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 theparties. (Arbitration was first used in 1981, but only for one of theunions–the Rural Letter Carriers Association.) Bargaining began inApril 1984 and continued until the July 20, 1984, expiration of currentagreements, when all meaningful negotiations on the major economicissues essentially ended, although the parties were able to agree onsome other issues.
The main impediment to settlements was the Postal Service’scontention that the employees were overpaid relative to workers holdingcomparable jobs in the private economy. Accordingly, the Postal Service called for adoption of a two-tier pay system under which new employeeswould be paid about one-third less than current employees. The PostalService also pressed for a wage freeze for current employees, adoptionof 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 demandeda 20-percent wage increase, and vowed not to accept any type of two-tierpay system. The provision of the Postal Reorganization Act of 1970 for bindingarbitration was triggered on October 20 when the stalemate had extended90 days beyond the expiration date of the prior contracts. The firstarbitration award, handed down on December 24, covered 500,000 workersrepresented by the American Postal Workers’ Union and the NationalAssociation of Letter Carriers, which had bargained jointly withmanagement.
In its 3-year award, the panel agreed that Postal Serviceworkers’ wages had pulled ahead of wages for comparable workers inthe private economy, but concluded that the discrepancy should becorrected through a policy of “moderate restraint” of postalworkers increases over a number of years. To begin, the panel awarded a2.7-percent specified pay increase in each contract year. In arriving at this figure, the panel estimated that consumerprices 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 automaticsemiannual pay adjustments under the cost-of-living formula, which wascontinued. This meant that the workers would need a 2.2-percent a yearspecified increase to stay even with inflation.
The panel added to the2.2 percent a 0.5-percent “improvement factor” equal toone-third of the estimated annual national rate of increase inproductivity over the contract term. The panel also found that substantial compression of the percentagedifferent ial between the lowest and highest pay rates had developedover the years as a result of giving all workers uniform pay increasesin dollars. This was partly alleviated by awarding the percentage payincreases and by adding some top pay progression steps for employees inthe higher grades (who were found to be slightly underpaid relative toworkers in the private economy) and adding some new lower starting stepsfor workers in the lowest grades (who were found to be substantiallyoverpaid relative to workers in the private economy). To furtherrelieve the pay compression, the panel also excluded workers in the newlower 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 LutherKing, Jr’s birthday) beginning in 1986; provision for aunion-management task force to consider the establishment of a PostalService health plan; and increased annual allowances for uniforms andwork clothes.
Similar provisions were announced by another arbitration panelearly in January for 40,000 workers represented by the Mail HandlersDivision of the Laborers International Union. The january award for the 60,000 workers represented by the RuralLetter Carriers differed somewhat from the others: * It runs for 3-1/2 years, expiring January 20, 1988, instead ofJuly 20, 1987. * The wage increases in July of 1984, 1985, and 1986 are in thesame dollar amounts as those for the other letter carriers, but amountto 2.9 percent instead of 2.7 percent. * The Rural Letter Carriers will receive a July 21, 1987, specifiedpay increase equal to half the increase they receive in July 1986.
Theymay also receive an automatic cost-of-living pay adjustment in November1987. If any specified wage change and cost-of-living adjustment resulting from the 1987 settlements for the members of the other unionsfor July 1987 to January 1988 total more than that the Rural LetterCarriers receive during those 6 months, the Rural Letter Carriers’pay will be raised to make up the difference.