benefits, we think that there's a resolution are bound without having any affect on our customers. >> you continue to offer that very low rate and i'm very proud of the. i don't want my time to expire. when we talk about the great republican lincoln said the legitimate role of government is to do for the people what they can do for themselves. the private sector can deliver a piece of mail for 44 cents across the country or around the globe. >> probably not. >> one question quickly, mr. guffey, on the issue of retirement benefits. this disturbing a great deal in light of what's happened in wisconsin and ohio and indiana. the notion that somehow these are overly generous benefits, when we are hiring, asking police officers, firefighters, mail carriers and the like to

embark upon a career which requires a great deal of physical exertion, and to have basically a short career as opposed to something that they might otherwise to do, and part of the trade off, part of the way you get people to embark upon those jobs is to guarantee that there is a healthy retirement for them, otherwise she would have police officers, at 75 years old chasing criminals and 75 euros delivering the mail and 80-year-olds climb into buildings. isn't that part of the consideration of in order to get people to do some of these public service jobs or quasi-service public jobs in your case? >> i think that is a great consideration, but there's also pride and knowledge of serving america. i'm from the era of the, see what you can do for your country, i went to vietnam, i

tried to serve the country and the postal service. and retirement, my retirement, i take him at $1600 a month and i pay my health insurance, $300, or about 250, out of my own health insurance, part of my payment. it's not a huge retirement by any means. but it's a satisfactory life of serving her country and your fellow americans. >> thank you, mr. chairman. >> i thank the gentleman. we now recognize the younger of two identical twins here and present today. i tell you apart mostly by your ties, both of which are stunning, but your father, i think it's you out a little on the ties. >> thanks much. i will have to catch up with him on my haberdashery. let me applaud, mr. guffey, for the comprehensive and thoughtful testimony you submitted to this

committee for today's hearing. i think it shows a serious commitment that the atw you has to work in partnership with the u.s. postal service to address the challenges that it currently faces. and i stand firmly in support of -- with working with our families in the postal unions, and i have committed to supporting the postal services reorganization to meet the challenges of today and tomorrow. however i am very concerned with some of the elements of this area. this congress in 1970, through the postal reform act, took action in essence to take politics out of the postal service. and also gave workers collective bargaining rights.

i'm afraid that some here today are seeking to return politics back to the postal service, and perhaps strip those rights are this committee certainly has a welcomed responsibility to perform oversight duties for the postal service. and i don't think anyone would question that. i think many here, like you, want to see the postal service sexy. the service that usps so admirably and consistently provides personifies the best of america. what's disturbing is that some want to use this area to attack something else that best personifies them. america, workers rights, and the freedom that comes with collective bargaining. i hope i'm wrong and i hope that

we are here today to help the postal service and its worker find the right path to sustainability and success. i don't think that it involves getting in the middle of the collection bargaining process, and i don't see how that helps. mr. guffey, your testimony demonstrates quite clearly that the postal service labor force has made some remarkable gains in productivity in the last few years. in fact, the workforce has been reduced by close to 120,000 employees since awake, to 572000 employees. this represents a 27% reduction since 2000. total costs have also been reduced by 11 billion cents 2009, including a reduction of 4 billion in labor costs your

country and. -- labor costs. mr. donahoe come he also mentioned productivity levels in recent years, is that right? >> yes, sir. >> and yet the wage side of equation, mr. guffey, you testified since 1970 that has been only a fairly modest increase in straight wages in real terms. do you agree? >> that's correct. >> and mr. donahoe, do you agree with that analysis? >> our employees have done a great job from reporter terry stamper, and they have enjoyed raises the track very closely to the rate of inflation. >> and when you say the postal service has gotten a pretty good deal of their employees over the years? >> i think the american public has gotten a very good deal for

the postal service and their employees. they have done a great job from a standpoint of productivity and service. >> thank you. i thank you both for your response. mr. chairman, i yield back. >> i thank the gentleman, and i certainly think that you do have to keep pace on the haberdashery side. you know, you have a haberdashery history with president truman, and that alone is missouri and its critical. >> we do have something in common. >> i thank you. we now recognize the gentleman from vermont for five minutes. >> thank you, mr. chairman. i thank the witnesses for their excellent testimony. my view, this is a practical problem to be solved. i don't see that we should be coming at this trying to take away wages and benefits, and i don't see that it should be an attack by trying to take away

