Postal Service to cut 120,000 jobs

This certainly won't help the unemployment rate. The Washington Post:

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.

Congress might go along with the plan, but the unions won't. We are headed for a confrontation that will have profound effects on the rest of the labor movement.

The USPS is one of the most inefficient organizations in the US. Lopping 20% of its workforce is a good start at changing that. But USPS management will have its hands full trying to sell it to the union. And the downgrade in health benefits will also be a tough sell.

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