GAO

United States General Accounting Office

Report to the Honorable

John M. McHugh, House of 

Representatives

September 2001 U.S. POSTAL 

SERVICE

Few Craft Employees 

Earned More Than 

Their Postmasters, But 

Adequacy and 

Reasonableness of Pay 

Differences Remain 

Unclear

GAO-01-1025

Page i GAO-01-1025 Postmasters Pay

Contents

Letter 1

Results in Brief 3

Pay Practices for Postmasters 5

Comparison of Craft Employees’ and Postmasters’ Pay 6

Selected Organizations’ Pay Practices for Supervisors 8

Comparison of Current Law to the Proposed Postmaster 

Legislation 9

Conclusions 9

Recommendations for Executive Action 10

Agency and Postmaster Organizations’ Comments and Our 

Evaluation 10

Appendixes

Appendix I: Objectives, Scope, and Methodology 14

Appendix II: Briefing on Comparison of Postmasters’ and Craft 

Employees’ Pay During 1999 16

Appendix III: Comparison of Current Law to the Proposed Postmasters’ 

Fairness and Rights Act and Views on the Proposed Act 78

Appendix IV: Comments From the U.S. Postal Service 80

Appendix V: Comments From the National Association of Postmasters of 

the United States 81

Appendix VI: Comments From the National League of Postmasters of the 

United States 82

Tables Table 1: Number of Craft Employees Who Earned More Than Their 

Local Postmasters in Basic and Gross Pay in 1999 7

Table 2: Number and Percentage of Postmasters Who Supervised at 

Least One Craft Employee Who Earned More Than They 

Did in 1999 8
Contents

Page ii GAO-01-1025 Postmasters Pay

Abbreviations

COLA Cost-of-Living Allowances

EAS Executive and Administrative Schedule

EVA Economic Value Added

FAA Federal Aviation Administration

FedEx Federal Express

NAPUS National Association of Postmasters of the United States

PCES Postal Career Executive Service

SDA Supervisory Differential Adjustment

TVA Tennessee Valley Authority

UPS United Parcel Service

WMATA Washington Metropolitan Area Transit Authority
Page 1 GAO-01-1025 Postmasters Pay

United States General Accounting Office

Washington, D.C. 20548

A

September 13, 2001 Letr

The Honorable John M. McHugh

House of Representatives

Dear Mr. McHugh:

This report responds to your request for information on the U.S. Postal 

Service’s (Service) pay practices for postmasters who supervise craft 

employees, including information on the Service’s use of a Supervisory 

Differential Adjustment (SDA) that the Service applies to the pay of firstline supervisors to help ensure that they earn more than their craft 

employees.1

 As you know, the Postal Reorganization Act of 1970 (1970 

Act)2

 requires that the Service pay wages comparable to the private sector. 

It also requires that the Service provide adequate and reasonable pay 

differences between clerks and carriers and their supervisors, such as 

postmasters, although the 1970 Act does not specify what constitutes 

adequate and reasonable differences. Furthermore, the 1970 Act requires 

the Service to consult with supervisor and postmaster organizations when 

planning and developing pay policies and other programs relating to their 

members. 

Since the mid-1970s, the two postmaster organizations (the National 

Association of Postmasters of the United States and the National League of 

Postmasters of the United States) have voiced concerns that they do not 

believe an adequate and reasonable pay difference exists between 

postmasters and the clerks and carriers they supervise. Officials from the 

organizations stated that they have long sought changes to increase the pay 

difference and modify the consultation process. They said they were 

particularly concerned about extensive changes the Service made in 1996 

to their pay and benefits, including the implementation of the SDA policy, 

and the Service’s nonacceptance of many of the recommendations the 

organizations made during the consultations. Recently, the organizations 

1

Craft employees are bargaining unit workers, which include employees such as clerks, city 

carriers, rural carriers, and mail handlers.

2

P.L. 91-375.
Page 2 GAO-01-1025 Postmasters Pay

took their concerns to the Congress. As a result, Senator Daniel Akaka and 

Representative Constance Morella introduced legislation—the 

Postmasters’ Fairness and Rights Act (H.R. 250 and S. 177)—to make 

substantive changes in the way postmasters’ pay is determined.

To assist you in your consideration of this issue, we agreed with your office 

to address the following objectives:

• Describe the Postal Service’s pay practices for postmasters, including 

how the Service determines and applies its SDA.

• Determine whether any craft employees earned more than their local 

postmasters during 1999 and, if so, why and to what extent.

• Determine other organizations’ practices for establishing pay for 

supervisors whose craft employees can earn more than they do, as well 

as determine prevalent industry practices.

We have also included information in this report (1) comparing the Postal 

Reorganization Act of 1970 to proposed legislative changes in the 

Postmasters’ Fairness and Rights Act and (2) describing the Service’s and 

the postmaster organizations’ views on the proposed act. 

On June 11, 2001, we briefed representatives from your office and others on 

the preliminary results of our work. This letter summarizes our findings. 

Appendix II contains updated slides from the briefing, as well as additional 

information on the pay practices of the other organizations that your office 

requested. Appendix III contains a detailed comparison of the current law 

with the proposed Postmasters’ Fairness and Rights Act, as well as the 

views of the Service and the postmaster organizations on the proposed act.

In completing our work, we reviewed the Postal Reorganization Act of 

1970, its legislative history, and legal decisions regarding postmasters’ pay. 

We discussed pay practices for supervisors with officials from the Service, 

postmaster organizations, and other selected organizations—the Federal 

Aviation Administration, Federal Express, the Tennessee Valley Authority, 

United Parcel Service, and the Washington Metropolitan Transit Authority. 

Additionally, because the Service did not have data on whether, or to what 

extent, craft employees earned more than their postmasters, we obtained 

the Service’s payroll files for 1999, the most recent year for which data 

were available when we started our review. These files contained the 

biweekly pay records of over 1 million employees. We focused our work on 

443,942 full-time permanent postmasters, clerks, city carriers, and rural 

carriers who had not been detailed to other jobs or changed their duty 
Page 3 GAO-01-1025 Postmasters Pay

stations during 1999. We then eliminated those clerks and carriers whom 

we could not match with their local postmasters, as well as postmasters 

whose locations did not match with at least one clerk or carrier. This 

created a study group of 201,871 employees, consisting of 191,694 clerks 

and carriers and the 10,177 postmasters who supervised them. The 1970 

Act did not specify whether basic or gross pay should be used in 

determining adequate and reasonable differences in pay between clerks 

and carriers and their supervisors. As a result, we computed both basic 

and gross pay for the employees in our study group to determine if any 

clerks or carriers earned more than their local postmasters. For purposes 

of this report, we defined gross pay as all pay received during calendar year 

1999, excluding severance payments, settlements, prior years’ pay 

adjustments, annual leave sell-back payments, and terminal leave 

payments. Basic pay was salaries and wages paid directly for duties 

performed during the regular workweek. A detailed explanation of our 

objectives, scope, and methodology is presented in appendix I.

We conducted our review at the Postal Service Headquarters in 

Washington, D.C., from March 2001 through August 2001, in accordance 

with generally accepted government auditing standards. We requested 

comments on a draft of this report from the Postmaster General and the 

presidents of the postmaster organizations. Their comments are discussed 

at the end of this letter and are reprinted in appendices IV, V, and VI.

Results in Brief Most postmasters are paid under the Service’s Executive and 

Administrative Schedule (EAS), which is the salary schedule that applies to 

nearly all supervisory and management employees. Generally, postmaster 

pay consists of basic pay; pay-for-performance; lump-sum merit awards; 

and supplemental pay, such as overtime. In 1996, the Service lowered the 

minimum basic pay of the 26 EAS grades. This resulted in the minimum 

basic pay of EAS-15 and EAS-16 supervisors being less than the maximum 

basic pay of a grade 5 clerk, which was the most populated grade and pay 

level of the largest bargaining unit. Because of this and the 1970 Act’s 

requirement that an adequate and reasonable pay difference be maintained, 

the Service established an SDA policy for EAS-15 and above supervisors 

who are not eligible to receive overtime pay at time-and-one-half. This 

policy provides that these supervisors will be paid no less than 5 percent 

more than the maximum basic pay of a grade 5 clerk. Although a 1995 

Service-contracted study reported that differentials ranged from 10 to 15 

percent among private sector companies that maintain formal differential 

policies, the Service made a management decision that a 5-percent SDA 
Page 4 GAO-01-1025 Postmasters Pay

would provide a noticeable difference in pay between the minimum pay of 

supervisors and the maximum pay of a grade 5 clerk. However, since 

implementing the SDA, the Service has not conducted the analyses 

necessary to fully determine the implications of its SDA policy on 

postmasters, including which postmasters should be eligible for, and the 

amount of, the SDA. 

Our analyses showed that two craft employees earned more in basic pay 

than their local postmasters in 1999, and about one-half of 1 percent of 

craft employees earned more in gross pay than their local postmasters. 

With respect to postmasters, about 12 percent supervised at least 1 craft 

employee who earned more than they did in gross pay or earned within 5 

percent of what they earned. Overtime was apparently the reason why 

these employees earned more or within 5 percent of what their local 

postmasters earned. Most postmasters who supervised at least 1 craft 

employee who earned more than they did were not eligible to receive the 

SDA. They could not receive the SDA because they were either eligible for 

overtime at time-and-one-half or were in grades below EAS-15.

The five organizations we selected to discuss pay practices had pay policies 

to minimize instances of craft employees earning more than their 

supervisors. These organizations indicated that craft employees will 

occasionally earn more than their supervisors, but this is the exception and 

not the norm. Four of the five organizations indicated that they used 

market-based pay systems that generally resulted in their organizations 

setting pay for supervisors high enough to prevent almost all craft 

employees from earning more than their supervisors. According to a 

2000/2001 nationwide survey of supervisory management compensation by 

the Watson Wyatt consulting firm, most private sector companies use 

market-based pay for nonbargaining unit positions, and about 30 percent of 

companies had various policies in place to help ensure that supervisors 

earn more than their employees. 

