Editorial: USPS Financial Crisis, Self Inflicted?

Can USPS Management Be Trusted to Repair It’s Own Damage?

The article below was written several months ago but it’s still a timely.

There are some very simple factors and a deliberate unspoken agenda that explain everything that is going on with the financial “crisis” and proposed “cures” at the US Postal Service today.

First the United States Postal Service should be understood for what it was intended to be and how exactly it came to be. The Second Continental Congress named Benjamin Franklin as the nation’s first Postmaster General on July 26, 1775.

Our United States Founding Fathers mandated the creation of an Army, Navy and Post Office in Article 1 Section 8 of the U.S. Constitution, which states,

“The Congress shall have Power…To establish Post Offices and Post Roads …To raise and support Armies,…To provide and maintain a Navy…”

But nowhere does the US Constitution require the Army, Navy or Post Office to “make a profit” or even to “break even.” America’s Founding Fathers simply did not include this stipulation when they wrote the actual words they set forth in the US Constitution.

Since that time, Congress has executed its mandate and defined how the USPS shall be operated in the following US Code:

”TITLE 39 PART I CHAPTER 1 § 101. Postal policy

(a) The United States Postal Service shall be operated as a basic and fundamental service provided to the people by the Government of the United States, authorized by the Constitution, created by Act of Congress, and supported by the people. The Postal Service shall have as its basic function the obligation to provide postal services to bind the Nation together through the personal, educational, literary, and business correspondence of the people. It shall provide prompt, reliable, and efficient services to patrons in all areas and shall render postal services to all communities. The costs of establishing and maintaining the Postal Service shall not be apportioned to impair the overall value of such service to the people.

(b) The Postal Service shall provide a maximum degree of effective and regular postal services to rural areas, communities, and small towns where post offices are not self-sustaining. No small post office shall be closed solely for operating at a deficit, it being the specific intent of the Congress that effective postal services be insured to residents of both urban and rural communities.

(c) As an employer, the Postal Service shall achieve and maintain compensation for its officers and employees comparable to the rates and types of compensation paid in the private sector of the economy of the United States. It shall place particular emphasis upon opportunities for career advancements of all officers and employees and the achievement of worthwhile and satisfying careers in the service of the United States.

(d) Postal rates shall be established to apportion the costs of all postal operations to all users of the mail on a fair and equitable basis.

(e) In determining all policies for postal services, the Postal Service shall give the highest consideration to the requirement for the most expeditious collection, transportation, and delivery of important letter mail.

(f) In selecting modes of transportation, the Postal Service shall give highest consideration to the prompt and economical delivery of all mail. Modern methods of transporting mail by containerization and programs designed to achieve overnight transportation to the destination of important letter mail to all parts of the Nation shall be a primary goal of postal operations.

(g) In planning and building new postal facilities, the Postal Service shall emphasize the need for facilities and equipment designed to create desirable working conditions for its officers and employees, a maximum degree of convenience for efficient postal services, proper access to existing and future air and surface transportation facilities, and control of costs to the Postal Service.”

It should be clear by reading and understanding the above US Law, that the US Army, US Navy and US Postal Service were all created by our Founding Fathers to SERVE and protect the interests of individual American Citizens and NOT for the sole and/or primary benefit of private companies, corporations and commercial interests.

But what we are seeing in many, if not most, of the USPS changes being proposed and pursued today are NOT intended to preserve the Constitutional Rights guaranteed to individual American Citizens by the US Constitution and by US Law.

Rather, the USPS changes being pushed on the American People have but one purpose, and that is to benefit the private sector companies and corporations in the commercial mass-mailing industry in order to protect and to help maximize their profits. These changes, if enacted, will come at a great cost of reduced SERVICE and benefit to all individual American Citizens and will ultimately deny US Citizens of this US Constitutional Right.

An ongoing primary and fundamental problem US Postal Service management could correct is the fact commercial mass-mailers, (sometimes referred to by the less politically correct term “junk mailers”), have been receiving excessive postage discounts for decades, often far in excess of the “costs avoided” by the USPS. In other words, the Postal Service actually under prices some of its postage rates so much that it loses money when it processes and delivers this under priced Standard Class Mail (also known as “junk mail”).