delivery services that americans have really come to rely on. i'm from a rural state in vermont, and i don't know how the letters -- we had a lot of snow this year. i mean, we had a lot of snow this year. we had 10 feet of snow. in fact, it's snowing now. and somehow someway on the eight-mile dirt road you manage to deliver the mail. i don't know who's responsible for that, but it wasn't you guys, i can tell that. it was those people in these little post offices back and heartland vermont, norwich, vermont. it's quite astonishing. there's been a festive atmosphere here on talk about what's good and bad, but the bottom line is the mail is getting delivered. the other thing that is amazing, you're doing it for 44 cents, first class piece of mail. that's a pretty good deal. its business and those personal

letters that we don't get as many of but we all love to receive. and the other thing that is amazing and i think just got to be acknowledged, it gets swept aside is the things that the commercial delivers don't want to provide, to deliver. you guys do. a lot of time it's frustrating will go to our mailbox and there's more quote, chart into that we want but it is a part of commercial life in this country. i think those have to be acknowledged when we're trying to to wrestle with his robin. the other thing you board a jet a 30% headcount. 100,000 fewer employees since 2008. that's an amazing thing. we set up here and act as though it's time to change because it's a new era and it's true, that we have to change. but that is hard. is our livelihood, people have

built their lives around a system that we put in place. not just individual employees but businesses, homeowners. i think that's a significant accomplishment that demonstrate real good faith. what are your views on the? >> i agree with you. it's a remarkable achievement. it's something that has been done in a compassionate way, most of it has been done in terms, in terms by attrition. some have been reassigned, but it's remarkable achievement that the unfortunate thing is that the volume of mail has contracted faster than, when you consider productivity increases, then we been able to keep up with. >> that's the new world we're in. so further reductions have to be made but my sense here is is easing off on the gas bill in trying to make these changes. would you agree with that?

>> yes, sir, i would. and i think postmaster general donahoe has done a great job. he was in charge of this as deputy postmaster general and ensure that governor juliana or chairman giuliana would agree with that. might have something to that. >> that's all right. let me go into another. at issue here is to go to if i take deliver to save money. i understand this debate about how much money that we would say. let me ask this question. i'll ask you mr. donahoe. will be the impact of losing market share to your competitors if we went to a five day week? >> fedex and ups don't deliver on saturday now. so we don't think that would be much of a change. we think that again, customers have the opportunity if they would like the postal service have a p.o. box to get the mail and. and we still would be bringing express mail service. so saturdays are our lightest days. is the day from an advertising

standpoint that that's the lightest day of the week. advertise try to hit a mailbox because generally people are on the bottom study. they do their shopping on the weekends. >> mr. guffey, how about you, what is your sense be? the saturday delivery is something speedy's i would hate to see any service got to the american people unless it's actually necessary. there are other means that would create a situation for private companies, mailbox et cetera in these places that provide their own boxes would not receive the mail, which is good for us because then the people who have those would have to come get post office boxes if they wanted them on saturday. but i hate to see any services got to the american people when there's opportunities to keep providing those services.

>> and chairman giuliani have you been talking about the first overpayment of contribution, right? >> this is an amazing situation. ubb overaggressive are too passive and it seems like we are making you front money beyond what actuary of the by any standard should be required to is that more or less the case because that's my understanding. congressman, there's a pattern behind us. this is not new. in 2003 it was determined that cs rs was overfunded by, i can remember the number, over $50 million. >> was the problem of changing that? >> we're told by omb and treasury that it takes a change in the law. >> and that's it? >> well -- >> mr. chairman, we can help solve this problem, change that law. thank you. >> i thank the gentleman, and i trust that in the president's

budget somewhere hidden, i didn't see it, he considered that but like i say, i missed that. now the gentlelady from new york for five minutes. >> thank you very much, and i would like to ask the postmaster general, mr. donahoe, questions on the wage rates in comparison to competitors. and i know that some of your private sector competitors are nonunion. but it is also my understanding that the wage rate of the postal service is roughly equivalent to the private sector competitors. and as the postal magazine studies show that postal service letter carries start at $15.85 an hour, while the starting pay for a ups driver and a fedex carrier are roughly $16.14 respectively. and i'd like to ask you, does the fact that the usps as required by statute to deliver universal service and to do a six day a week drive up, that

their compensation costs put them possibly at a competitive disadvantage but actually compare to the postal magazine you are very competitive. in fact, you are lower than one of your major competitors. so i'd like your comments on that, mr. donahoe. >> yes, thank you, congresswoman. we do realize that we have a competitive rate of pay. and that's something very important to us. as we sat down and negotiate with the apwu, they key thing for us was to achieve some short-term financial benefit from the contract as well as increased flexibility going forward. were able to do that with labor costs, drive costs because they're such a labor intensive organization. i think we work very well with this you need to come up with some good solutions going forward to reduce costs and help keep the postal service viable for the american public. >> thank you.

