US Postal Service 2012 Annual Report Download - page 35

2012 Report on Form 10-K United States Postal Service- 34 -
The following graph details the decline in numbers of our career employee workforce and the decline in total work hours
since 2000.
In order to encourage attrition, we have periodically offered targeted separation incentives over the past three years. Two
separation incentives were offered in Quarter III, 2012: one to postmasters, with an incentive of $20,000; and one to mail
handlers with an incentive of $15,000. The incentive for both programs will be payable in two installments on December
21, 2012, and on December 20, 2013. Approximately 4,275 eligible postmasters accepted the offer, with the majority
leaving the Postal Service by July 31, 2012. Approximately 2,925 mail handlers accepted the incentive and left the Postal
Service by August 31, 2012. In compliance with GAAP, the full estimated amount of these payments of approximately
$135 million was recorded as an expense in Quarter IV, 2012, although the cash payments will be paid in future periods.
In 2011, a similar incentive of $20,000 was paid to approximately 2,000 administrative employees who elected to retire in
Quarter III, 2011, totaling $40 million. In 2010, a $112 million incentive expense was incurred for approximately 7,400
APWU and NPMHU employees who elected to retire or resign from the Postal Service in Quarter I, 2010.
On October 1, 2012, the Postal Service announced a Special Incentive Offer to employees represented by the APWU.
Eligible APWU employees, who want to leave under the incentive of Voluntary Early Retirement (VER), as well as those
who are already retirement eligible or wish to voluntarily resign, must notify USPS on or before December 3, 2012 of their
intent to participate. Most separations will be effective January 31, 2013. Incentive payments of $10,000 will be made on
May 24, 2013, and $5,000 on May 23, 2014. No amounts for this incentive have been reflected in our 2012 financial
statements since they occurred subsequent to September 30, 2012.
A second important and much related driver of compensation expenses are work hours. As illustrated in the chart above,
work hours have been reduced in ten of the last eleven years, with only 2005 showing a slight increase. Since 2002, work
hour reductions have been the single biggest contributor to the ongoing achievement of savings targets.
In 2012, total work hours of 1,122 million hours decreased by 27 million, or 2.3%, from 1,149 million work hours in 2011.
Work hours in 2011 decreased by 34 million from the 2010 total. Total work hours continue to decrease despite increases
in the number of delivery points, which rose by approximately 654,500 in 2012 and approximately 636,500 in 2011. The
growth rate of new delivery points has slowed in recent years, compared to pre-recession levels, due to the weak
economy, with lower housing starts.