In years past, this was not too big of a problem because First Class Mail was priced at a profit and the volume of First Class Mail was greater than the deeply discounted mass-mailed “Standard Class Mail.” In effect, First Class, Priority, Express and other mail classes that are more appropriately priced were subsidizing commercial mass-mailed Standard Class Mail postage rates.

Things began to change significantly around 2008 when First Class Mail volume dropped below the threshold needed to subsidize the losses the USPS takes on much of the commercial mass-mailed Standard Class Mail it processes and delivers. While First Class Mail volumes have plummeted sharply and rapidly in recent years, commercial mass-mailed Standard Class Mail volume is off a much smaller percentage.

Compounding the US Postal Service’s economic problems is the 2006 Postal Accountability Enhancement Act (PAEA). Among the PAEA changes enacted is the requirement for the USPS to pre-fund its retirement obligations by an annual payment of some $5.6 billion per year. No other agency or business in America has this kind of “prepayment” requirement. An internal audit in 2010 by the USPS Office Of Inspector General reported that the USPS has over-funded its FERS retirement obligations by $6.8 billion and its CSRS retirement obligations by $75 billion. Rather than costing American Taxpayers a cent of their tax money to operate the USPS, it is the USPS that has been being milked like a fat dairy cow. These billions of dollars that are being skimmed off of the USPS are apparently sent to the “general fund” where all the other tax money goes to be spent by Congress. But this is another subject entirely because these over-funding issues are created outside of US Postal Service management by Congress and are beyond the Postal Service’s control.

Also beyond US Postal Service management control is its ever fluctuating fuel costs. The USPS reports that it owns and operates the largest civilian fleet of cars and trucks on the planet and drives them some 1.25 billion miles each year on some 399 million gallons of fuel. While labor costs have remained fairly steady over the years and postage rates take months to increase, fuel costs can change literally overnight. This too is entirely another subject because it is beyond US Postal Service management control.

It should be noted that while most US Postal Workers have long been paid middle class pay and benefits, the American public received in exchange a workforce of highly motivated dedicated public servants. Internal theft and dereliction of duty case are extremely rare when compared to the some 500 billion pieces of mail processed and delivered each day. Because those rare cases of a Postal Carrier burning some mail under a bridge or being caught doing something they shouldn’t be doing are so widely publicized, one might get the wrong impression of the other 99.99+% of union represented Postal Workers. Put another way, the American public can trust and rely upon those who sort and deliver their mail to preserve the sanctity and security of their mail and to take every diligent effort to ensure its timely delivery. This may not be the case if the American public’s mail is instead entrusted to a much lower compensated transient workforce either by misguided reorganization or privatization.

But some will no doubt blame the USPS’s financial problems in whole or part on the Postal Unions. Inevitably some always seem to blame Unions for far more harm and damage to mismanaged businesses than Unions actually have the capacity to inflict. It is an easy diversion tactic to focus the attention and blame away from poor management decisions of a broader scope than just those dealing with employees and labor issues. Some 85% of US Postal Service operational costs are attributed to just payroll costs. There are many reasons for this but this percentage of operational costs has not changed much over the last few decades. However, hourly Union represented employee wages and benefits have not risen significantly from 1971 to today when adjusted for inflation. But the same cannot be said of US Postal Service executive and managerial pay, benefits and bonuses, which have steadily become a much larger percentage of the USPS’s payroll costs over the same period of time. The largest US Postal Service employee union, the American Postal Workers Union recently agreed to a new contract that will save the US Postal Service and estimated $3.8 billion dollars in the wages of the hourly workers it represents. The other US Postal unions are currently in negotiations. In short, the USPS has operated without financial problems for nearly 40 years, since 1971, with the existing unions and essentially steady or declining hourly pay rates when adjusted for inflation.

The focus of this article is the very thing that is within the control of US Postal Service management and specifically Postmaster General Patrick Donahoe, and that is the setting of postage rates. US Postal Service management has the duty and obligation to set postage rates, or at least the attempt to set all postage rates, high enough to avoid losing money processing and delivering all classes and types of mail. It is the basic oath of office duty and obligation of US Postal Service management to responsibly manage the US Postal Service to successfully accomplish its mission and to protect not only its business, but its assets as well.

