Union's Challenge To PMG Generates Interesting Response From Mailing Industry

Burrus Update
Caught Like a Burglar With the Goods in Hand

The union’s challenge to Postmaster General Potter to set the wages of mail-processing employees at an amount that is less than the worksharing discounts major mailers enjoy has generated some interesting responses. Some mailing-industry pundits have suggested that ending the exorbitant discounts they receive for adding bar codes and for pre-sorting mail would lead to a reduction in mail volume. Others have said it would spark a postal hiring frenzy. These observers have even challenged the mathematical difference between 10.5 cents and 10.4 cents! In each response, they purposely avoid the facts. (Perhaps the most irrelevant reaction is the one that suggests the postmaster general is indifferent to my announced retirement.)

For more than 200 years, the mission of the United States Postal Service has been to provide universal service at uniform rates. Beginning in 1976, however, postal management made exceptions to the uniform-rate requirement through the establishment of work share discounts; but this exception does not modify the legal requirement for uniform rates.

Fortunately, after continuous insistence by the APWU, in 2006 Congress clarified the uniform-rate requirement and decreed that workshare discounts could not exceed the costs the Postal Service avoids if work is performed by private “mail consolidators.” No matter the justification, rates can be reduced only by the value of the work performed by the private contractors.

In each rate-setting case since this standard was adopted, postal management has certified that workshare discounts meet this criteria. After years of challenges and appeals, the APWU now exposes these blatantly false certifications with an offer to perform the work mail consolidators, pre-sorters and bar-coders are performing – at a cheaper rate. I fail to understand the misunderstanding of our offer: We pledge to perform the work for less.

To fully understand this offer, one must understand postal processing operations and discounted mail. After years of modernization, postal management is able to sort all letters and flats to 9 and 11 digits. Management has invested a kingly sum of over $50 billion in automation, computerization, facility redesign, and the incorporation of remote encoding capabilities into the USPS mail processing system. This investment made the Postal Service more efficient and brought down the cost of mail processing. As a result, the avoided costs are lower. (For example, the incorporation of the remote encoding centers resulted in the elimination of 53 of the 55 REC sites.)

But at the end of this huge investment, workshare discounts have actually increased from 7.6 percent of the postage rate in 1976 (a one-cent discount on the 13-cent cost of a first-class letter) to 23.9 percent in 2009 (a 10.5-cent discount on the 44-cent cost of a first-class letter). These discounts diminish the USPS return on investment.

Notwithstanding the activity of the major mailers and others, postal employees must perform further sortation to achieve the 11-digit sortation that directs the mail to the appropriate Letter Carrier and into “walk sequence” for delivery. The work performed by the mailer that allegedly justifies the discount does not complete the preparation of mail for delivery and serves little purpose. The postal system would do just fine if the mailers performed no mail-processing activity and paid the uniform rate. Spare me the justification that mail volume will suffer if mailers are required to pay the legal rate. The loss of mail volume does not justify violations of the uniform rate standard: Management and the mailers must change the law or comply.

But if the value of affixing a bar code and bypassing two sorts by the USPS is 10.5 cents, it is reasonable to accept that the added sortation by postal employees doubles this cost, suggesting that proportional cost of mail processing for a letter is approximately 21 cents.

These figures exclude the costs of delivery, transportation, and overhead; with postage rates at 44 cents for first-class letters, they are nothing short of ridiculous.

A further oddity of the workshare calculations is that the level of the discount is measured by postal costs, so it is in the interest of the mailers to increase postal costs to justify increased rates for discounts. This is achieved by reducing the mail available for postal processing, which results in a reduction in efficiency, an increase in the postal per piece rate, and a reduction on the return on investment in postal automation. This further exposes the charade of workshare discounts. The mailers’ response to the union’s proposal is akin to a burglar being caught in the lights with stolen property in hand.

The supporters of this irrational scheme to avoid uniform rates simultaneously wage an assault on the collective bargaining process in their effort to require arbitrators to “consider the financial health of the Postal Service.” I find it odd that the mailers seek to require arbitrators to consider the financial health of the Postal Service when establishing employee wages and benefits, while ignoring USPS financial health when deferring income through discounts. While they resist setting postal employees salaries at the level that the Postal Service has justified (10.5 cents per letter and flat), they pursue a dual system, one in which they determine the value of the work performed but apply it only to themselves And at the same time, they attempt to stack the deck to ensure that postal employees receive far less.

Notwithstanding the ranting about my offer, I repeat: Pay postal mail-processing employees 10.4 cents or .1 cent less than the certified 10.5 cent value, or, alternatively, reduce workshare discounts to a level that would force the union to withdraw our proposal.

In response to the fear-mongering that postal employment would explode if the union’s challenge was accepted, the union will guarantee the payment of wages and benefits for all new mail-processing APWU bargaining-unit employees from the increased productivity and the 10.4 cent fee. There you have it; it is an offer that management can’t refuse.

Regarding the perceived reaction by Postmaster General Potter to my announced retirement, I assume that any competent CEO would hope for a labor leader who can reach agreements and lead the union’s membership to ratify them. The American Postal Workers Union is a democratic organization and we welcome dissent. There is a contrary opinion on every decision, but ratification by the members of the APWU of the 2006 Collective Bargaining Agreement and the two extensions of the 2000 contract was the highest in the union’s history. The only expectation that PMG Potter is entitled to is my ability to deliver on my word. The APWU members will pass judgment on the rest.

William Burrus