Postal negotiations end in arbitration Essay

For the first time in the 14-year collective bargaining relationship between the U.S. Postal Service and its four major unions,
the parties were unable to agree on wage and benefit terms. As a result,
their differences were resolved by arbitration panels selected by the
parties. (Arbitration was first used in 1981, but only for one of the
unions–the Rural Letter Carriers Association.) Bargaining began in
April 1984 and continued until the July 20, 1984, expiration of current
agreements, when all meaningful negotiations on the major economic
issues essentially ended, although the parties were able to agree on
some other issues.

The main impediment to settlements was the Postal Service’s
contention that the employees were overpaid relative to workers holding
comparable jobs in the private economy. Accordingly, the Postal Service called for adoption of a two-tier pay system under which new employees
would be paid about one-third less than current employees. The Postal
Service also pressed for a wage freeze for current employees, adoption
of a less liberal automatic cost-of-living pay adjustment formula,
adoption of some restrictions on premium pay for Sunday and night work,
and additional limits on eligibility for sick pay. The unions demanded
a 20-percent wage increase, and vowed not to accept any type of two-tier
pay system.

The provision of the Postal Reorganization Act of 1970 for binding
arbitration was triggered on October 20 when the stalemate had extended
90 days beyond the expiration date of the prior contracts. The first
arbitration award, handed down on December 24, covered 500,000 workers
represented by the American Postal Workers’ Union and the National
Association of Letter Carriers, which had bargained jointly with

In its 3-year award, the panel agreed that Postal Service
workers’ wages had pulled ahead of wages for comparable workers in
the private economy, but concluded that the discrepancy should be
corrected through a policy of “moderate restraint” of postal
workers increases over a number of years. To begin, the panel awarded a
2.7-percent specified pay increase in each contract year.

In arriving at this figure, the panel estimated that consumer
prices would rise at a 5.5-percent annual rate during the contract term,
and 60 percent (or 3.3 percent) of the rise would be offset by automatic
semiannual pay adjustments under the cost-of-living formula, which was
continued. This meant that the workers would need a 2.2-percent a year
specified increase to stay even with inflation. The panel added to the
2.2 percent a 0.5-percent “improvement factor” equal to
one-third of the estimated annual national rate of increase in
productivity over the contract term.

The panel also found that substantial compression of the percentage
different ial between the lowest and highest pay rates had developed
over the years as a result of giving all workers uniform pay increases
in dollars. This was partly alleviated by awarding the percentage pay
increases and by adding some top pay progression steps for employees in
the higher grades (who were found to be slightly underpaid relative to
workers in the private economy) and adding some new lower starting steps
for workers in the lowest grades (who were found to be substantially
overpaid relative to workers in the private economy). To further
relieve the pay compression, the panel also excluded workers in the new
lower starting steps from receiving the first 2.7-percent pay increase,
which was retroactive to July 20, 1984.

Other award terms included a tenth paid holiday (Martin Luther
King, Jr’s birthday) beginning in 1986; provision for a
union-management task force to consider the establishment of a Postal
Service health plan; and increased annual allowances for uniforms and
work clothes.

Similar provisions were announced by another arbitration panel
early in January for 40,000 workers represented by the Mail Handlers
Division of the Laborers International Union.

The january award for the 60,000 workers represented by the Rural
Letter Carriers differed somewhat from the others:

* It runs for 3-1/2 years, expiring January 20, 1988, instead of
July 20, 1987.

* The wage increases in July of 1984, 1985, and 1986 are in the
same dollar amounts as those for the other letter carriers, but amount
to 2.9 percent instead of 2.7 percent.

* The Rural Letter Carriers will receive a July 21, 1987, specified
pay increase equal to half the increase they receive in July 1986. They
may also receive an automatic cost-of-living pay adjustment in November
1987. If any specified wage change and cost-of-living adjustment resulting from the 1987 settlements for the members of the other unions
for July 1987 to January 1988 total more than that the Rural Letter
Carriers receive during those 6 months, the Rural Letter Carriers’
pay will be raised to make up the difference.


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