and as the majority has pointed out repeatedly, 80% of the postal service's operating costs are related to workforce compensation. but just so that we are clear on this point, i am informed that less than two-thirds of that 80% is for compensation of the postal service's unionized workforce, is that correct? >> that's true. >> so the unionized workforce of the postal service accounts for roughly 50% of the operating costs, not 80% as some would imply, is that correct? >> as in any business you will have wages. we've got wages and benefits make up about 70, 70% of her costs. another 10% over cost, we pre-fund retiree health benefits. the other 20% cover transportation, supply services, fuel and like any other company. >> i think it's important that we are clear about the actual

labor costs represented by the unionized workforce, and you have helped us do that. i would like to open it up to the other members of the panel to comment on this issue, if you would please. >> certainly our bargaining unit only represents about 30% of the cost, i think about 29% of the cost. >> other comments? >> congresswoman, i would just comment that we think that the percentage of cost is not the issue. it's how the total costs relate to our financial position. we think that today's tentative agreement we're talking about makes good steps to reducing those labor costs in a fairway, while maintaining flexibility and use of network force. >> and governor nor? >> congresswoman, i think, number one, we have to look at

every opportunity for the postal service to reduce costs, given our dire financial straits. secondly, i would think that would be frankly whether we would, dire financial straits or not, would be responsible for us not to look at costs at every opportunity for a contract negotiation. >> my time has expired. thank you very much. >> i thank the gentleman 80. and -- the gentlelady. will not go into the second round. double check to make sure those came in. okay, i want to tidy up a few things. the gentlelady from new york talked about unionized workforce. mr. donahoe, it doesn't matter whether you your labor is unionized or not does it, if it's 80%, its 80%? >> it is. it represents 70% of our total cost, yes or. the other 10% is the other

retiree benefit health cost. >> she actions that unionized workforce which confused me because you have plenty of nonunion workers because their management and their represented by associations. >> yes, sir. >> secondly i think it was a lot of dialogue back and forth and want to set one thing clear. this is not about the hard-working men and women of the post office. this hearing is not even about the union negotiations per se. our committee's primary jurisdiction in the area of concern is, is the post office the right sized for the future. one of our concerns, one of my concerns goes to this, and governor miller, maybe you can help me with this, in union negotiations they negotiated a no layoff. now, the problem is if we go from six days to five days and you score savings of 60,000

workers, you can't lay off workers, how do you get the savings? >> well, mr. chairman, first that no layoff provision was an extension of the previous contract. >> i understand but just barely you can't score savings if you can't get rid of the people especially when you have 100,000 too many today. i've asked my staff to look at a lot of areas that we may legislate which would include, and for the postmaster general, i know you're looking for legislation. i'm going to tell you what we probably need to do is bite the bullet one time and figure out how we're going to retire people who are over 55 and over 20 years of service to help get your number down, voluntary departures are networking. the package of less than 1%, you have the lowest attrition any private coming would love to have the attrition you have. you still have to people that are 98 years old on the payroll.

your people don't retire, do they? >> they do retire, mr. chairman. we have reduce the headcount in this organization by about 215,000 since -- >> but today you're tearing over 100,000, almost to her thousand more people you would need if you started the organization -- and al. you start the organization and did the job that you company to do here you build the facilities you need and you have to workforce you needed. you would need between 170-270,000 less people. you're shaking your head no. governor miller, if you go from the ground that you would need a lot less people, would you? >> you're right, mr. chairman, and you're right on the basic principle. but as i understand it, correct me if i'm wrong, but $3.8 billion testament includes the problems of diminishing the numbers. so under this contract because

businesses contract, you don't realize all the benefits right away. is correct if you think about it. that is if you're going to be contracting very fast, how do you break down the number of employees as rapidly as -- >> i have two more things in a short time remaining. mr. guffey, usage of a 1600-dollar retirement. now, that's your retirement basically funner military service, right? >> no. >> that is your postal service retirement. >> yes. >> you have any other entitlement coming out in the future. >> no, that's it. >> i want to make sure we understood that. i've got a chart i want to put up very briefly. this is the crux of one of our challenges. all of you have been talking up refining and overfunding. when you look at that chart through 2016 which is the end of the pre-funding period, it is higher and then it drops down. you all see that?

