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The 1984 postal arbitration: issues surrounding the award.

The 1984 postal arbitration: issues surrounding the award

The 1984 interest arbitration was the first time that the United States Postal Service (USPS) and its two largest unions, the American Postal Workers Union and the National Association of Letter Carriers, implemented the legislated impasse procedure of the Postal Reorganization Act of 1970 to resolve all economic issues raised in bargaining. As such, it represented a significant development in postal labor relations and resulted in an award for more than 500,000 employees, the largest number of workers involved in a single arbitration in the United States. It also raised questions about standards to be employed in wage-setting and in interest arbitration.

The 1984 negotiations

The 1984 postal negotiations were the first postal labor talks since the air traffic controllers' strike of 1981. The tone for the negotiations was set by a policy statement issued by the Board of Governors of USPS 2 weeks before the initial bargaining meeting which found that postal workers' compensation exceeded that of comparable private-sector employees and which therefore directed USPS management "to seek correction of this situation.'1 The mandate of the Board was reflected in management's economic proposals which included a two-tier wage structure, with the scale for new hires 33 percent below the current base.

The unions' Joint Bargaining Committee (JBC) believed that the USPS proposal was regressive and unwarranted by the economic success of USPS. Postal volume had continued to climb in spite of rate hikes and of doomsayers who had predicted a decline in hard mail copy. Annual productivity had also increased beyond that in the private sector in 7 of the last 10 years. USPS had accumulated more than $1.5 billion in surplus in 3 successive years, even though congressional subsidies had ended. Moreover, the unions claimed that employees had received an overly modest economic settlement in the 1981 agreement. JBC wanted significant improvements in wages and benefits.

Negotiations were unsuccessful. Impasse procedures were initiated. Another attempt at negotiations proved no more successful than the earlier one, leading the parties to mandated binding arbitration.

Interest arbitration

The statutory arbitration format is a three-member panel, with each party choosing one member and those two selecting a third; if the two are unable to agree, the director of the Federal Mediation and Conciliation Service designates the impartial neutral. The tripartite panel has 45 days in which to issue its award. In 1984, the statutory scheme was complicated by the presence of a joint bargaining team of two unions and by a time frame much shorter than the statute envisioned. The parties eventually agreed on a five-member panel: each union would nominate a member to the panel; USPS would nominate two members to balance the union representation; and one impartial chairman would be selected. Each representative arbitrator would cast a half vote; the chairman would be entitled to a full vote. The impartial chairman was Clark Kerr, an arbitrator and former chancellor of the University of California at Berkeley. The deadline for the arbitration award according to the statutory timetable was December 25. The hearings began December 11 and concluded on December 19.

The central question addressed by the parties during the arbitration hearings was the interpretation of Section 1003 of the Postal Reorganization Act of 1970:

It shall be the policy of the Postal Service to maintain compensation and benefits for all officers and employees on a standard of comparability to the compensation and benefits paid for comparable levels of work in the private sector of the economy.

To demonstrate that postal employees were paid a premium over comparable private-sector employees, USPS presented expert witnesses to testify on econometric studies, job evaluation studies, occupational wage surveys, and package industry wage surveys. JBC denied that the statutory mandate should be the sole criterion guiding the arbitrators, but was willing to present evidence to counter that presented by USPS.

The key witnesses were Michael Wachter for USPS and Joel Popkin for JBC. Their testimony centered on the validity of their respective econometric studies about the existence and size of a premium of postal wages over private sector wages and about the applicability or utility of their findings to collective bargaining.2 The importance attached to these witnesses and an unusual departure from typical arbitration hearing procedure was, following their testimony, a joint seminar before the arbitration panel to allow Wachter and Popkin to discuss their studies, point out areas of agreement, and challenge each other on areas of disagreement.

Wachter asked the research question, "What wage would a postal employee get in alternative sources of employment?' and concluded that USPS paid a premium of 19.8 percent over the private sector. If only the wages of unionized workers in the private sector were used as a comparison, the wage premium for postal employees would still be 12.2 percent. Wachter validated his results by looking at the large number of applicants for postal jobs, low quit rates, lack of unemployment, and a comparison of wages of new hires as postal mail handlers and material handlers in private industry.

Popkin noted that 20.5 percent of represented employees were nonwhite and 27 percent were women. He hypothesized that private industry discriminated in setting wages, particularly against female and nonwhite employees performing work similar to that of white men. Given that USPS was not a discriminatory employer, the white-male wage comparison was the appropriate one for determining comparability. The addition of race and sex variables in the regression analysis accounted for the major portion of postal-private sector wage differentials. In addition, Popkin included variables for firm size, proportion of industry unionized, and tenure in current job, all of which had been shown to affect wage levels. He found no statistical significance between the wages of white men in USPS and those of white men comparably situated in the private sector.