Over the years, the USPS has invested billions of dollars in high tech automated high-speed industrial mail processing machinery and probably leads the world in the application of this type of mail processing technology. These equipment investments have presumably paid for themselves in terms of adding greater mail processing efficiency and a large reduction in the amount of manpower required to sort the over 500 million mail pieces each day.

Initially the USPS was one of the first users of Optical Character Reading (OCR) technology. OCR capability was incorporated into high-speed mail sorting machines in the very early 1980’s. Commercial mass-mailers were offered discounts for preparing their mailings to rigid specifications intended to maximize the utilizations and efficiently of these early OCR capable automated mail sorting machines. But today, some thirty years later, computers have made exponential advancements in computational power from the first generation of US Postal OCR machines that were based on Intel 386 era hardware. And since that time, OCR technology has improved to the point where most mail needs no special preparation for the current generation of USPS high-speed sortation equipment to accurately process even handwritten addressed mail. Yet the excessive Standard Class Mail discounts continue to linger on for commercial mass-mailers like most government subsidy programs, long after the original need and justification has passed.

So no matter how much more efficient each generation of high tech automated high-speed industrial mail processing machinery becomes, they remain unable to overcome the amount of Standard Class Mail postage rates being priced below operational costs. Something must change and it must change soon.

The obvious answer would be to simply increase the Standard Class Mail postage rates, but only on those portions of Standard Mailings that are priced below costs. Postmaster General Patrick Donahoe announced in August of 2011 that the Postal Service is dropping its legal battle with regulators to force a 5.6% rate increase because the private company and corporate commercial US mail industry now appears to be “too fragile” for a rate increase. It would be interesting to see if the mailing associations that represent these commercial mailers have reduced their political contributions, lobbyist efforts and PAC activities in these “fragile” times.

So the USPS appears to be hell-bent on seeking other solutions to preserve the way of life for the ever too “fragile” commercial mass-mailers. Among these is a slash and burn approach that starts with closing as many USPS facilities of all types and sizes as possible and getting rid of as many hourly workers as possible (while excluding executives and managerial staff from these proposed drastic cuts).

But more troubling than adding to the US unemployment numbers is the fact USPS Postmaster General Patrick Donahoe wants to cut service from the historic delivery expectations of 1-3 day First Class delivery to at least 2-3 day First Class delivery with the emphasis on 3 day delivery. Essentially, PMG Donahoe wants to give individual American Citizens what is basically Standard Class Mail service and delivery expectations for First Class Mail postage rates (or higher).

Lowering First Class Mail delivery service expectations does not affect commercial mass-mailers in the least. Neither does 5 day or even the real ultimate goal of 3 day delivery week. Most of the Standard Class Mail is planned and paid for weeks and months in advance. It does not matter to most advertisers if they have to factor in extra time for the USPS to deliver the mailing as long as the delivery times are consistent. Nor does it matter much to them if mail is only delivered on Monday, Wednesday and Friday. It has been said that more “junk mail” is tossed unread on Saturdays than any other day of the week and these mass-mailers usually try to avoid Saturday delivery altogether. Eliminating Saturday delivery would alleviate this problem.

The Standard Class Mail that private companies and corporate commercial mass-mailers send usually enters the US Postal Service as palletized shipments by truck. Only special Postal facilities with truck docks set up for large quantities of mail receive commercially mailed Standard Class Mail. These are typically not your local Post Offices so these commercial mass-mailers will not be affected in the least by the closures of even thousands of local Post Offices that only benefit individual American Citizens.

In fact, since the Standard Class Mail private companies and corporate commercial mass-mailers have their mail trucked to the USPS, it is not too great of an inconvenience or added cost for them to truck that mail an extra 50 or 100 miles to another USPS plant farther away. So closing and/or “consolidating” the larger Postal sortation plants will not harm the commercial mass-mailers, even though it will permanently destroy the historical First Class Mail delivery service established by Federal Law for the benefit of individual American Citizens.