We are making recommendations to the Postmaster General to evaluate the 

Service’s SDA policy and the pay differences between postmasters and the 

craft employees they supervise. The Service and the two postmaster 

organizations generally agreed with our findings and recommendations. 

However, they each believe the findings support their conflicting views of 

whether postmaster and craft employee pay differentials were adequate 

and reasonable. Because of the lack of specificity in the 1970 Act, we are 

not in a position to conclude whether or not our findings represent an 
Page 5 GAO-01-1025 Postmasters Pay

adequate and reasonable outcome regarding pay differences for 

postmasters.

Pay Practices for 

Postmasters 

The vast majority of postmasters were paid under the Service’s EAS, which 

has 26 pay grades and covers essentially all supervisory and management 

employees. Postmasters were in grades 11, 13, 14, 15, 18, 20, 21, 22, 24, and 

26. The few remaining postmasters were covered by the Postal Career 

Executive Service pay schedule, which is comparable to the Civil Service’s 

Senior Executive Service. The Postal Service classified a little more than 

half of its postmasters as nonexempt from the requirements of the Fair 

Labor Standards Act and, as such, they are eligible for overtime pay at timeand-one-half. The remaining postmasters were classified as exempt 

employees and thus not eligible for overtime pay at time-and-one-half. 

According to the Service, these postmasters were classified as exempt 

because, among other things, they supervised two or more craft employees. 

During 1999, postmaster pay had four major components—basic pay, 

variable pay, merit awards, and premium pay. Basic pay consisted of 

salaries and wages paid directly for duties performed during the regular 

workweek. Variable pay—Economic Value Added (EVA)—was pay-for–

performance cash rewards for achieving specific organizational goals and 

targets. Merit awards were lump-sum payments to recognize achievements 

beyond what was normally expected. Premium pay was supplemental pay 

for overtime, nights, and holidays worked. Basic pay, variable pay, and 

merit awards and/or premium pay made up about 95 percent, 4 percent, 

and 1 percent, respectively, of postmasters’ gross pay.

Using the results of a 1995 Hay Management report3

 that compared EAS 

and private sector compensation, the Service said that in 1996 it made 

substantive changes to EAS pay.4

 Among other changes, the Service 

lowered the basic pay minimums of the 26 EAS grades. This change 

resulted in the basic pay minimums of EAS-15 and EAS-16 exempt 

supervisors being less than the basic pay maximum of a grade 5 clerk, 

3

Hay Management Consultants, Comparison of United States Postal Service 

Nonbargaining-Unit Salaries and Benefits to Private Sector Market Data, Feb. 21, 1995.

4

The Service hired Hay Management to compare the salaries, pay practices, and benefit 

practices of nonbargaining unit employees to those available in the private sector. In 1995 

and 1999, Hay Management issued reports of its comparative analyses to the Service.
Page 6 GAO-01-1025 Postmasters Pay

which was the most populated grade and pay level of the largest bargaining 

unit. To compensate for this lack of a pay difference and comply with the 

requirement of the 1970 Act to provide adequate and reasonable pay 

differences, the Service established an SDA policy for its EAS-15 exempt 

supervisors and above. The Service stated that it chose grade EAS-15 

exempt supervisors as the starting point of eligibility for the SDA because 

most exempt first-line supervisors were in grades EAS-15 and EAS-16. 

(There were no EAS-16 postmasters, only supervisors.) The SDA policy 

provided that EAS-15 exempt supervisors and above were to be paid no 

less than 5 percent more than the basic pay maximum of a grade 5 clerk.

The Hay Management report indicated that of the private sector companies 

that maintained a formal salary differential between supervisors and their 

subordinates, the salary differential typically ranged from 10 to 15 percent. 

The Service said it made a management decision to set the SDA at 5 percent 

because it believed this amount would provide a visible difference between 

the minimum pay of supervisors and the maximum basic pay of a grade 5 

clerk. However, since implementing the SDA, the Service had not 

conducted the analyses necessary to fully determine the implications of its 

SDA policy on postmasters, including which postmasters should be eligible 

for, and the amount of, the SDA.

Comparison of Craft 

Employees’ and 

Postmasters’ Pay

Because the 1970 Act did not specify whether the pay difference between 

supervisors and their craft employees should be determined using basic or 

gross pay, we analyzed both to determine the differences in pay between 

craft employees and their local postmasters. From a basic pay perspective, 

our analyses showed that 2 of the 48,272 clerks earned more in basic pay 

than their local postmasters, as shown in table 1. No city carriers earned 

more in basic pay than their local postmasters.5

 From a gross pay 

perspective, 727 of the 191,694 craft employees (about one-half of 1 

percent) earned more than their local postmasters. These craft employees 

earned, on average, about $2,400 more than their local postmasters. 

Overtime paid to clerks and city carriers was the primary reason why they 

earned more than their local postmasters. According to the Service, the 

inclusion of overtime in rural carriers’ basic pay was the most probable 

5

We could not determine whether any rural carriers earned more in basic pay than their 

local postmasters did because rural carriers’ basic pay included overtime, which we were 

unable to identify and exclude. Unlike clerks and city carriers who are paid on an hourly 

basis, rural carriers are salaried employees whose basic pay includes estimated overtime. 
Page 7 GAO-01-1025 Postmasters Pay

reason why they earned more. Of the 727 craft employees earning more 

than their local postmasters, 562, or 77 percent, were rural carriers. 

Table 1: Number of Craft Employees Who Earned More Than Their Local Postmasters in Basic and Gross Pay in 1999

a

Rural carrier basic pay includes estimated overtime, which we were unable to identify and exclude.

Source: GAO analysis of pay data from the Postal Service’s payroll file for 1999.

With respect to postmasters, about 6 percent (624 of 10,177) supervised at 

least 1 craft employee who earned more than they did in gross pay, as 

shown in table 2. Of the EAS-15 nonexempt postmasters and below, about 

16 percent (430) supervised at least 1 craft employee who earned more in 

gross pay than they did. These postmasters were not entitled to the SDA 

because they were either nonexempt or in grades below EAS-15. Of the 

EAS-15 exempt postmasters who could receive the SDA, about 5 percent 

(104) supervised at least 1 craft employee who earned more in gross pay 

than they did. Of the EAS-18 exempt postmasters and above, about 2 

percent (90) supervised at least 1 craft employee who earned more in gross 

pay than they did. These postmasters were not entitled to the SDA because 

their basic pay was more than 5 percent greater than the maximum basic 

pay of a grade 5 clerk. A further analysis of postmaster pay showed that an 

additional 6 percent of postmasters (618 of 9,553) supervised at least 1 craft 

employee whose earnings were within 5 percent of their postmasters’ gross 

earnings.

Type of craft employee

Number of craft employees in

the study group

Number of craft employees

who earned more than their

local postmaster in basic pay

Number of craft employees

who earned more than their

local postmaster in gross pay

Clerks 48,272 2 73

City carriers 111,608 0 92

Rural carriers 31,814 a 562

Total 191,694 2 727
Page 8 GAO-01-1025 Postmasters Pay

Table 2: Number and Percentage of Postmasters Who Supervised at Least One Craft Employee Who Earned More Than They Did 

in 1999

Source: GAO analysis of pay data from the Postal Service’s payroll file for 1999.

Selected Organizations’ 

Pay Practices for 

Supervisors

The five organizations we selected to discuss pay practices indicated that 

the potential exists for their craft employees to earn more than their 

immediate supervisors, but this rarely occurs because of how their pay 

policies were designed. Four of the five organizations indicated that they 

used market-based pay systems that generally resulted in their 

organizations setting the basic pay for their supervisors high enough to 

prevent almost all craft employees from earning more than their 

supervisors. As a general guide for determining supervisory pay scales, the 

organizations relied heavily on surveys of prevailing salaries and other 

compensation practices used by other organizations in similar markets. 

According to the consulting firm Watson Wyatt, most private sector 

companies use a market-based approach to set basic pay and other 

compensation policies.6

 Watson Wyatt reported that about one in three 

companies it surveyed (about 30 percent) had policies in place to help 

ensure that supervisors earn more than their employees. Watson Wyatt 

also reported that these companies used a combination of approaches, 

such as ad hoc salary increases for supervisors and SDAs, to accomplish 

this outcome. 

EAS grade levels

Number of postmasters in the

study group

Number of postmasters who

supervised at least one craft

employee who earned more

than them

Percentage of postmasters

who supervised at least one

craft employee who earned

more than them

EAS-15 nonexempt and below 2,616 430 16%

EAS-15 exempt 1,946 104 5%

EAS-18 exempt and above 5,615 90 2%

Total 10,177 624 6%

6

Watson Wyatt annually surveys employers within the United States to obtain information 

on their compensation, benefits, and employee practices.
Page 9 GAO-01-1025 Postmasters Pay

Comparison of Current 

Law to the Proposed 

Postmaster 

Legislation

Our review of the Postal Reorganization Act of 1970 showed that the 

Service is required to provide a program of consultation with organizations 

representing supervisors and postmasters under which the organizations 

are entitled to participate directly in the planning and development of pay 

policies and other programs relating to their members. The 1970 Act, as 

amended, specifies additional procedures and protections for 

organizations representing supervisors with regard to the consultation 

process. For example, organizations representing supervisors are entitled 

to monthly meetings with the Service; if they are not satisfied with the 

Service’s decisions, they may request a fact-finding panel to consider the 

matter. Organizations representing postmasters are not entitled to these 

additional procedures and protections.

The proposed Postmasters’ Fairness and Rights Act was introduced in the 

107th Congress and would provide new rights to organizations representing 

postmasters. Most notably, the proposed act would provide organizations 

representing postmasters with the right to binding arbitration with regard 

to pay policies and other programs affecting their members. The Service is 

opposed to the proposed act because it believes that it is unnecessary, that 

it will do irreparable damage to the Service, and that it is inconsistent with 

the 1970 Act and basic labor law. The two postmaster organizations 

support the proposed act and participated in its development. They believe 

the proposed act will restore equity to the pay and benefits of postmasters 

and provide a more level playing field for their organizations in planning 

and developing other programs. 