i want us to understand every year you don't prefunded who now and in 2017, you have to add it back on in the later years. so one of the challenges are looking at is if we were to debate today all of your pre-funding from now until 2017, although you would drop down, in 2017th we would be looking for nine or $10 billion, and every year going up. so one of the challenges, even if we work to smooth it out and leslie were to forgive essentially what you're going to have to pay, essentially you are lowering and now you'll be raising it back. does anybody disagree with that? >> yes, because that chart includes a track that would result in substantial overfunding of the account. >> i'm going to ask one exit question here. chairman, you talked in terms of private corporations that you've been very good on its i want to

hold you to it. are you willing to do what they did in 1992, have congress ag2r you tell you that if we're not going to stand behind the pensions, what have you pay in, you pay in because of which are asking to do is to not prefunded and you want to sort of be there were 1992 made it, those private corporations, and i believe including united airlines who stuck the american people with their bankruptcy and others, basically they limited their contribution and a default met their retirees got less. if you don't as you call it a refund and in the post office continues to drop off to where it's not able to pay in the amount because it's and would be too big a burden to the postal carrying makes sense, wouldn't we all totally end up with a federal responsibility? in other words, today you're saying you call it pre-fund. we call it fully fund on our side of the aisle. if you don't pay in now, and we were to say we will give you the

abatement that we will tie it to the default being a default that doesn't pay out, how would the letter carriers and others feel if what we said was because you don't want to pay it in, we will do that but then we will not stay behind with full faith of the american people. how would they feel? >> i don't have a would feel but let me speak oh, you know how they would feel, don't you, mr. chairman? you will hear and let you say -- >> i know they would not like that, but there's some confusion here, mr. chairman, i would like to -- you are referring to funding pensions, fully funding pensions. .doc. >> you use the analysis of the pensions earlier on. >> no, 1992, might not be the exact year, but close to that,. >> it's when general motors had this huge hit. >> that's right. it was a book it.

it was a balance sheet it. it was not a cache hit. they chose to determine what the liabilities levels were going to be far retiring health care benefits. not pensions. pensions are governed by a whole different set of pension accounting rules which for most public companies only require 80% funding. based upon the actuarial means. >> and that's were i came with what happened in the case of united airlines and others. my time has long expired but the fundamental question i think that will we will leave unanswered anyone can respond for the record is, isn't it true that if we don't fully funds by some way -- i'm not -- not over five but fun, that we leave the taxpayers of america on the hook should the post office not be able to pay in the future of? >> we are paying, we are fully funding, the postal service is fully funded for pensions, and overfunded for pensions, and

overfunded for retiree health care benefits. all we are saying is, as i said in my statement, we are more than willing continue paying of the 7.9 billion in 2011, that 5.5, plus two plus some other billion dollars we are paying to make sure that we are fully funding the retiree health care benefits on the actuarial means. what we are concerned about what we are asking for fairness and a level playing field is a $5.5 billion that came across in 2006 on an accelerated basis required us to prefunded. that's what nobody else has to do. we want to stand behind these responsibilities. we have been. we think we can't. >> i appreciate the. i apologize but i have exceeded my time. nestor cummings. >> let me ask you this, mr. donahoe. you are not asking to eliminate

pre-funding, but you pay your retiree health benefits on a to cost basis and spread it over 30 to 40 years versus tackling the liability and 10 years, is that accurate? >> what we are looking to do is get a true accounting of exactly what we owe. we would not shirk our responsibility. when we talk about 400,000 employees, that would include a postal service that delivers mail five days a week, that has a substantial number of noncareer employees that would be not adding onto that liability. and then we would reach i put everything that we've got going forward. that's what we need to do because until we do that, you don't really have an idea of exactly what is owed. >> let me say this to you, mr. donahoe. i, too, join my colleagues in applauding you, and i say this very, very seriously, for -- he

did an outstanding job for us. sorry to see him leave. he helped us to our transition. he was absolutely magnificent, and that means a lot to us to know that he is there and we really do appreciate that. >> we agree with you. we're very happy to have him. >> one of the things that i wanted, both sides of the aisle have said that this is not an attack on postal employees, and it's not. i don't want one single postal employee -- i have some in my family, and i know how hard they work. mr. guffey, i understand, i really do understand your emotion. you don't have to apologize for that, because you're representing some people who have already given