Postal Service Compensation and the Comparability Standard

Barry T. Hirsch

Georgia State University; Institute for the Study of Labor (IZA)

Michael L. Wachter

University of Pennsylvania Law School

James W. Gillula


Research in Labor Economics, Vol. 18, pp. 243-279, 1999

Compensation for U.S. Postal Service workers is determined through a process of collective bargaining and mandatory interest arbitration in the event of impasse. The directive of the Postal Reorganization Act is to maintain compensation similar to that awarded for comparable levels of work in the private sector. This paper examines a wide array of evidence to assess the comparability of postal and private sector compensation. The evidence points to a substantial postal premium. Cross-sectional analysis for 1994, controlling for worker characteristics, indicates that bargaining unit postal employees receive wages 28% higher than similar private sector workers. A premium estimate of 34% is obtained following an accounting for occupational skill requirements and working conditions, while inclusion of fringe benefits increases further the size of the premium. Longitudinal evidence from the Postal New Hire Survey, matched CPS panels, and Displaced Worker Surveys indicate wage gains of 30%-40% among postal entrants. Data on quit rates and applicant queues reinforce the conclusion that postal workers receive substantial rents. We explore in depth methodological issues, with particular attention given to the choice of the comparison group with whom postal workers are most directly compared. Many of the issues analyzed here have general applicability to studies of wage comparability.

JEL Classification: J45, J31, K31

Accepted Paper Series

Not Available For Download

Date posted: November 9, 2003  

Suggested Citation

Hirsch, Barry T. and Wachter, Michael L. and Gillula, James W., Postal Service Compensation and the Comparability Standard. Research in Labor Economics, Vol. 18, pp. 243-279, 1999. Available at SSRN: http://ssrn.com/abstract=208828

Contact Information

Barry T. Hirsch
Georgia State University ( email )
Department of Economics
Andrew Young School of Policy Studies
Atlanta, GA 30302-3992
United States
404-413-0880 (Phone)
404-413-0145 (Fax)
HOME PAGE: http://www2.gsu.edu/bhirsch

Institute for the Study of Labor (IZA)
P.O. Box 7240
Bonn, D-53072

Michael L. Wachter
University of Pennsylvania Law School ( email )
3501 Sansom Street
Philadelphia, PA 19104
United States
215-898-7852 (Phone)
215-573-2025 (Fax)
James W. Gillula (Contact Author)
DRI-WEFA ( email )
10th Floor
1200 G Street NW Standard and Poor's DRI Suite 1000
Washington, DC 20005
United States
(202) 383-3525 (Phone)
(202) 383-2005 (Fax)
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