Conclusions Although the Postal Reorganization Act of 1970 requires that supervisors 

and other managerial personnel be paid salaries that provide them an 

adequate and reasonable difference in pay over that of clerks and carriers, 

the act did not specify what constitutes an adequate and reasonable 

difference or whether the difference should apply to basic or gross pay. In 

1996, the Service lowered the basic pay minimums of the EAS and 

established an SDA of 5 percent to provide a pay difference for certain 

postmasters and other supervisors in order to address this statutory 

requirement. However, since implementing the SDA, the Service had not 

fully evaluated the impact of the differential on postmasters and other 

supervisors. Our review showed that in 1999, very few craft employees 

earned more than their postmasters did in basic pay. However, for gross 

pay, about 12 percent of the postmasters we studied supervised craft 

employees who either earned more than they did or earned within 5 
Page 10 GAO-01-1025 Postmasters Pay

percent of what they earned, apparently due to overtime. Our review also 

showed that most postmasters who earned less than their craft employees 

were lower graded postmasters and not eligible for the SDA.

Given the lack of specificity in the 1970 Act, we are not in a position to 

conclude whether or not the results we found represent an adequate and 

reasonable outcome regarding the pay differences for postmasters. 

However, prior to our providing the results of our review to the Service, it 

had only limited data to evaluate the impact of its SDA policy on 

postmasters, including which postmasters should be eligible for, and the 

amount of, the SDA. Without such information, the Service was not in the 

best possible position to factually assess the adequacy and reasonableness 

of the Service’s SDA policy or other pay differences. Now that some data 

are available and an approach has been developed to analyze the Service’s 

payroll data, the Service should have the capability to do the analyses 

necessary to put it in a better position to make fact-based decisions on the 

adequacy and reasonableness of its SDA policy and pay differences.

Recommendations for 

Executive Action

In order to be in a better position to evaluate its SDA policy and the pay 

differences between postmasters and their craft employees, we 

recommend that the Postmaster General use postal payroll and any other 

comparable data to periodically (1) determine the extent to which clerks 

and carriers may be earning more than their local postmasters, and the 

reasons why, if applicable; and (2) reassess the adequacy and 

reasonableness of the pay differences between postmasters and the clerks 

and carriers they supervise. 

Agency and Postmaster 

Organizations’ 

Comments and Our 

Evaluation 

We received written comments on a draft of this report from the 

Postmaster General dated August 27, 2001; the President of the National 

Association of Postmasters of the United States (NAPUS) dated August 15, 

2001; and the President of the National League of Postmasters of the United 

States (the League) dated August 21, 2001. These comments are 

summarized below and are reprinted in appendices IV, V, and VI. Officials 

from the Service and the Tennessee Valley Authority provided oral 

technical and clarifying comments. Also, officials from Federal Express 

and the Federal Aviation Administration provided technical and clarifying 

comments by e-mail. All technical and clarifying comments were 

incorporated, where appropriate.
Page 11 GAO-01-1025 Postmasters Pay

The Postmaster General, and the presidents of NAPUS and the League, 

indicated general agreement with our findings and recommendations. 

They believed that the findings supported their views, which conflicted, 

regarding whether adequate and reasonable differences in pay existed 

between postmasters and craft employees. That is, the Postmaster General 

believed the findings supported the Service’s contention that adequate and 

reasonable differences in pay exist. Conversely, the presidents of the 

postmaster organizations believed that the findings supported their 

contention that adequate and reasonable differences do not exist. 

Specifically, the President of the League stated that although the Congress 

did not legislate the amount of the differential, the Congress considered a 

25-percent differential to be reasonable and adequate. 

We continue to believe that given the lack of specificity in the 1970 Act, we 

are not in a position to conclude whether or not the results we found 

represent an adequate and reasonable outcome for postmasters. With 

respect to the League president’s comment that the Congress considered a 

25-percent differential to be reasonable and adequate, we did not find any 

support for that view. Although the legislative history indicated that the 

Congress considered establishing a specific pay difference, the history also 

indicated that the Congress chose not to do so because it did not want to 

bind the Service to a fixed difference to be maintained in the future. We 

also note that a comment that there should be a minimum differential of at 

least 25 percent was made by a former Assistant Postmaster General for 

Personnel at a public hearing before enactment of the 1970 Act, not by the 

Congress. 

The President of the League also expressed three concerns regarding the 

data, methodology, and analyses used in our work. First, he said the 1999 

payroll data that we used in our analyses were outdated and did not 

accurately reflect current pay conditions. Second, the president was 

concerned that we, for various reasons, excluded over 200,000 craft 

employees and postmasters from our study group. Third, the president was 

concerned that we did not perform a thorough analysis of the earnings of 

certain lower graded postmasters and their craft employees. Specifically, 

he noted that the lack of pay difference was most prevalent for EAS-15 

postmasters and below. He stated that we diminished the seriousness of 

the pay inadequacies experienced by these lower graded postmasters when 

we combined their earnings with those of higher graded postmasters to 

create various statistics. He said that a study of the pay differential should 

be limited to EAS-18 postmasters and below and their craft employees. He 

went on to say that the magnitude of the lack of an adequate pay 
Page 12 GAO-01-1025 Postmasters Pay

differential cannot be accurately determined without comparing the pay of 

all craft employees, including rural carriers, and postmasters. 

We agree with the President of the League that it would be helpful to have 

more current data and additional analyses of the data, but this was not 

possible to do in our review. First, we used calendar year 1999 payroll data 

because, at the time we started our work, these data were the most current 

available. Second, in order to have a level-playing field for our analyses, we 

excluded certain craft employees and postmasters from our study group 

for the following reasons. As stated in the letter, we excluded all 

employees who were not postmasters, clerks, city carriers, or rural 

carriers. We also excluded those clerks, carriers, and postmasters who 

were not full-time permanent employees for the entire year, or were 

detailed to other jobs or changed their duty stations during 1999. Next, we 

eliminated those clerks and carriers whose locations did not match with a 

postmaster. Also, we eliminated those postmasters whose locations did 

not match with at least one clerk or carrier. Third, due to complexities 

associated with the payroll file and because of time constraints, we were 

unable to do a more exhaustive analysis. Finally, we were asked to review 

the pay of all postmasters and not just EAS-18 postmasters and below. We 

recognize that combining the earnings of various grades of postmasters 

does not provide specific data by grade; however, we believe that the data 

that we do provide offer some insight into the pay of postmasters that was 

not previously available. Also, we recognize that more exhaustive analyses 

of payroll data need to be done, and we believe the Service is in the best 

position to do these analyses. This recognition and our findings helped 

form the basis for our conclusions and recommendations.

We are sending copies of this report to the Chairmen and Ranking Minority 

Members, Senate Committee on Governmental Affairs and its 

Subcommittee on International Security, Proliferation and Federal 

Services; and to the Chairman and Ranking Minority Member, House 

Committee on Government Reform. We are also sending copies of this 

report to Representative Constance Morella because of her expressed 

interest in postmasters’ pay; the Postmaster General and Chief Executive 

Officer, U.S. Postal Service; the National President, National Association of 

Postmasters of the United States; and the President of the National League 

of Postmasters of the United States. 
Page 13 GAO-01-1025 Postmasters Pay

Major contributors to this report included Don D. Allison, Gerald P. Barnes, 

Roger L. Lively, Anne Rhodes-Kline, George H. Quinn, and Charles F. 

Wicker. If you have any questions about this letter or the appendices, 

please contact me or Mr. Barnes on (202) 512-8387 or at ungarb@gao.gov or 

barnesgp@gao.gov. 

Sincerely yours,

Bernard L. Ungar

Director, Physical Infrastructure Issues
Page 14 GAO-01-1025 Postmasters Pay

Appendix I

Objectives, Scope, and Methodology AAppenednxidxeiIs

Our objectives were to (1) describe the Postal Service’s pay practices for 

postmasters, including how the Service determines and applies its 

supervisory differential adjustment (SDA); (2) determine whether any craft 

employees earned more than their local postmasters during 1999 and, if so, 

why and to what extent; and (3) determine other organizations’ practices 

for establishing pay for supervisors whose craft employees can earn more 

than they do, as well as determine prevalent industry practices.

To address our objectives, we reviewed the Postal Reorganization Act of 

1970, its legislative history, legal decisions regarding postmasters’ pay, the 

Service’s pay policies, proposed legislation to change the consultation 

process used to determine postmaster pay, and studies of supervisory 

compensation practices within private industry. We discussed pay 

practices for supervisors with officials from the Service, postmaster 

organizations, Hay Management Consultants, Watson Wyatt, and other 

selected organizations—the Federal Aviation Administration, Federal 

Express, the Tennessee Valley Authority, United Parcel Service, and the 

Washington Metropolitan Area Transit Authority.1

 We selected these 

organizations by using a combination of factors, including (1) exemption 

from the pay provisions of Title 5 of the U.S. Code, (2) substantial overtime 

usage, (3) supervision of bargaining unit employees by nonbargaining unit 

managers, and (4) competitiveness with the Service. We also obtained the 

views of the Service and the postmaster organizations regarding the 

proposed legislation.

Additionally, because the Service did not have current data on whether, or 

to what extent, craft employees earned more than their postmasters, we 

obtained the Service’s payroll files for 1999, the most recent year for which 

data were available when we started our review. These files contained the 

biweekly pay records of over 1 million employees who worked for the 

Service at some point during that year. Because we focused our work on 

postmasters, clerks, city carriers, and rural carriers, we excluded all 

employees who were not in one of these four occupations or were not fulltime permanent employees for the entire year. We also excluded 

1

The Service hired Hay Management to compare the salaries, pay practices, and benefit 

practices of nonbargaining unit employees to those available in the private sector. In 1995 

and 1999, Hay issued reports of its comparative analyses to the Service. Watson Wyatt 

annually surveys employers within the United States to obtain information on their 

compensation, benefits, and employment practices. In its 1995 and 1999 compensation 

studies, Hay Management referenced Watson Wyatt’s survey results relating to supervisory 

differentials.
Appendix I

Objectives, Scope, and Methodology

Page 15 GAO-01-1025 Postmasters Pay

employees who, during the year, were detailed to other jobs or changed 

their duty stations. After these exclusions, a total of 443,942 postmasters, 

clerks, and carriers remained. We then matched clerks and carriers with 

their local postmasters according to postal facility locations and eliminated 

those clerks and carriers whose locations did not match with a 

postmaster’s. We also eliminated those postmasters whose locations did 

not match with at least one clerk or carrier. This created a study group of 

201,871 employees, consisting of 191,694 clerks and carriers and the 10,177 

postmasters who supervised them.

