Implications of Electronic Mail and Message Systems for the U.S. Postal Service

Ch. 6-Implications for Postal Rates, Service levels, and Labor Requirements .65

service levels and labor productivity, it is
possible to estimate the labor requirements for
projected future mail volumes.
As a first step in the analysis, OTA esti
mated variable and fixed percentages for each
major group of USPS employees. The results
are summarized in table 12, along with the
total number of employees in each group as
of fiscal year 1980. The variable percentage is
the labor component that varies directly with
mail volume. The fixed percentage is the labor
component that is necessary to maintain the
current service levels. The variable and fixed
percentages in table 12 were derived by OTA
directly from the USPS fiscal year 1980 Rev
enue and Cost Analysis. The variable labor
percentage is based on the direct and indirect
variable attributable cost from the USPS anal
ysis, expressed as a percentage of total ac
crued costs. The fixed labor percentage is the
sum of specific fixed attributable costs plus
all other institutional costs for each employee
group. The variable and fixed labor percent
Table 12.-Structure of the USPS Labor Force,
Fiscal Year 1980

Employee group'
Headquarters employees
Regional and other field
Inspection service
Post office supervisors
and technical
Post office clerks and
mail handlers
City delivery carriers and
vehicle drivers
Rural delivery carriers
Special delivery
Building and equipment
maintenance personnel
Vehicle maintenance
facility personnel

Number of Variable Fixed
employees percentage percentage


2502 39 61
29,409 45 55
4,837 29 71
666.823 61% 39%

alncludesfull- and part-time employees
bBas on Annual Report of the Postmaster General Fiscal I9o0, P 31, and data
supplied by F L Ben Kinney, USPS Manager of Financial Planning
CBased on usPs, FY80 Revenue and Cost Analysis, Cost Segments and Corn
ponents Workpaper, pp 7-62,
SOURCE Office of Technology Assessment

ages were reviewed with USPS and found to
be reasonable.
The overall cost split for the entire USPS
labor force was calculated to be 61 percent
variable and 39 percent fixed. This fixed
percentage is somewhat higher than the 36
percent fixed for total USPS costs used in the
OTA revenue/cost analysis (ch. 5). The 36 per
cent reflects the lower fixed percentages of the
cost components for transportation (primari
ly air, rail, and highway) and building occupan
cy (rents, fuel, and utilities). The 61/39 split
for labor is reasonably consistent with actual
data on the relationship between USPS labor
work hours and mail volume changes collected
during 1979 and 1980."
As a next step, OTA calculated labor pro
ductivity index values at 5 year intervals from
1980 to 2000. An average productivity im
provement of 1.5 percent per year was as
sumed as the baseline. USPS labor productivi
ty improved by roughly 3 percent annually
during the 1970's, and a goal of 3 percent im
provement per year has been announced. But
this does not appear to be realistic in view of
the fact that most productivity improvement
from automation and mechanization has al
ready been realized. Even the expanded ZIP
code program, known as ZIP + 4, would
realize a cumulative labor productivity im
provement of only 2.3 percent, according to
USPS estimates. For comparison purposes,
labor force requirements were also calculated
for 3.0 and O. 0 percent productivity improve
ment per year.
Employee groups with 100 percent fixed
costs would not vary with mail volume. A total
of only 14,268 employees, or about 2.1 percent
of the total USPS labor force, fall into this
category. Included here would be head
quarters, regional, and inspection service
employees. This assumes that current service
levels are maintained. If, for example, a signifi
cant number of major post offices were closed,
then some portion of the costs for these em
ployee groups would become variable. In this
Robert W. Anthony et al., op. cit., pp. 55-56.
2See ch. 2, footnote 4.

United States. Congress. Office of Technology Assessment. Implications of Electronic Mail and Message Systems for the U.S. Postal Service. UNT Digital Library. Accessed August 29, 2014.