When all of these facts and factors are added up, the conclusion is simple. The United States Postal Service is being stolen from its intended purpose and mission to primary provide a service to individual American Citizens. Those in charge of USPS, including Postmaster General Patrick Donahoe, intend to “repurpose” the US Postal Service as a quasi-Government entity with its primary focus to provide First Class Service to commercial mass-mailers at Second Class Mail postage rates often below operational costs. It appears the primary goal of their plans is to ensure the commercial for-profit mailing businesses can preserve, maintain and maximize their profit margins at the expense of individual American Citizens who have, or at least once had, a Constitutional RIGHT to this Service.

APWU Steward,Atlanta (Georgia) MAL 32

Click Here for a copy of this article in PDF via 21st Century Postal Worker

12 thoughts on “Editorial: USPS Financial Crisis, Self Inflicted?

  1. Damn! So well said and actually informative for once! I have been harping on the two major factors that you brought up, which is the heavily stacked higher-eschelons of overpaid upper management in the US Postal Service, and the discounted rates to mailers who are actually running the US Postal Service. Nobody has been listening! But you bring up these same concerns, and so eloquently, might I add. Also, let’s make sure to bring up the fact that there wouldn’t need to be so much union activity if it wasn’t for much of the current management in the USPS. The Postal Service has been stolen from us all by Potter and Donahoe. Can’t anybody see that? The Congress hasn’t helped, passing legislation for the retiree benefits and raises for our PMG and his cronies! If you ask me, the whole country of America is being sold out by the people we elected to look out for our best interests. Donahoe is no different, except that we didn’t have any choice in that, he was appointed or hired by SOMEBODY! All those people in Washington are up there kissing each others butts and rubbing each others palms, unconcerned – truly – with what they are doing to the millions of people in their care. They are all too busy trying to make it rich, like Donahoe. Donahoe is in bed with all the mailers and the legislators. He truly needs to be fired! And then we need a revolution to change what has been messed up by these people!

  2. An excellent encapsulation of the conflict within the Institution. The organization seems set on a course of self-destruction & we employees feel as though we can’t change its course. Management, at the various tiers, is trying to stifle any opinions contrary to theirs. It is full-on madness these days.

  3. This article says it all. Great job of discussing the USPS. A must read for all postal employees and THE article to refer to and quote from when those questions and comments arise at your family holiday parties.

  4. You scabs crack me up. Waahhh I’m not represented… Waahhh the Union won’t file my nonsense grievance…Waahhhh Wahhh somebody took a 20 minute break and I got 15, I’m telling! Waahhh

  5. This is kina simple they are voilating the Constutition!! WOW no matter what they are to still keep devilvering mail!! Just raise the price of the stamp!! SMH

  6. I enjoyed the article and it was well written. At my plant I have seen the number of managers and supervisors increase as the numbers of craft personnel decrease. I understand the need for change including the pay freezes and reduction in employees thats already occurred. However its time for shared sacrifice by everyone to save our jobs and the postal service. This includes bulk mailers and supervision.

  7. If you plan on occupying the APWU, do it on Form 1186. Send them Form 1188 and you will have to wait another long year of the scumbags taking your dues without representation.

  8. To Mike Nodine and from the pages of the 21st Century Postal Worker:

    “I called the “APWU Store” again today seeking to order a few copies of the 2010-2015 CBA (trying to get some Christmas shopping done). I was told by the salesperson that many have been contacting her for copies of the CBA and she recently called and asked National APWU the reason for the hold up. She was told the contract had not been signed yet.”

    Come clean APWU before your people occupy you with PS Forms 1188. My suggestion to all who like to write extensive articles blacing blame on one entity…MANY are to blame for the USPS woes. USPS may have seriously warped ideas on how to save itself but I Spent many years looking at the malingerers and lazy being supported by stewards that would do and create whatever they had to do in order to NOT work. It was the unions that created, supported and defended the antiwork ethic that existed in USPS.I’d really love to see the APWU run operations in USPS for just 1 week. That would really be one big joke especially with an unsigned contract.

  9. how about the post offices nationwide sell the following


    i am sure they would sell like hotcakes and solve all the
    financial distress at the usps. call 867-5309 to get your
    bumpersticker…ask for jenny jenny

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