Next, we computed the basic and gross pay of the employees in our study 

group to determine if any clerks or carriers earned more than their local 

postmasters, or if any postmasters supervised clerks or carriers who 

earned more than they did.2

 For purposes of this report, we defined gross 

pay as all pay received during calendar year 1999, excluding severance 

payments, settlements, prior years’ pay adjustments, annual leave sell-back 

payments, and terminal leave payments.

We did not assess the reliability of the Service’s 1999 payroll files. 

However, audits performed by Ernst & Young LLP on the Service’s financial 

statements for 1998, 1999, and 2000 did not identify any material 

weaknesses in the Service’s payroll system.

2

 In making these computations we noted that the basic pay of at least 873 postmasters

(8.6 percent) exceeded the maximum basic pay for their grades. Additionally, we noted a 

similar situation for at least 526 craft employees (0.3 percent). According to the Service, 

these anomalies were primarily due to situations where employees had gone from higher to 

lower graded positions but retained the higher pay from their previous positions—a 

situation known as “saved-pay.” 
Page 16 GAO-01-1025 Postmasters Pay

Appendix II

Briefing on Comparison of Postmasters’ and 

Craft Employees’ Pay During 1999 ApendxiI

1

U.S. Postal Service:

Few Craft Employees Earned More Than Their

Postmasters, But Adequacy and

Reasonableness of Pay Differences Remain

Unclear
Appendix II

Briefing on Comparison of Postmasters’ and 

Craft Employees’ Pay During 1999

Page 17 GAO-01-1025 Postmasters Pay

2

Briefing Contents

• Objectives

• Scope and Methodology

• Background

• Results in Brief

• Objective 1: Postal Service’s Pay Practices for Postmasters

• Objective 2: Comparison of Postmasters’ and Craft Employees’

1999 Earnings

• Objective 3: Other Organizations’ and Industry Pay Practices for

Supervisors

• Conclusions

• Recommendations for Executive Action
Appendix II

Briefing on Comparison of Postmasters’ and 

Craft Employees’ Pay During 1999

Page 18 GAO-01-1025 Postmasters Pay

3

Objectives

• Describe the Postal Service’s pay practices for postmasters,

including how the Service determines and applies its

Supervisory Differential Adjustment (SDA).

• Determine whether any craft employees earned more than their

local postmasters during 1999 and, if so, why and to what

extent.

• Determine other organizations’ practices for establishing pay for

supervisors whose craft employees can earn more than they

do, as well as determine prevalent industry practices.
Appendix II

Briefing on Comparison of Postmasters’ and 

Craft Employees’ Pay During 1999

Page 19 GAO-01-1025 Postmasters Pay

4

Scope and Methodology

• Conducted work at Postal Service Headquarters, Washington, D.C.

• Interviewed

• Service officials responsible for compensation, finance, labor

relations, payroll processing, and legal issues;

• postmaster organizations’ presidents, officers, and members;

• Federal Aviation Administration (FAA), Washington

Metropolitan Area Transit Authority (WMATA), and Tennessee

Valley Authority (TVA) compensation officials because these

organizations were exempt from Title 5 of the U.S. Code and

had high overtime usage;

• Federal Express (FedEx) and United Parcel Service (UPS)

compensation officials because these organizations were

competitors of the Postal Service; and
Appendix II

Briefing on Comparison of Postmasters’ and 

Craft Employees’ Pay During 1999

Page 20 GAO-01-1025 Postmasters Pay

5

Scope and Methodology (cont.)

• Hay Management and Watson Wyatt Worldwide consulting

firms’ compensation experts.

• Reviewed the following relevant documents:

• Postal Reorganization Act of 1970 and its legislative history;

• National Association of Postal Supervisors v. United States

Postal Service, 602 F.2d 420 (D.C. Cir. 1979);

• USPS Employee and Labor-Relations Manual;

• Hay Management Consultants’ 1995 and 1999 comparisons of

USPS’ nonbargaining-unit salaries, pay, and benefits to those

in the private sector;

• Watson Wyatt Worldwide’s ECS Industry Report on

Supervisory Management Compensation, 2000/2001;
Appendix II

Briefing on Comparison of Postmasters’ and 

Craft Employees’ Pay During 1999

Page 21 GAO-01-1025 Postmasters Pay

6

Scope and Methodology (cont.)

• the Service’s 1998, 1999, and 2000 annual financial reports

and comprehensive statements; and

• prior GAO reports and testimonies on compensation and

related issues.

• Analyzed postmaster and craft employee pay.

• Obtained the Service’s payroll files for calendar year 1999

containing pay records for over 1 million full- and part-time

employees who were paid at least once during the year.

• Identified 443,942 postmasters, clerks, and carriers who were

full-time permanent employees for all of 1999 and did not

change occupation or duty station.
Appendix II

Briefing on Comparison of Postmasters’ and 

Craft Employees’ Pay During 1999

Page 22 GAO-01-1025 Postmasters Pay

7

Scope and Methodology (cont.)

• Matched clerks and carriers with the local postmasters who

supervised them, creating a study group of 201,871 employees

(191,694 craft employees and 10,177 postmasters).

• Computed the basic and gross pay of postmasters, clerks, and

carriers for 1999.

• Gross pay was defined as all pay received during calendar

year 1999, excluding severance payments, settlements,

prior year pay adjustments, annual leave sell-back

payments, and terminal leave payments.

• Clerks’ and carriers’ pay included basic pay, overtime and

other premium pay, bonuses, and awards.

• Postmasters’ pay included basic pay; variable pay; merit

awards; and premium pay, including overtime.
Appendix II

Briefing on Comparison of Postmasters’ and 

Craft Employees’ Pay During 1999

Page 23 GAO-01-1025 Postmasters Pay

8

Scope and Methodology (cont.)

• Identified (1) the clerks and carriers who earned more than their

local postmasters and (2) the postmasters who supervised

clerks and/or carriers who earned more than they did.

• Performed various statistical and comparative analyses of the

matched postmasters, clerks, and carriers.

• Although we did not assess the reliability of the Service’s

payroll file, the audits done by Ernst & Young LLP on the

Service’s financial statements for 1998, 1999, and 2000 did not

identify any material weaknesses regarding the payroll system.
Appendix II

Briefing on Comparison of Postmasters’ and 

Craft Employees’ Pay During 1999

Page 24 GAO-01-1025 Postmasters Pay

9

Background

• The Service had a nationwide delivery and retail infrastructure that

included about 798,000 career employees and about 38,000 post

offices, stations, and branches in 1999.

• Craft employees accounted for the vast majority of career

employees. These employees included about 292,000 clerks,

242,000 city carriers, and 55,000 rural carriers. Their pay is set

through collective bargaining or binding arbitration, when needed,

to resolve bargaining deadlocks.

• Postmasters accounted for about 26,000 of the 78,000 supervisory

and management employees.
Appendix II

Briefing on Comparison of Postmasters’ and 

Craft Employees’ Pay During 1999

Page 25 GAO-01-1025 Postmasters Pay

10

Background (cont.)

• Postmasters are generally paid under the Executive and

Administrative Schedule (EAS), which covers about 78,000 noncraft

employees, including executives, managers, and supervisors.

• The EAS has 26 grade levels for pay.

• EAS postmasters were in grades 11, 13, 15, 18, 20, 21, 22, 24,

and 26.

• Postmasters not paid under the EAS are paid under the Postal

Career Executive Service (PCES) pay schedule, which is

comparable to the Civil Service’s Senior Executive Service.
Appendix II

Briefing on Comparison of Postmasters’ and 

Craft Employees’ Pay During 1999

Page 26 GAO-01-1025 Postmasters Pay

11

Background (cont.)

• Following the provisions of the Fair Labor Standards Act, the

Service classified about 14,000 postmasters as nonexempt, and, as

such, they were eligible for overtime pay at time-and-one-half. The

remaining postmasters were classified as exempt employees and

thus not eligible for overtime at time-and-one-half. According to the

Service, these postmasters were classified as exempt because,

among other things, they supervised two or more craft employees.

• The 1970 Act requires that the Service pay wages comparable to

private sector wages and provide an adequate and reasonable

difference in pay for supervisors and managers over that of the

clerks and carriers they supervise.
Appendix II

Briefing on Comparison of Postmasters’ and 

Craft Employees’ Pay During 1999

Page 27 GAO-01-1025 Postmasters Pay

12

Background (cont.)

• The 1970 Act provides the Service broad discretion in setting a pay

difference between postmasters and their craft employees.

• The 1970 Act’s legislative history indicates the Congress

considered imposing a pay difference formula but chose not to.

• The Congress did not want to bind the Service to a fixed

difference to be maintained in the future. Instead, the Congress

wanted to provide Postal Service management with maximum

flexibility and control over its costs.
Appendix II

Briefing on Comparison of Postmasters’ and 

Craft Employees’ Pay During 1999

Page 28 GAO-01-1025 Postmasters Pay

13

Background (cont.)

• During the late 1970s, the postmaster organizations sued the

Service, claiming that the Congress intended a 25-percent

difference in pay between postmasters and craft employees. The

Court ruled in favor of the Service, citing that the Congress did not

set a fixed difference nor require that the Service set a fixed

difference.
Appendix II

Briefing on Comparison of Postmasters’ and 

Craft Employees’ Pay During 1999

Page 29 GAO-01-1025 Postmasters Pay

14

Results in Brief

• In 1996, the Service lowered the basic pay minimums of the 26

EAS grades. This resulted in the basic pay minimums of EAS-15

and EAS-16 exempt supervisors being less than the maximum pay

of a grade 5 clerk, which was the most populated grade and pay

level of the largest bargaining unit.

