More than 200,000 U.S. Postal Service employees have just received their first two catch-up cost-of-living adjustments, and will soon receive their third COLA, thanks to a provision in a postal union labor contract that members approved this month.

Members of the National Association of Letter Carriers on Aug. 19 received a 1.2 percent retroactive pay raise, effective Nov. 26, 2016, and received two backdated COLA payments worth $21 and $333, which will be paid annually. Postal workers covered under the union contract will receive a third annual COLA worth $270 on Sept. 2.

The pay raise and annual COLAs mark the first in a series of gradual pay increases that will take effect throughout the duration of NALC’s new labor contract agreement with USPS. Postal union members approved the labor contract at an Aug. 7 meeting, with 94 percent voting in favor of the deal. The contract lasts until Sept. 20, 2019.

Under the agreement, NALC postal workers will receive an additional 1.3 percent pay raise on Nov. 25 this year, and will receive four more COLAs throughout the lifespan of the contract:

• The fourth COLA will be effective in March 2018.
• The fifth COLA will be effective in September 2018.
• The sixth COLA will be effective in March 2019.
• The seventh COLA will be effective in September 2019.

The final contract also contains a no-layoff clause that protects letter carriers after six years of service as career employees. NALC members currently at Grade 2 of NALC’s pay scale will also receive a 2.1 percent pay raise, while Grade 1 employees will move to Grade 2.

Non-career city carrier assistants with at least 30 months experience with the Postal Service will convert to career status under the deal.

One drawback to the labor agreement is a provision in which the Postal Service would reduce its share of health insurance premiums costs by 3 percent over the length of the contract. However, USPS would still pay a maximum of 76 percent of any plan’s costs in 2019, which is still higher than the 75 percent maximum paid by other federal agencies that participate in the Federal Employees Health Benefits Program.

USPS Vice President of Labor Relations Douglas Tulino said in a statement that the contract represented a “fair, responsible agreement that serves the best interests of our employees, customers and other stakeholders.”

The union ratified the labor contract just days before the Postal Service reported a $2.1 billion net loss for the third quarter of fiscal 2017. Meanwhile, the Postal Regulatory will conclude its 10-year review of postal rates this fall, and appears likely to give USPS more freedom to raise postage stamp prices.

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