Postal Negotiations End in Arbitration
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 management.
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. …