• Because of this and the 1970 Act’s requirement to maintain an

adequate and reasonable pay difference, the Service established

an SDA policy for EAS-15 exempt supervisors and above who are

not eligible for overtime pay at time-and-one-half. The policy

provides that these supervisors will be paid no less than 5 percent

more than the basic pay maximum of a grade 5 clerk.

Generally, postmaster pay consists of basic pay, variable pay, lump

sum merit awards, and supplemental pay, such as for overtime.
Appendix II

Briefing on Comparison of Postmasters’ and 

Craft Employees’ Pay During 1999

Page 30 GAO-01-1025 Postmasters Pay

15

Results in Brief (cont.)

• Although a 1995 Hay Management study reported that differentials

ranged from 10 to 15 percent among private sector companies that

maintain formal differential policies, the Service made a

management decision that a 5-percent SDA would provide a

noticeable difference in pay between the minimum pay of

supervisors and the maximum pay of a grade 5 clerk.

• However, since implementing the SDA, the Service has not

conducted the analyses necessary to fully determine the

implications of its SDA policy on postmasters, including which

postmasters should be eligible for, and the amount of, the SDA.
Appendix II

Briefing on Comparison of Postmasters’ and 

Craft Employees’ Pay During 1999

Page 31 GAO-01-1025 Postmasters Pay

16

Results in Brief (cont.)

• Two craft employees earned more in basic pay than their local

postmasters in 1999. About one-half of 1 percent of craft

employees earned more in gross pay than their local postmasters.

• With regard to postmasters, about 12 percent supervised at least 1

craft employee who earned more than they did in gross pay or

earned within 5 percent of what they earned. Overtime was

apparently the reason why these employees earned more or within

5 percent of what their postmasters earned. Most postmasters who

supervised at least 1 craft employee who earned more than they

did were not eligible to receive the SDA. These postmasters could

not receive the SDA because they were either eligible for overtime

at time-and-one-half or were in grades below EAS-15.
Appendix II

Briefing on Comparison of Postmasters’ and 

Craft Employees’ Pay During 1999

Page 32 GAO-01-1025 Postmasters Pay

17

Results in Brief (cont.)

• The five organizations we selected had pay policies to minimize

instances of craft employees earning more than their supervisors.

• The five organizations indicated that craft employees will

occasionally earn more than their supervisors, but this is the

exception and not the norm. Four of the five organizations

indicated that they used market-based pay systems that

generally resulted in their organization setting pay for

supervisors high enough to prevent almost all craft employees

from earning more than their supervisors.

• According to Watson Wyatt, private sector companies use

market-based pay for nonbargaining unit positions, and about

30 percent of the companies had various policies in place to

help ensure that supervisors earned more than their

employees.
Appendix II

Briefing on Comparison of Postmasters’ and 

Craft Employees’ Pay During 1999

Page 33 GAO-01-1025 Postmasters Pay

18

Objective 1: Postal Service’s Pay Practices for

Postmasters

• During 1999, postmasters’ pay had four major components:

• Basic pay consisted of salaries and wages paid directly for

duties performed during the regular workweek and accounted

for, on average, 95 percent of a postmaster’s pay.

• Variable pay, Economic Value Added (EVA), was pay-forperformance cash rewards for achieving specific organizational

goals and targets and accounted for, on average, 4 percent of a

postmaster’s pay.

• Merit awards were lump-sum payments to recognize

achievements beyond what was normally expected.
Appendix II

Briefing on Comparison of Postmasters’ and 

Craft Employees’ Pay During 1999

Page 34 GAO-01-1025 Postmasters Pay

19

Objective 1: Postal Service’s Pay Practices for

Postmasters (cont.)

• Premium pay was supplemental pay for overtime, nights, and

holidays worked.

• Merit awards and premium pay accounted for, on average, 1

percent of a postmaster’s pay.

• The Service said it used the results of a 1995 Hay Management

report that compared EAS and private sector compensation as a

guide in making substantive changes to the EAS pay system in

1996.

• Among other changes, the Service lowered the basic pay

minimums of the 26 EAS grades. That change resulted in the

basic pay minimums of EAS-15 and EAS-16 exempt

supervisors being less than the basic pay maximum of a grade

5 clerk--the most populated grade and pay level of the largest

bargaining unit.
Appendix II

Briefing on Comparison of Postmasters’ and 

Craft Employees’ Pay During 1999

Page 35 GAO-01-1025 Postmasters Pay

20

Objective 1: Postal Service’s Pay Practices for

Postmasters (cont.)

• To compensate for this lack of a pay difference and comply with

the 1970 Act’s requirement to provide adequate and reasonable

pay differences, the Service instituted an SDA policy. This

policy provides that EAS-15 exempt supervisors and above will

be paid no less than 1.05 times the maximum basic pay for the

most populated grade in the largest bargaining unit (grade 5,

step O, clerk).

• The Service stated that it chose EAS-15 exempt supervisors as

the starting point of eligibility for the SDA because most exempt

first-line supervisors were in grades EAS-15 and EAS-16.

(There were no EAS-16 postmasters, only supervisors.)
Appendix II

Briefing on Comparison of Postmasters’ and 

Craft Employees’ Pay During 1999

Page 36 GAO-01-1025 Postmasters Pay

21

Objective 1: Postal Service’s Pay Practices for

Postmasters (cont.)

• The SDA set a floor for the salaries of EAS-15 exempt supervisors

and above at 5 percent more than the maximum basic pay of a

grade 5 clerk (i.e., grade 5, step O).

• In 1995, Hay Management reported to the Service that a

quarter of the private sector companies maintained a formal

salary differential between supervisors and subordinates. Of

these companies, the differential was typically 10-15 percent.

• In 1996, the Service made a management decision to set the

SDA at 5 percent because it believed this amount would

provide a visible difference between the minimum pay of

exempt supervisors and the maximum basic pay of a grade 5

clerk. However, since implementing the SDA, the Service has

not conducted the analyses necessary to fully determine the

implications of its SDA policy on postmasters, including which

postmasters should be eligible for, and the amount of, the SDA.
Appendix II

Briefing on Comparison of Postmasters’ and 

Craft Employees’ Pay During 1999

Page 37 GAO-01-1025 Postmasters Pay

22

Objective 1: Postal Service’s Pay Practices for

Postmasters (cont.)

• SDA does not apply to EAS-15 nonexempt supervisors or EAS14 supervisors and below.

• Although the SDA rate of 5 percent does not change, the SDA

salary does change as the maximum basic pay of a grade 5

clerk is adjusted for cost-of-living-allowances (COLA) and for

other general pay increases.

• Until November 1998, the SDA did not apply to exempt

supervisors above EAS-16 because their basic pay minimums

provided a pay difference that exceeded the 5 percent SDA

rate.
Appendix II

Briefing on Comparison of Postmasters’ and 

Craft Employees’ Pay During 1999

Page 38 GAO-01-1025 Postmasters Pay

23

Objective 1: Postal Service’s Pay Practices for

Postmasters (cont.)

• From 1996 through 1999, the SDA salary increased nine times

due to various increases in the maximum basic pay of a grade

5 clerk.
Appendix II

Briefing on Comparison of Postmasters’ and 

Craft Employees’ Pay During 1999

Page 39 GAO-01-1025 Postmasters Pay

24

Objective 1: Postal Service’s Pay Practices for

Postmasters (cont.)



	





	

	



		    

8/31/96 $36,551 $38,379 Implementation

3/15/97 $36,863 $38,706 Clerk COLA

8/30/97 $37,029 $38,880 Clerk COLA

11/22/97 $37,456 $39,329 Clerk General Increase

3/14/98 $37,623 $39,504 Clerk COLA

9/12/98 $37,831 $39,723 Clerk COLA

11/21/98 $38,588 $40,517 Clerk General Increase

3/13/99 $38,650 $40,583 Clerk COLA

9/11/99 $38,983 $40,932 Clerk COLA

11/20/99 $39,515 $41,491 Clerk General Increase

*All references to a clerk refer to one at grade 5, step O.

SDA Salary Increases Through 1999

Source: U.S. Postal Service
Appendix II

Briefing on Comparison of Postmasters’ and 

Craft Employees’ Pay During 1999

Page 40 GAO-01-1025 Postmasters Pay

25

Objective 1: Postal Service’s Pay Practices for

Postmasters (cont.)

• In November 1999, the maximum basic pay for EAS-15 and EAS16 was 19 percent and 28 percent, respectively, higher than the

maximum basic pay of a grade 5 clerk.

• In November 1999, basic pay for

• EAS ranged from $20,875 to $82,349;

• clerks ranged from $21,602 to $45,990;

• city carriers ranged from $28,539 to $40,526; and

• rural carriers ranged from $8,031 to $48,518.

• The EAS has 26 grades and associated pay ranges. Clerks have

10 grades with up to 18 steps. City carriers have 2 grades with 15

steps. Rural carriers are salaried employees.
Appendix II

Briefing on Comparison of Postmasters’ and 

Craft Employees’ Pay During 1999

Page 41 GAO-01-1025 Postmasters Pay

26

Objective 1: Postal Service’s Pay Practices for

Postmasters (cont.)

$20,875 $21,602

$28,539

$8,031

$39,515

$82,349

$45,990

$40,526

$48,518

$41,491













	









   



EAS and Craft Pay Ranges, End of Calendar Year 1999

*The SDA produced a minimum salary of $41,491 for EAS-15 through 17 exempt supervisors.

The basic pay for a, grade 5, step O clerk was $39,515.

Source: U.S. Postal Service
Appendix II

Briefing on Comparison of Postmasters’ and 

Craft Employees’ Pay During 1999

Page 42 GAO-01-1025 Postmasters Pay

27

Objective 1: Postal Service’s Pay Practices for

Postmasters (cont.)

• Postmasters’ average basic pay in each of these EAS grades was

above the midpoint salary for that grade.

