple effects throughout government.
It would also deliver a major blow to the nation’s labor movement.

In
a notice informing employees of its proposals — with the headline
"Financial crisis calls for significant actions” — the Postal Service
said, "We will be insolvent next month due to significant declines in
mail volume and retiree health benefit pre-funding costs imposed by
Congress.”

During the past four years, the service lost $20
billion, including $8.5 billion in fiscal 2010. Over that period, mail
volume dropped by 20 percent.

The USPS plan is described in two draft documents obtained by The Washington Post. A "Workforce Optimization” paper acknowledges its "extraordinary request” to break its labor contracts.

"However, exceptional circumstances require exceptional remedies,” the document says.

"The Postal Service is facing dire economic challenges that threaten its very existence. . . .
If the Postal Service was a private sector business, it would have
filed for bankruptcy and utilized the reorganization process to
restructure its labor agreements to reflect the new financial reality,”
the document continues.

In a white paper on health and retirement benefits, the USPS said it was imperative to rein in health benefit and pension costs, which are a third of its labor expenses.

For
health insurance plans, the paper said, the Postal Service wanted to
withdraw its 480,000 pensioners and 600,000 active employees from the
Federal Employees Health Benefits Program "and place them in a new,
Postal Service administered” program.