US Postal Service 2012 Annual Report Download - page 34

2012 Report on Form 10-K United States Postal Service- 33 -
The following table provides details of compensation and benefits for current employees over the past three years.
Compensation and Benefits Expenses
(Dollars in millions) 2012 2011 2010
Compensation $ 36,279 $ 36,821 $ 37,545
Retirement 5,854 5,879 5,809
Health Benefits 5,187 5,222 5,141
Other 369 388 414
Total Compensation and Benefits Expenses
$
47,689
$
48,310
$
48,909
In 2012, total compensation and benefits expenses of $47,689 million declined $621 million, or 1.3%, compared to 2011,
while in 2011 total compensation and benefits expenses of $48,310 million declined $599 million, or 1.2% compared to
2010. These decreases were driven by continued and consistent efforts to efficiently manage work hours, the reduction in
employees and decreasing mail volume. However, as discussed in further detail in the sections below, despite year-over-
year success in reducing work hours, our cost base, and most significantly, compensation expense, remains in excess of
the amounts that can be supported by current and future mail volumes and related revenues. In addition, we still face the
continued upward pressure from rising health care premiums, as well as compensation rates which continue to increase,
albeit at a decreasing rate.
COMPENSATION EXPENSE
Compensation expenses in 2012 decreased by $542 million, or 1.5%, from $36,821 million in 2011 to $36,279 million. In
2011, compensation expenses decreased by $724 million, or 1.9%, from $37,545 million in 2010 to $36,821 million.
These decreases were driven primarily by reductions in the number of employees, reductions in work hours, and the
impact of recent changes in our labor agreements which provide more flexibility to manage our workforce, including
increased utilization of non-career employees. However, partially offsetting the savings generated by the decrease in
work hours in 2012 was a 0.9% increase in the average hourly pay rate. In addition, the number of overtime hours worked
by employees also increased by 3.4% and 8.4% in 2012, and 2011, respectively.
The largest driver of compensation expense is the employee headcount, as it directly impacts work hours paid. The total
number of employees at September 30, 2012, was approximately 629,000, of which approximately 528,000 were career
employees. There has been a reduction in the total number of career employees by approximately 29,000, or 5.2%, since
September 30, 2011, when the number of total career employees was approximately 557,000. In 2011, the total number
of career employees decreased by 27,000 or 4.6% from 2010 when total career employees numbered 584,000. Since the
end of 2008, the number of career employees has been reduced by approximately 135,000 or over 20%. These
reductions have been accomplished primarily through attrition and incentives to retire or resign. The number of non-career
employees increased by approximately 12,000 in 2012 as a result of the increased workforce flexibility available under the
new APWU agreement.