Senator Collins Applauds PRC Unanimous Decision To Reject USPS’s Requested Rate Hikes
Filed under: postal news, PRC, press releases, rate increase, usps
WASHINGTON, D.C. — U.S. Senator Susan Collins, Ranking Member of the Senate Homeland Security and Governmental Affairs Committee and author of the 2006 Postal Accountability and Enhancement Act, today applauded the Postal Regulatory Commission’s (PRC) unanimous decision to reject the U.S. Postal Service’s requested rate hikes.
“American consumers and businesses that rely on the Postal Service won a major victory today,” said Senator Collins. “I am pleased with this decision, which I argued was required by the language of the 2006 postal reform law.
“By rejecting these proposed rate hikes, the PRC has given the Postal Service an opportunity to improve its operations and thrive. The Postal Service now needs to redouble its efforts to cut costs, develop new services to increase volume, re-invent its business model and work with the Administration to remedy an overpayment to the federal retirement fund. I will continue to press the Administration and Postal Service on these vital reforms,” Senator Collins said.
The Postal Service is the linchpin of a $1 trillion mailing industry that employs approximately 7.5 million Americans in fields as diverse as direct mail, printing, catalog production, paper manufacturing, and financial services.
The 2006 postal reform law that Senator Collins authored allowed for rate increases above the level of inflation “only if the Postal Service could prove ‘extraordinary or exceptional circumstances,’ such as terrorist attacks or natural disasters, have had a profound effect on its operations, well outside normal business cycles,” said Senator Collins.
In its decision released today, the PRC found that the Postal Service failed to prove that its financial condition met the standard of the narrowly worded law.
Senator Collins believes the PRC’s decision will help prevent further declines in mail volumes because unexpectedly higher postage rates would prompt businesses and customers to seek less expensive, digital alternatives. This would have resulted in customers using the Postal Service less, ever-sinking mail volumes and even higher net losses for the Postal Service.
Senator Collins also cited the findings of three recent investigations into Postal Service operations that she requested the Inspector General (IG) conduct. The three probes found stunning evidence of waste, fraud and abuse, especially in the contracting area. All told, the Postal Service could save more than $800 million in 2011 if it implemented all the IG recommendations. Specifically, the IG investigations found that:
• 359 non-competitive contracts were given to former employees, some of whom were hired back to train their replacements at twice their former pay;
• the Postal Service pays 100 percent of health insurance premiums for 835 of its top employees, an expensive perk that occurs at no other federal agency, at an annual cost of $10 million;
• postal employees participate in many of the same health insurance and life insurance programs as federal employees, yet the Postal Services pays a greater share of the premiums;
• the Postal Service’s contract management did not protect the USPS from waste, fraud, and abuse;
• the Postal Service could not even identify how many contracts were awarded without competition, and the IG found that 35 percent of the no-bid contracts lacked justification; and,
• significant savings could be achieved by consolidating the USPS’s area and district field offices.
On July 6, the Postal Service filed its exigent rate case with the PRC, seeking approval for a wide array of rate increases. Today, the Postal Service expects to post a loss of more than $7 billion for fiscal year 2010.
Its requested increases, averaging 4 to 6 percent, would have far exceeded the rate of inflation. For one class of mail, for example, the proposed increase would have been a whopping 23 percent. For catalog mail, the Postal Service proposed a postage hike of more than 5 percent, which owners warned would prompt many catalog businesses to reduce mail usage and direct customers to websites.
Publishers would have responded in a similar way. One national company, which has relied heavily on direct mail, said the proposed increases would have forced it to reduce mail usage by 15 to 20 percent. The rate hikes, had they taken effect, would have made direct mail less of a financially viable, large-volume advertising medium.
Affordable Mail Alliance Commends PRC On Rejection Of Postal Rate Hikes
Filed under: postal, postal news, press releases, rate increase, usps
Washington, DC – The Affordable Mail Alliance – an unprecedented coalition of more than 1,200 non-profits, Fortune 500 companies, small businesses, major trade associations, consumer groups, and citizens representing the vast majority of the mail sent in the United States – said today that the decision of the Postal Regulatory Commission (PRC) to reject the rate hikes proposed by the Postal Service is good for businesses, and will actually benefit the USPS in the long run.
The proposed rate hikes, which were to have taken effect next January, would have added $3 billion annually to the nation’s postal bill even though the rate of inflation is close to zero. The PRC decision reaffirms that the Postal Service must limit rate increases to the rate of inflation, as the law requires.
“The PRC today has helped countless businesses stay competitive and saved tens of thousands of jobs,” said Tony Conway, Affordable Mail Alliance spokesperson and Executive Director of the Alliance of Nonprofit Mailers. “The Commissioners recognized that imposing an additional tax on Postal Service customers is not the way to address its financial troubles. Our members look forward to working with the Postal Service on the long-term restructuring needed to restore the Postal Service to competitiveness.”
While today’s decision will help the Postal Service retain volume and revenue, there is still more work to do. Blue ribbon commissions and government auditors have reported for decades that the Postal Service needs to streamline its inefficiently large network of undersized and obsolete mail processing plants. And although contracts with several major employee groups are up for renegotiation, the unions have signaled that they will strongly resist any major concessions. Additionally, Congress should also take a hard look at the Postal Service’s current obligations for prefunding its retiree health benefits program, a major cost burden. This prepayment schedule is another major contributor to the Postal Service’s financial problems.