The arbitration award provided for a 3-year agreement retroactive to July 20, 1984. The award increased the salaries in the current wage schedule by 2.7 percent annually for incumbent employees. New employees in the first seven grades would start at steps below those currently in the wage schedule: three new steps for grades 1-3 and two new steps for grades 4-7. The time for a newly hired employee to reach step 1 of the 1981-84 wage scale would be 272 weeks for grades 1-3, 184 weeks for grade 4, and 140 weeks for grades 5-7. To reach the top of scale would require from 13 years in grades 1-3 to 10.5 years in grades 5-7. The award added a new step at the top of the grade 8 wage scale and two new steps at the top of the wage scales for grades 9 and 10. The COLA formula and times of computation were maintained. COLA accumulated under the 1981-84 agreement would be rolled into the basic salary schedule in October 1987, except that employees eligible for retirement by 1990 could elect an earlier roll-in. Martin Luther King Day was added as a holiday beginning in 1986. The uniform allowance was increased 10 percent. No change was awarded in leave, benefit plans, and premium pay provisions. It was estimated that the award would add approximately $4 billion in postal costs.3 Kerr explained the basis for the award:

This award reflects a policy of "moderate restraint' . . .. This award interprets moderate restraint as a slowing of wage increases, as against the private sector, by 1 percent a year or for 3 percent in total over the life of this agreement.4

Issues raised

The 1984 postal arbitration raised fundamental questions about the interpretation of statutory provisions for wage-setting in USPS, the relative roles of these provisions and collective bargaining, and the criteria to be used by arbitrators. The issues were identified and discussed; all were not answered clearly.

Several aspects of Section 1003 of the Postal Reorganization Act may be ambiguous. First, the provision calls for USPS "to maintain' comparable compensation and benefits. Does this suggest a minimum, a general guide, or an absolute standard for setting compensation? As might be expected, JBC argued the first approach, while USPS adopted the last one. Second, what is the base period for comparisons? Wachter advocated 1969 because that was the last year before postal reorganization was discussed seriously by the Congress. Counsel for USPS used 1970 on the ground that the Congress awarded postal employees wage raises following the end of the 1970 strike to establish comparable rates. The unions adopted 1971 since that was the first time the parties bargained collectively and interpreted freely the meaning of the statutory language. The choice of a base period for comparisons affects the results, especially because postal wages rose significantly between 1969 and 1971. Third, how does one define "comparable levels of work in the private sector of the economy?' The USPS utilized a broad, all-inclusive definition to measure comparability. The unions preferred a more limited definition for comparative purposes.

Even if these thorny issues regarding interpretation of Section 1003 could be resolved, the question remains of the significance of the statutory standards for collective bargaining. Congress granted postal employees the right to bargain collectively on wages, hours, and conditions of employment. If wages were determined by an agreed-upon definition of comparability, what would remain for the negotiation of wages? Collective bargaining would then be subordinated to the interpretation of Section 1003 promoted by USPS at the arbitration hearings.

For the arbitrators, the issue was further compounded by that of appropriate arbitral standards. The USPS contended that comparability was the sole standard before the panel. The unions argued for a more flexible approach, suggesting that the arbitrators refer to past collective bargaining settlements between the parties as a guide in their decision. The award also raised additional questions. If postal employees had gained a premium of the amount suggested by Wachter, what reason could there have been to award incumbent employees any wage increase, let alone one more generous than the parties had negotiated in their prior agreement? How are the parties to interpret these results in future negotiations? And is it simply coincidental that the cost of the award was $4 billion, the same as that of the 1981-84 agreement and the amount USPS projected in its filings with the Postal Rate Commission earlier in 1984?

It is easier to raise questions than to fashion interest arbitration awards. Issuing an interest award 5 days after the end of hearings is an accomplishment. The Kerr panel indicated some directions, provided solace to the parties, and carefully avoided direct answers to fundamental questions. While neither side achieved all it had sought, each could live with the result. Perhaps no more should be expected from interest arbitration.

1 Bureau of National Affairs, Government Employment Relations, No. 1058 (Washington, Apr. 9, 1984), p. 685.

2 For earlier studies, see Michael Asher and Joel Popkin, "The Effect of Gender and Race Differentials of Public-Private Wage Comparisons: A Study of Postal Workers,' Industrial and Labor Relations Review, October 1984, pp. 16-25; and Jeffrey M. Perloff and Michael L. Wachter, "Wage Comparability in the U.S. Postal Service,' Industrial and Labor Relations Review, October 1984, pp. 26-35.

3 Bureau of National Affairs, Government Employment Relations Report, No. 1095 (Washington, Dec. 31, 1984), p. 2329.

4 "Arbitration Opinion and Award, U.S. Postal Service and National Association of Letter Carriers and American Postal Workers Union,' Dec. 24, 1984, pp. 20-21.
COPYRIGHT 1986 U.S. Bureau of Labor Statistics
No portion of this article can be reproduced without the express written permission from the copyright holder.
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Title Annotation:postal service collective bargaining
Author:Loewenberg, J. Joseph
Publication:Monthly Labor Review
Date:Jun 1, 1986
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