More Hypocrisy as Big Mailers Decry Rate Hike

In Run-Up to Postal Reform, They Championed Annual Increases

Burrus Update 11-2010, July 13, 2010

The APWU often criticizes the cozy relationship between large mailers and postal management, but we understand that without the major mailers there would be insufficient mail volume to maintain the Postal Service’s national network and to employ 600,000 workers. “Non-household mail” enables us to fulfill our obligation to serve the American people.

Unfortunately, commercial mailers have been permitted to influence postal management beyond the scope of their contribution. While direct mail accounts for an ever-increasing share of mail volume, its contribution to USPS revenue is a pitiful 20 percent. But the voice of the average citizen, who pays 44 cents postage per letter, is drowned out by those who have access to USPS decision-makers.

The APWU has frequently found fault with the major mailers and some unions for championing “postal reform,” which resulted in the Postal Accountability and Enhancement Act of 2006 (PAEA). History will reflect that this legislation — with its onerous requirement that the USPS must pre-fund more than $5 billion of future retiree healthcare liabilities annually for 10 years — has caused immeasurable damage to the Postal Service. The result has been the degradation of service to the public through facility consolidations, station-and-branch closings, reduced service, and mail delays caused by the need to reduce expenses to satisfy this requirement.

One of the most disturbing aspects of the unhealthy relationship between the USPS and major mailers is the mailers’ reaction to the Postal Service’s recent request for a rate increase under the “exigency provisions” of the PAEA. These provisions allow the USPS to increase postage above the rate of inflation.

The influential mailers have formed an organization, the Affordable Mail Alliance, for the sole purpose of denying the Postal Service the opportunity to increase revenue in response to the pre-funding obligation that the mailers imposed. Included in their near-hysterical reaction to the increase is the refrain that the Postal Service is raising rates “again.”

Despite differences in the legal interpretation of an “exigency,” if the mailers were honest, they would accept responsibility for the legislation that resulted in annual rate increases. Prior to the enactment of the 2006 law, the Postal Service’s mandate was to “break even over time.” The mandate was applied to three-year rate cycles, with the intent that the USPS would generate a surplus in year one; break even in year two, and lose money in year three, thus breaking even over time.

The large mailers insisted to Congress that their business model was best served by annual incremental rate increases rather than larger, less frequent rate hikes. Individual citizens and small businesses voiced no opinion about whether postage should increase by 3 cents every three years or by one cent each year for three years.

It was the large mailers who demanded annual increases tied to the Consumer Price Index; now, however, they have joined the chorus criticizing the Postal Service for raising rates “again.” Despite the differences between the large mailers and the unions, we should at least be honest with the American people: The mailers may disagree with the use of the exigency option, but annual rate increases are of their own doing, and they should take responsibility for them.

William Burrus