Each EAS grade has a pay range that includes a minimum,

maximum, and midpoint. Postmasters were in EAS grades 11, 13,

15, 18, 20, 21, 22, 24, and 26.
Appendix II

Briefing on Comparison of Postmasters’ and 

Craft Employees’ Pay During 1999

Page 43 GAO-01-1025 Postmasters Pay

28

Objective 1: Postal Service’s Pay Practices for

Postmasters (cont.)

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

$90,000

EAS Grade Level

Maximum $38,532 $42,266 $46,907 $55,040 $60,776 $63,728 $67,517 $74,720 $82,349

Average $38,037 $41,631 $46,005 $53,139 $58,891 $62,367 $65,676 $72,544 $78,082

Midpoint $34,436 $37,773 $41,921 $48,368 $53,409 $56,003 $59,333 $65,663 $72,367

Minimum $30,340 $33,280 $36,935 $41,697 $46,042 $48,279 $51,149 $56,606 $62,386

11 13 15 18 20 21 22 24 26

Postmasters’ Pay Ranges and Average Basic Pay by Grade

Calendar Year 1999

Source: GAO analysis of U.S. Postal Service payroll data.
Appendix II

Briefing on Comparison of Postmasters’ and 

Craft Employees’ Pay During 1999

Page 44 GAO-01-1025 Postmasters Pay

29

Objective 1: Postal Service’s Pay Practices for

Postmasters (cont.)

• The Postal Reorganization Act of 1970 requires that the Service

consider the following four factors in establishing the pay of its

supervisors and managers. The Service’s explanation of how it

considered each factor also follows.

• Provide supervisors and managers with compensation that is

comparable to the private sector. In considering this factor, the

Service contracted with Hay Management for a comprehensive

comparison of postal supervisory/management and private

sector pay. That comparison showed that 25 percent of private

sector companies maintained a formal salary differential

between employees and their supervisors. For those

companies that maintained a formal salary differential, it ranged

from 10 to 15 percent.
Appendix II

Briefing on Comparison of Postmasters’ and 

Craft Employees’ Pay During 1999

Page 45 GAO-01-1025 Postmasters Pay

30

Objective 1: Postal Service’s Pay Practices for

Postmasters (cont.)

• Set pay at a level that will attract and retain qualified and

capable supervisors and managers. The Service did not

consider this factor as critical as other factors because EAS

employee turnover was low, and many people sought to fill any

vacant EAS positions.

• Promote supervisors’ and managers’ leadership status

compared to the workers they supervise. Because the EAS

pay system closely resembled that of craft employees, the

Service changed the EAS pay system in 1996 to enhance its

status and make it more similar to the PCES pay system. Also,

an SDA was established to help ensure that exempt

supervisors’ and managers’ salaries would be higher than

those of the craft employees they supervised.
Appendix II

Briefing on Comparison of Postmasters’ and 

Craft Employees’ Pay During 1999

Page 46 GAO-01-1025 Postmasters Pay

31

Objective 1: Postal Service’s Pay Practices for

Postmasters (cont.)

• Provide prompt, reliable, and efficient service. To reward

supervisors and managers for improvements in providing

prompt, reliable, and efficient postal services, the Service also

added a variable pay program (EVA) to their EAS pay system.

According to the Service, EVA and other changes to the EAS

pay system made in 1996 were carefully analyzed, before

implementation, to assess the operational and economic impact

of the changes, particularly because personnel costs account

for over 75 percent of the Service’s total expenses.
Appendix II

Briefing on Comparison of Postmasters’ and 

Craft Employees’ Pay During 1999

Page 47 GAO-01-1025 Postmasters Pay

32

Objective 2: Comparison of Postmasters’ and Craft

Employees’ 1999 Earnings

• We found that from a basic pay perspective, 2 of the 48,272 clerks

earned more than their local postmasters.

• The two clerks were grade 5s who earned the maximum basic

pay; one worked for an EAS-11 postmaster, and one worked for

an EAS-13.

• No city carriers earned more in basic pay than their local

postmasters.

• Rural carriers were excluded from our basic pay analysis

because their basic pay included overtime, which could not be

identified and excluded.
Appendix II

Briefing on Comparison of Postmasters’ and 

Craft Employees’ Pay During 1999

Page 48 GAO-01-1025 Postmasters Pay

33

Objective 2: Comparison of Postmasters’ and Craft

Employees’ 1999 Earnings (cont.)

• From a gross pay perspective, 727 (0.4 percent) of the 191,694

craft employees earned more than their local postmasters.

• Overtime was the primary reason why clerks and city carriers

earned more than their local postmasters.

• Overtime could not be isolated for rural carriers; but

according to Service officials, overtime was the most

probable reason why rural carriers earned more than their

local postmasters.

• Craft employees earning more averaged about $2,400 more

than their local postmasters.
Appendix II

Briefing on Comparison of Postmasters’ and 

Craft Employees’ Pay During 1999

Page 49 GAO-01-1025 Postmasters Pay

34

Objective 2: Comparison of Postmasters’ and Craft

Employees’ 1999 Earnings (cont.)

• Rural carriers accounted for 77 percent (562) of the craft

employees who earned more than their local postmasters. Of

the remaining 165 (23 percent) craft employees who earned

more than their local postmasters, 92 were city carriers and 73

were clerks.
Appendix II

Briefing on Comparison of Postmasters’ and 

Craft Employees’ Pay During 1999

Page 50 GAO-01-1025 Postmasters Pay

35

Objective 2: Comparison of Postmasters’ and Craft

Employees’ 1999 Earnings (cont.)

Percentage of Craft Employees Earning More or Less Than Their

Local Postmasters in 1999

Craft

employees

who earned

less

Rural carriers

who earned more

Clerks and city

carriers who

 earned more

99.6%

77%

23%

Craft employees

who earned more

0.4%

Source: GAO analysis of U.S. Postal Service payroll data.
Appendix II

Briefing on Comparison of Postmasters’ and 

Craft Employees’ Pay During 1999

Page 51 GAO-01-1025 Postmasters Pay

36

Objective 2: Comparison of Postmasters’ and Craft

Employees’ 1999 Earnings (cont.)

• Of the 727 craft employees who earned more than their local

postmasters, 409 (56 percent) earned less than $2,000 more, with

4 earning less than $10 more.

• Nine of the 727 (1 percent) craft employees earned $10,000 or

more than their local postmasters.

• One craft employee earned over $18,000 more than the local

postmaster.
Appendix II

Briefing on Comparison of Postmasters’ and 

Craft Employees’ Pay During 1999

Page 52 GAO-01-1025 Postmasters Pay

37

Objective 2: Comparison of Postmasters’ and Craft

Employees’ 1999 Earnings (cont.)

Percentage Distribution of the Dollar Amounts Craft 

Employees Earned More Than Their Postmasters

0

10

20

30

40

50

60

< $2000

$2,000-$3,999

$4,000-$5,999

$6,000-$7,999

$8,000-$9,999

> $9,999

Percentage

Source: GAO analysis of U.S. Postal Service payroll data.
Appendix II

Briefing on Comparison of Postmasters’ and 

Craft Employees’ Pay During 1999

Page 53 GAO-01-1025 Postmasters Pay

38

Objective 2: Comparison of Postmasters’ and Craft

Employees’ 1999 Earnings (cont.)

• Of the 190,967 craft employees who earned less than their local

postmasters, 854 (0.4 percent) earned within 5 percent of what their

local postmasters earned. Of these 854 craft employees

• 132 earned within 1 percent of what their local postmasters

earned.

• 333 earned within 1 percent to 3 percent of what their local

postmasters earned.

• 389 earned within 3 percent to 5 percent of what their local

postmasters earned.
Appendix II

Briefing on Comparison of Postmasters’ and 

Craft Employees’ Pay During 1999

Page 54 GAO-01-1025 Postmasters Pay

39

Objective 2: Comparison of Postmasters’ and Craft

Employees’ 1999 Earnings (cont.)

Number of Craft Employees Whose 1999 Gross Earnings Were Less Than the Earnings of 

Their Local Postmasters, but Within 5 Percent

0

50

100

150

200

250

300

350

400

450

< 1%

1.01% to 3 %

3.01% to 5%

Number

Source: GAO analysis of U.S. Postal Service payroll data.
Appendix II

Briefing on Comparison of Postmasters’ and 

Craft Employees’ Pay During 1999

Page 55 GAO-01-1025 Postmasters Pay

40

Objective 2: Comparison of Postmasters’ and Craft

Employees’ 1999 Earnings (cont.)

Average gross pay for craft employees ranged from $39,672 for rural

carriers to $43,125 for city carriers. Overall, the average gross pay for

craft employees was $42,481.
Appendix II

Briefing on Comparison of Postmasters’ and 

Craft Employees’ Pay During 1999

Page 56 GAO-01-1025 Postmasters Pay

41

Objective 2: Comparison of Postmasters’ and Craft

Employees’ 1999 Earnings (cont.)

*Unlike clerks and city carriers, rural carriers are salaried employees whose basic pay includes overtime.

Source: GAO analysis of U.S. Postal Service payroll data.

Craft employees 1999 Average pay

Study group

Number in

study group Basic pay Gross pay

Clerks 48,272 $37,472 $42,844

City Carriers 111,608 $36,549 $43,125

Rural Carriers* 31,814 $39,489* $39,672

 Total/Average 191,694 N/A $42,481

1999 Average Basic and Gross Pay for Craft Employees
Appendix II

Briefing on Comparison of Postmasters’ and 

Craft Employees’ Pay During 1999

Page 57 GAO-01-1025 Postmasters Pay

42

Objective 2: Comparison of Postmasters’ and Craft

Employees’ 1999 Earnings (cont.)

• With respect to postmasters, 6.1 percent of all postmasters (624 of

10,177) supervised at least 1 craft employee who earned more in

gross pay than they did.

• About 16 percent of EAS-15 nonexempt postmasters and below

(430 of 2,616) supervised at least 1 craft employee who earned

more in gross pay than they did--these postmasters were not

entitled to the SDA because they were either EAS-15

nonexempt or in grades below EAS-15.

