Commission’s findings bolster the NALC campaign to save Saturday service

March 24, 2011 — The Postal Regulatory Commission, an independent federal agency charged with overseeing USPS operations, issued an opinion today sharply critical of key aspects of the Postal Service’s proposal to eliminate Saturday delivery. The Commission embraced many of the criticisms of the plan expressed by the NALC in our year-long campaign to preserve six-day delivery and 25,000 letter carrier jobs.

“Thanks to the hard work of thousands of letter carriers who rang the alarm bell on the potential loss of Saturday delivery for citizens and small businesses all over America, and thanks to our hard-working staff and team of attorneys, Congress now has all the evidence it needs to conclude that ‘5-day is indeed the wrong way,’” NALC President Fredric V. Rolando said.

The three Republicans and two Democrats on the Commission agreed that the Postal Service overstated by $1.4 billion how much it would save each year by delivering mail only five days per week. In particular, the Commissioners found that USPS grossly overestimated — by more than three-quarters of a billion dollars — the savings it would achieve from its letter carrier workforce.

The bipartisan Commission also concluded that USPS underestimated — by hundreds of millions of dollars — how much revenue it would lose when customers, faced with no Saturday postal delivery, look to alternatives to get their messages and packages delivered.

The Commission’s independent analysis determined further that ending Saturday service would delay the delivery of 25 percent of all First-Class Mail and Priority Mail — almost all of it by two days.

Federal law requires the Postal Service to ask for an advisory opinion from the Postal Regulatory Commission whenever it seeks to make a nationwide change in its operations. The PRC’s opinion on USPS’s five-day plan is purely advisory; only Congress has the authority to permit USPS to drop Saturday delivery.

USPS filed its request for an opinion from the Commission last year, in March 2010. The PRC proceeded to conduct extensive hearings on the Postal Service’s plan over the course of several months, both in Washington and in locations around the country, soliciting the views of economists and other experts, as well as those of mailers, small-business owners, community newspaper publishers, business executives, local government officials and ordinary citizens.

NALC participated actively in all the proceedings. President Rolando testified forcefully against USPS’s plan at the Washington hearings, while other letter carriers expressed their opposition at the field hearings. NALC also enlisted the help of a pair of leading postal economists from Rutgers University and the University of Pennsylvania to explain to the Commission the faulty assumptions in the Postal Service’s plan.

All five Commissioners endorsed one joint opinion that pointed out major flaws in USPS’s projections, but this joint opinion expressed no ultimate view on whether Saturday delivery should be eliminated. Four of the Commissioners wrote their own separate opinions.

In her separate opinion, PRC Chair Ruth Goldway (D) announced her view that “eliminating Saturday delivery does not conform to the Nation’s postal policy.” She explained that with five-day delivery, Americans would pay the same postage but receive a lower level of service. She also noted that this reduction in service would be “particularly felt in remote and rural areas.”

Commissioner Nanci Langley (D) wrote that cutting Saturday delivery would diminish USPS’s “competitive advantage in the package delivery sector” and “forfeit the significant competitive advantage” that USPS now enjoys with six-day delivery. Even Commissioner Blair (R), while otherwise supportive of USPS’s plan, noted that it would “unduly impact” those mail users who are dependent on Saturday delivery, including community newspapers, customers who receive pharmaceuticals by mail and those in remote areas. He concluded that the burden is on USPS to show that a reduction in delivery days will “help, not hurt, its future financial viability.”

NALC argued in the hearings before the Commission that USPS grossly overestimated the savings it would achieve by going to five-day delivery. The Commissioners in their joint opinion agreed, noting that even with recent declines in mail volume, city carrier routes are generally at capacity and that overtime hours have recently risen. Squeezing the same amount of mail delivery into fewer days will mean USPS will have to create more routes, to keep within the 8-hour standard, increasing labor costs.

The Commissioners rejected USPS’s notion that it could “absorb” the mountains of mail that would accumulate on Mondays without any significant increase in letter carrier hours. They explained that office time would rise since carriers would have to spend more time sorting the mail. They also explained that there would be an increase in street time: “There are limits on how much mail can go in a carrier’s satchel, and how much mail can be relayed at any one time … Volume directly affects how much time a carrier spends fingering mail on the street, sorting it into cluster boxes, or sorting mail into banks of apartment mailboxes.” The resulting increased work hours, the Commissioners concluded, would eat into the savings USPS projects from its five-day proposal.

The Commission also criticized the Postal Service’s conclusion, based on a survey it conducted of mail customers, that its revenue loss from cutting Saturday delivery would be minimal. NALC argued at the hearing that USPS put its thumb on the scale by asking survey respondents to give their best estimate of how much less they would use the Postal Service if Saturday delivery were cut, and then reducing the answers it received by a so-called “likelihood” factor. The Commission took USPS to task for such statistical game-playing.

Although the Commission’s opinion is not binding, and although the Commissioners reached no unanimity on whether to give USPS’s plan the thumbs up or thumbs down, its findings that USPS’s projections are seriously flawed will help Congress and the general public understand what a serious mistake it would be to eliminate Saturday delivery.