It’s Official: Two Year Pay Freeze for Postal Workers

As the Postal Service continues to struggle with financial losses, it has come to an agreement with the American Postal Workers Union on a tentative March 14 labor agreement that will save $3.8 billion, largely via pay and benefits cuts.

As the Postal Service continues to struggle with financial losses, it has come to an agreement with the American Postal Workers Union (APWU) when the union ratified a March 14 tentative labor agreement that is estimated to save $3.8 billion throughout the contract’s duration which runs from May 23, 2011 to May 20, 2015. The savings come in part from benefit and pay cuts.

“This contract serves as a testament to the commitment the American Postal Workers Union has to its membership and to preserving the future of the Postal Service,” said Postmaster General Patrick R. Donahoe. “We worked together to negotiate a responsible agreement that is in the best interest of our customers, our employees and the future of the Postal Service. It offers short-term cost relief, structural changes to future labor costs and enhanced workforce flexibility to adjust to America’s changing mailing trends.”

The new contract aims to bring short term cost relief to the Postal Service in the form of a two year pay freeze for workers and then low pay increases over the life of the contract that range from 0 to 1.5%, totaling 3.5%. Also, cost of living adjustments are eliminated in the first year, deferred in the second year to the third year and resumed thereafter.

Longer term savings include a new career pay schedule that is permanently 10.2% lower on average than the current pay schedule.

There are also provisions in the agreement that allow for more use of non-career employees: 5.9 percent to 20 percent in clerk craft and 10 percent in maintenance and motor vehicle craft function. This is projected to save costs as the POstal Service will not be incurring long-term liability costs for retirements and other benefits as the employee population moves towards non-career employees as APWU employees retire.

The new agreement contains new scheduling options for career employees: rather than working 8 hours a day for 40 hours a week, the Postal Service can schedule employees for irregular shifts with hours totaling between 30 and 48 hours per week.

Lastly, employees will now be required to contribute additional amounts to health care premiums. Employer contributions to health care will equal 76 percent at the end of the contract.

About the Author

Ian Smith is one of the co-founders of He has over 20 years of combined experience in media and government services, having worked at two government contracting firms and an online news and web development company prior to his current role at FedSmith.