• About 5 percent of EAS-15 exempt postmasters (104 of 1,946)

supervised at least 1 craft employee who earned more in gross

pay than they did--these postmasters could receive the SDA.
Appendix II

Briefing on Comparison of Postmasters’ and 

Craft Employees’ Pay During 1999

Page 58 GAO-01-1025 Postmasters Pay

43

Objective 2: Comparison of Postmaster and Craft

Employee 1999 Earnings (cont.)

• About 2 percent of EAS-18 to EAS-26 exempt postmasters (90

of 5,588) supervised at least 1 craft employee who earned

more in gross pay than they did. These postmasters were not

entitled to the SDA because their basic pay was more than 5

percent greater than the maximum basic pay of a grade 5 clerk.

• None of the 27 PCES postmasters had a craft employee who

earned more in gross pay than they did.
Appendix II

Briefing on Comparison of Postmasters’ and 

Craft Employees’ Pay During 1999

Page 59 GAO-01-1025 Postmasters Pay

44

Objective 2: Comparison of Postmasters’ and Craft

Employees’ 1999 Earnings (cont.)

0

2

4

6

8

10

12

14

16

18

All Postmasters EAS-15 nonexempt

and below

Exempt EAS-15

postmasters

Exempt EAS-18 to

EAS-26

PCES

Percentage of Postmasters With Craft Employees Who Earned More

Source: GAO analysis of U.S. Postal Service payroll data.
Appendix II

Briefing on Comparison of Postmasters’ and 

Craft Employees’ Pay During 1999

Page 60 GAO-01-1025 Postmasters Pay

45

Objective 2: Comparison of Postmasters’ and Craft

Employees’ 1999 Earnings (cont.)

• Of the 9,553 postmasters who supervised a craft employee who

earned less than they did, 618 (6.4 percent) supervised a craft

employee whose earnings were within 5 percent of their pay.

• 103 postmasters supervised craft employees whose earnings

were within 1 percent of their pay.

• 241 postmasters supervised craft employees whose earnings

were within 1 to 3 percent of their pay.

• 274 postmasters supervised craft employees whose earnings

were within 3 to 5 percent of their pay.
Appendix II

Briefing on Comparison of Postmasters’ and 

Craft Employees’ Pay During 1999

Page 61 GAO-01-1025 Postmasters Pay

46

Objective 2: Comparison of Postmasters’ and Craft

Employees’ 1999 Earnings (cont.)

Number of Postmasters Who Supervised Craft Employees 

Whose Gross Earnings in 1999 Were Less Than Their Local 

Postmasters' Earnings but Were Within 5 Percent

0

50

100

150

200

250

300

< 1%

1.01% to3%

3.01% to 5%

Number

Source: GAO analysis of U.S. Postal Service payroll data.
Appendix II

Briefing on Comparison of Postmasters’ and 

Craft Employees’ Pay During 1999

Page 62 GAO-01-1025 Postmasters Pay

47

Objective 2: Comparison of Postmasters’ and Craft

Employees’ 1999 Earnings (cont.)

Average gross pay for postmasters ranged from $44,875 for EAS-15

nonexempt postmasters and below to $102,506 for PCES postmasters.

The average gross pay for postmasters was $54,733.
Appendix II

Briefing on Comparison of Postmasters’ and 

Craft Employees’ Pay During 1999

Page 63 GAO-01-1025 Postmasters Pay

48

Objective 2: Comparison of Postmasters’ and Craft

Employees’ 1999 Earnings (cont.)

Postmasters 1999 Average pay

Participants in

study group

EAS-15 nonexempt 

and below

EAS-15 exempt 

and above

PCES

 Total/Average 10,177 $54,733

27

7,534

2,616 $42,489

$54,827

$94,331

$51,760

$44,875

$57,985

$102,506

Basic pay Gross pay Study group

1999 Average Basic and Gross Pay for Postmasters

Source: GAO analysis of U.S. Postal Service payroll data.
Appendix II

Briefing on Comparison of Postmasters’ and 

Craft Employees’ Pay During 1999

Page 64 GAO-01-1025 Postmasters Pay

49

Objective 3: Other Organizations’ and Industry Pay

Practices for Supervisors

Other Organizations

• The five organizations we selected--TVA, FAA, WMATA, UPS, and

FedEx--to discuss pay practices indicated that it was possible for

their craft employees to earn more than their immediate

supervisors, but this rarely occurs because of how their pay policies

were designed.

Industry Pay Practices

• The pay practices of these five organizations generally paralleled

national pay practices, as reported by Watson Wyatt from the

results of its 2000-2001 survey of supervisory management

compensation practices.
Appendix II

Briefing on Comparison of Postmasters’ and 

Craft Employees’ Pay During 1999

Page 65 GAO-01-1025 Postmasters Pay

50

Objective 3: Other Organizations’ and Industry Pay

Practices for Supervisors (cont.)

Key Pay Practices

• All five organizations said they used one or more of the following six

pay practices to minimize the occurrence of employees’ earning

more than their supervisors:

• market-based pay,

• variable pay,

• supervisory differentials,

• overtime for exempt employees,

• ad hoc payments, and

• increased variable pay opportunities.
Appendix II

Briefing on Comparison of Postmasters’ and 

Craft Employees’ Pay During 1999

Page 66 GAO-01-1025 Postmasters Pay

51

Objective 3: Other Organizations’ and Industry Pay

Practices for Supervisors (cont.)

Market-Based Pay

• Four of these organizations had pay systems based on prevailing

salaries used by other organizations in similar markets. They said

the market-rate differences were usually sufficient to prevent most

craft employees from earning more than their supervisors.

• FedEx used a market-based pay system for all its employees

(craft employees were not unionized).

• TVA, WMATA, and UPS negotiated craft pay and used marketbased pay for supervisory and managerial employees.

• FAA negotiated pay with the air traffic controllers’ union and

used it to set pay for its nonunion air traffic control supervisors

and managers.

• According to Watson Wyatt, private sector companies typically use

market-based pay for nonunion positions.
Appendix II

Briefing on Comparison of Postmasters’ and 

Craft Employees’ Pay During 1999

Page 67 GAO-01-1025 Postmasters Pay

52

Objective 3: Other Organizations’ and Industry Pay

Practices for Supervisors (cont.)

Variable Pay

• All five organizations had variable pay programs applicable to

supervisors and managers and/or craft employees.

• Supervisors and managers and craft employees at TVA, FAA,

and FedEx were covered by variable pay programs linked to

the organization’s performance.

• Exempt supervisors and managers at all five organizations and

craft employees at FAA were included in variable pay programs

linked to the individual’s job performance (e.g., merit pay and

pay for performance).

• Watson Wyatt reported that about 70 percent of companies

provided at least one type of bonus or other variable pay plan for

supervisors (e.g., profit sharing, spot awards, and merit pay)

representing an increase of about 28 percent since 1995.
Appendix II

Briefing on Comparison of Postmasters’ and 

Craft Employees’ Pay During 1999

Page 68 GAO-01-1025 Postmasters Pay

53

Objective 3: Other Organizations’ and Industry Pay

Practices for Supervisors (cont.)

Supervisory Differentials (an adjustment to an individual

supervisor’s minimum pay rate)

• All five organizations had differences in their pay structures for craft

employees and supervisors; two used a differential, but they varied on

which supervisors were covered and the differential’s rate.

• WMATA provided its foremen (mostly nonexempt) a 6-percent

differential over the highest pay rate for the craft occupation

supervised.

• FedEx provided its managers (all exempt) a 20-percent differential

over the highest hourly rate of employee supervised.
Appendix II

Briefing on Comparison of Postmasters’ and 

Craft Employees’ Pay During 1999

Page 69 GAO-01-1025 Postmasters Pay

54

Objective 3: Other Organizations’ and Industry Pay

Practices for Supervisors (cont.)

• According to Watson Wyatt, private sector companies that use a

differential commonly apply it to the rate of the highest paid

employee supervised. The average supervisory differential is 11

percent. Application varies (i.e., exempt supervisors only,

nonexempt supervisors only, or both). Since 1995, use of

supervisory differentials by private sector companies has

decreased by more than 60 percent.

Supervisory Differentials (an adjustment to an individual

 supervisor’s minimum pay rate) (cont.)
Appendix II

Briefing on Comparison of Postmasters’ and 

Craft Employees’ Pay During 1999

Page 70 GAO-01-1025 Postmasters Pay

55

Objective 3: Other Organizations’ and Industry Pay

Practices for Supervisors (cont.)

Overtime for Exempt Employees

• FAA had a policy authorizing overtime (and/or compensatory time

off in lieu of overtime pay) for its exempt employees. Air traffic

control supervisors and managers were eligible for overtime pay at

time-and-one-half rates.

• According to Watson Wyatt, private sector practices included cashonly payments, compensatory time off, and a combination of cash

and time off. Overtime compensation rates varied from straight

time to time-and-one-half.
Appendix II

Briefing on Comparison of Postmasters’ and 

Craft Employees’ Pay During 1999

Page 71 GAO-01-1025 Postmasters Pay

56

Objective 3: Other Organizations’ and Industry Pay

Practices for Supervisors (cont.)

Ad Hoc Payments

• TVA used an ad hoc approach to address situations where craft

employees earned more than their supervisors. TVA may authorize

a lump-sum cash payment to nonbargaining unit supervisors at any

time to recognize their performance and extra hours worked for

periods when their craft employees are paid overtime.

• According to Watson Wyatt, the ad hoc approach was the most

popular approach used by private sector companies to address

situations where employees earned more than their supervisors.

The flexibility of this pay practice allows companies to make

compensation decisions on a case-by-case basis.
Appendix II

Briefing on Comparison of Postmasters’ and 

Craft Employees’ Pay During 1999

Page 72 GAO-01-1025 Postmasters Pay

57

Objective 3: Other Organizations’ and Industry Pay

Practices for Supervisors (cont.)

Increased Variable Pay Opportunities

• None of the five organizations we spoke with used increased

variable pay opportunities to address situations where

employees earned more than their supervisors.

