What Are the Things That Determine COLA for Postal Workers?

Cost of living allowances for letter carriers are negotiated by their union.

The United States Postal Service employs 574,000 people in the United States. Most of these employees are represented by a number of different unions. These unions, either jointly or separately, negotiate collective bargaining agreements on behalf of their members. A common benefit is a cost of living allowance. Several factors go into determining the amount of this benefit for postal employees.

Cost of Living Allowance

A cost of living allowance is an increase in pay designed to offset a higher cost of living from year to year. A formula is applied to the Consumer Price Index, tracked by the government, to determine the amount of the increase. Cost of living allowances are common for government and civil service employees, unions members, government retirees and those receiving other government payments such as Social Security. Postal employees receive cost of living allowances under the collective bargaining contracts negotiated for them by their unions.

Collective Bargaining

There are several different postal unions; three large unions represent more than 80 percent of all employees. The National Association of Letter Carriers represents 200,000 letter carriers. The National Postal Mail Handlers Union represents an additional 47,000 mail clerks. The American Postal Workers Union is the largest postal union, representing 220,000 employees. These groups sometimes jointly negotiate contracts; all include cost of living allowances as one of their demands.

Consumer Price Index

The Consumer Price Index, or CPI, is the major metric used to calculate cost of living allowances. The CPI measures the change in prices for specific goods over a period of time, tracking information about price changes in the economy. These changes are reported monthly. There are several different consumer price indices, each based on a different criteria of consumer. Postal contracts are usually tied to the CPI - W, the Consumer Price Index for Urban Wage Earners and Clerical Workers.

Typical Calculations

A specific CPI - W is set as the base index; wage increases are determined by the change in the index over a six month period. Both the 2006 - 2011 NALC contract and the 2011 - 2015 APWU contract set the wage increase rate at one cent per hour for every 0.4 of a point rise in the applicable index above the base index. An example in the APWU contract states that if the index rises 1.2 points between July 2011 and January 2012, the wage will increase three cents per hour. The allowance won't decrease should the index decrease.

References

• United States Postal Service: Who We Are
• Bureau of Labor Statistics: Consumer Price Index
• United States Postal Service: Postal Service Begins Labor Contract Negotiations With Two Unions
• American Postal Workers Union: About the American Postal Workers Union
• American Postal Workers Union: Tentative Agreement
• National Association of Letter Carriers: 2006 - 2011 National Agreement