• According to Watson Wyatt, private sector companies that

increased supervisors’ opportunities for variable pay used one or

more variable pay programs, such as bonuses, spot awards,

gainsharing, and/or lump-sum merit pay (added to basic pay or

not).
Appendix II

Briefing on Comparison of Postmasters’ and 

Craft Employees’ Pay During 1999

Page 73 GAO-01-1025 Postmasters Pay

58

Objective 3: Other Organizations’ and Industry Pay

Practices for Supervisors (cont.)

Market-based pay Variable pay program Supervisory differential Exempt overtime Ad hoc pay

TVA XX X

FAA X X

WMATA XX X

UPS X X

FedEx XX X

Key Pay Practices for Supervisors

Source: GAO
Appendix II

Briefing on Comparison of Postmasters’ and 

Craft Employees’ Pay During 1999

Page 74 GAO-01-1025 Postmasters Pay

59

Conclusions

• The 1970 Act requires that supervisors be paid salaries that provide

them an adequate and reasonable difference in pay over that of

clerks and carriers. However, the 1970 Act did not specify what

constitutes an adequate and reasonable difference or whether the

difference should apply to basic or gross pay.

• In 1996, the Service lowered the the basic pay minimums of the

EAS. It also established an SDA of 5 percent to provide a pay

difference for certain postmasters and other supervisors in order to

address this statutory requirement. However, since implementing

the SDA, the Service has not fully evaluated the impact of the

differential on postmasters and other supervisors.
Appendix II

Briefing on Comparison of Postmasters’ and 

Craft Employees’ Pay During 1999

Page 75 GAO-01-1025 Postmasters Pay

60

• Our review showed that in 1999, for gross pay, about 12 percent of

postmasters supervised craft employees who either earned more

than they did or earned within 5 percent of what they earned. Also,

most of these postmasters were lower graded and not eligible for

the SDA.

• Given the lack of specificity in the 1970 Act, we are not in a position

to conclude whether or not the results we found represent an

adequate and reasonable outcome regarding pay differences for

postmasters. However, prior to our providing the review results to

the Service, it had only limited data to evaluate the impact of its

SDA policy on postmasters, including which postmasters should be

eligible for, and the amount of, the SDA. Without such information,

the Service was not in the best possible position to factually assess

the adequacy and reasonableness of the Service’s SDA policy or

other pay differences.

Conclusions (cont.)
Appendix II

Briefing on Comparison of Postmasters’ and 

Craft Employees’ Pay During 1999

Page 76 GAO-01-1025 Postmasters Pay

61

Conclusions (cont.)

• Now that some data are available and an approach has been

developed to analyze the Service’s payroll data, the Service should

be in a better position to make fact-based decisions on the

adequacy and reasonableness of its SDA policy and pay

differences.
Appendix II

Briefing on Comparison of Postmasters’ and 

Craft Employees’ Pay During 1999

Page 77 GAO-01-1025 Postmasters Pay

62

Recommendations for Executive Action

• In order to be in a better position to evaluate its SDA policy and the

pay differences between postmasters and their craft employees, we

recommend that the Postmaster General use postal payroll and any

other comparable data to periodically:

• determine the extent to which clerks and carriers may be

earning more than their local postmasters, and the reasons

why, if applicable; and

• reassess the adequacy and reasonableness of the pay

differences between postmasters and the clerks and carriers

they supervise.
Page 78 GAO-01-1025 Postmasters Pay

Appendix III

Comparison of Current Law to the Proposed 

Postmasters’ Fairness and Rights Act and 

Views on the Proposed Act ApendxiI

Under the Postal Reorganization Act of 1970, the Service is required to 

provide a program of consultation with organizations representing 

supervisors and postmasters under which the organizations are entitled to 

participate directly in the planning and development of pay policies and 

schedules, fringe benefits, and other programs relating to their members 

(39 U.S.C. 1004(b)). Under this act, the Service must discuss its proposed 

policies with postmaster organizations before they go into effect; and such 

discussions must be conducted in a meaningful, good faith manner. 

However, the Service cannot be forced to accept the postmaster 

organizations' proposals on polices or even be compelled to negotiate 

those policies with them.1

As a result of amendments to section 1004 in 1980, organizations 

representing supervisors are entitled to additional protections and 

procedures regarding the planning and development of pay policies and 

other programs affecting their members. For example, unless otherwise 

mutually agreed to by both the Service and the organizations, the Service is 

required to provide monthly meetings regarding the planning and 

development of pay and benefit programs to organizations representing 

supervisors. In addition, if organizations representing supervisors are not 

satisfied with the Service’s decisions, they may request the Federal 

Mediation and Conciliation Service to convene a fact-finding panel to 

consider the matter.2

 Organizations representing postmasters are not 

entitled to these protections and procedures. 

The Postmaster Fairness and Rights Act (the proposed act), H.R. 250 and S. 

177, introduced in the 107th Congress, would provide new rights to 

organizations representing postmasters with regard to the consultation 

process. Most notably, if the Service and postmasters were unable to 

resolve any differences they might have regarding proposals on pay 

policies or other programs, either party could refer the dispute to binding 

arbitration.

We requested the views of the Service and the postmaster organizations on 

the proposed act. The Service is opposed to the proposed act and believes 

that it is unnecessary and will do irreparable damage to the Service’s 

mission. The Service believes that the proposed act will create a labor 

1

 See National Association of Postmasters of U.S. v. Runyon, 821 F. Supp. 775 (D.D.C. 1993).

2

 See 39 U.S.C. 1004(c)-(h).
Appendix III

Comparison of Current Law to the Proposed 

Postmasters’ Fairness and Rights Act and 

Views on the Proposed Act

Page 79 GAO-01-1025 Postmasters Pay

union relationship with supervisory and managerial employees, which is 

inconsistent with the intent of the Postal Reorganization Act of 1970. 

According to the Service, supervisory unions are also inconsistent with the 

intent of the National Labor Relations Act, which is the foundation for 

union-management relations in the United States.

The National League of Postmasters of the United States (the League) 

strongly supports enactment of the proposed act and participated in its 

development. The League told us that over the last several years, 

postmasters have seen a continuous erosion of pay and benefits, including 

diminished pay differentials, the loss of cost-of-living adjustments, and 

reductions in convention and administrative leave. According to the 

League, under the Postal Reorganization Act of 1970, postmasters have no 

recourse when consultations with the Service produce unsatisfactory 

results. The League believes that the proposed act will help restore equity 

to the pay and benefits of postmasters and will encourage fair and true 

negotiation.

The National Association of Postmasters of the United States (NAPUS) also 

participated in developing the proposed act. According to NAPUS, in 

recent years, postmasters have been denied the ability to play a 

constructive and productive role in discussions with senior postal 

management over compensatory and programmatic issues. NAPUS 

believes that the proposed act will provide a more level playing field. It 

pointed out that in a number of instances outside the Service, managementlevel personnel are afforded opportunities to participate in a more 

equitable discussion over pay and program issues. According to NAPUS, 

school administrators in a number of states and municipalities and airline 

pilots are provided with these opportunities.
Page 80 GAO-01-1025 Postmasters Pay

Appendix IV

Comments From the U.S. Postal Service ApendxIVi
Page 81 GAO-01-1025 Postmasters Pay

Appendix V

Comments From the National Association of 

Postmasters of the United States ApendxVi
Page 82 GAO-01-1025 Postmasters Pay

Appendix VI

Comments From the National League of 

Postmasters of the United States ApendxViI
Appendix VI

Comments From the National League of 

Postmasters of the United States

(393002) Letr Page 83 GAO-01-1025 Postmasters Pay
GAO’s Mission The General Accounting Office, the investigative arm of Congress, exists to 

support Congress in meeting its constitutional responsibilities and to help improve 

the performance and accountability of the federal government for the American 

people. GAO examines the use of public funds; evaluates federal programs and 

policies; and provides analyses, recommendations, and other assistance to help 

Congress make informed oversight, policy, and funding decisions. GAO’s 

commitment to good government is reflected in its core values of accountability, 

integrity, and reliability.

Obtaining Copies of 

GAO Reports and 

Testimony

The fastest and easiest way to obtain copies of GAO documents is through the 

Internet. GAO’s Web site (www.gao.gov) contains abstracts and full-text files of 

current reports and testimony and an expanding archive of older products. The 

Web site features a search engine to help you locate documents using key words 

and phrases. You can print these documents in their entirety, including charts and 

other graphics.

Each day, GAO issues a list of newly released reports, testimony, and 

correspondence. GAO posts this list, known as “Today’s Reports,” on its Web site 

daily. The list contains links to the full-text document files. To have GAO E-mail 

this list to you every afternoon, go to our home page and complete the easy-to-use 

electronic order form found under “To Order GAO Products.”

Order by Mail or Phone The first copy of each printed report is free. Additional copies are $2 each. A check 

or money order should be made out to the Superintendent of Documents. GAO 

also accepts VISA and Mastercard. Orders for 100 or more copies mailed to a single 

address are discounted 25 percent. Orders should be sent to:

U.S. General Accounting Office

P.O. Box 37050

Washington, D.C. 20013

To order by Phone: Voice: (202) 512-6000 

TDD: (301) 413-0006 

Fax: (202) 258-4066

Visit GAO’s Document 

Distribution Center

GAO Building 

Room 1100, 700 4th Street, NW (corner of 4th and G Streets, NW)

Washington, D.C. 20013

To Report Fraud, 

Waste, and Abuse in 

Federal Programs

Contact:

Web site: www.gao.gov/fraudnet/fraudnet.htm,

E-mail: fraudnet@gao.gov, or

1-800-424-5454 (automated answering system).

Public Affairs Jeff Nelligan, Managing Director, NelliganJ@gao.gov (202) 512-4800

U.S. General Accounting Office, 441 G. Street NW, Room 7149, 

Washington, D.C. 20548

United States

General Accounting Office

Washington, D.C. 20548-0001

Official Business

Penalty for Private Use $300

Address Correction Requested

Presorted Standard

Postage & Fees Paid

GAO

Permit No. GI00