“The Affordable Mail Alliance is truly an unprecedented effort with members across the country all of whom deserve thanks for uniting to address this important issue,” Conway said. “We are also grateful for our support from Congress and particularly for the leadership of Sen. Susan Collins, the key author of the 2006 Postal legislation at issue here and a tireless advocate for the future of the Postal Service. We stand ready to move forward in addressing the other issues that are so important to the future of the Postal Service.”
More on the Affordable Mail Alliance
The Affordable Mail Alliance is an unprecedented coalition of postal customers. The coalition includes charities, consumer groups, small business, national retailers, utilities, banks, insurance companies, Fortune 500 companies, and the customers who use the Post Office every day. The members represent many of the Postal Service’s biggest customers-and many of its smallest-and use every major class of mail. For further information, please visit www.affordablemailalliance.org or contact Jessica McCreight at jmccreight@skdknick.com or (202) 464-6900.
Breaking News: Postal Regulatory Commission Denies USPS Rate Increase Request
The Postal Regulatory Commission announced its decision rejecting the requested price hike at a news conference Thursday.
“After careful consideration, the Commission agreed with the Postal Service that the recent severe recession, and the decline in mail volume experienced during the recession, do qualify as an extraordinary or exceptional circumstance under the law. However, the Commission finds that the requested exigent rate adjustments are not due to the recent recession, or its impact on mail volume. Rather, they represent an attempt to address long-term structural problems not caused by the recent recession. The Commission finds, therefore, that the Postal Service has failed to meet its burden under the law and the Commission is unanimous in denying its request for an exigent rate increase..”
The new rates would have taken effect next Jan. 2.
Text of the Postal Regulatory Commission’s press release:
Washington, DC – The Postal Regulatory Commission today issued Order No. 547 in Docket
R2010-4 denying a Postal Service request for an average 5.6 percent rate increase. The Commission
found that the Postal Service failed to justiff rate increases in excess of its statutory CPI price cap.
“The Commission finds that the Postal Service has shown the recent recession to be an exigent
circumstance but it has failed both to quantifo the impact of the recession on its finances and to show
how its rate request relates to the resulting loss of mailvolume; therefore, we unanimously deny its
exigent rate request,” said Chairman Ruth Y. Goldway.
The law requires the Postal Service to demonstrate that any exigent rate adjustments are due to the
identified exceptional circumstances. This prevents a bona fide extraordinary or exceptional
circumstance from being used as a general rate increase mechanism that would circumvent the price
cap system.
The Postal Service’s recent volume losses and multi-billion dollar shortfalls are recognized. However,
Commission analysis confirms that the Postal Service’s cash flow problem is not a result of the
recession and would have occurred whether or not the recession took place. lt is the result of other,
unrelated structural problems and the proposed exigent rate adjustments would neither solve nor
delay those problems.
The Postal Service may be unable to continue to meet a statutory 1O-year payment schedule -
averaging roughly $5.5 billion per year – to create a fund to pay future retiree health benefit
premiums. lt has been unable to fund this obligation from operations, and has instead used up all of
its retained earnings and drawn down from its $15 billion borrowing authority. Even with the
requested increase, the Postal Service would be unable to meet this annual obligation either in 2011,
or in succeeding years.
The Postal Service achieved over $6 billion in cost reductions in 2009. While volume declines
outstripped cost reductions during the actual recession, Postal Service cost containment programs
are producing results and work hours have declined faster than volumes in 2010.
Goldway also said that the USPS could implement a 1.6-2% increase under the normal price cap process.
Statement of PRC Chairman Ruth Goldway
PRC to Issue Decision Tomorrow on Extraordinary Postage Increase Request
Filed under: postage rates, postal, postal news, PRC, rate increase, usps
Washington, DC –The Postal Regulatory Commission invites press and interested parties to a short briefing on its decision in the U.S. Postal Service Request for an above inflation, “exigent” price increase for its market-dominant products. This is the first time that the issue of what is an “exceptional or extraordinary” circumstance will be decided under the Postal Accountability and Enhancement Act of 2006 (PAEA). Questions from the Press will be entertained following the briefing.
What: The Commission will announce its decision on a closely watched case, the Postal Service exigent price increase request filed on July 6, 2010, seeking to increase prices by an average of 5.6 percent on its Market-Dominant products, including, but not limited to, First-Class and Standard letters and flats, Periodicals, and Standard packages.
Under the PAEA, price increases for Market-Dominant products are capped at the rate of inflation as measured by the Consumer Price Index for All Urban Consumers (CPI-U). The Postal Service may request Market-Dominant increases above the rate of inflation, however, due to “extraordinary or exceptional” circumstances.
Commissioners and Commission staff
11:00 a.m., Thursday, September 30, 2010
Where: Hearing Room
Postal Regulatory Commission
901 New York Avenue, NW, Suite 200
Washington DC 20268
Senator Collins says USPS Should Get Spending Under Control Before Raising Rates
Filed under: oig, postal, postal news, rate increase, usps
Maine Sen. Susan Collins is taking the U.S. Postal Service to task for spending she says is unwarranted at a time when the service is seeking to raise rates. In a speech on the Senate floor, Collins cited an Inspector General’s report, which she says indicates that spending in some areas is out of line.
“Its unbelievable to me that the Postal Service, awash in debt and asking for huge postal rate increases, is paying the full health care premium for 835 of its executives,” she said.
Collins says the IG’s report also indicates that the Postal Service has been hiring back retired executives at salaries well above their original pay — in some cases twice as much.
Collins says the Postal Service needs to get spending under control before raising rates again. Under the current proposal, the price of a stamp would go up to 46-cents in January. That’s twice what it cost to mail a letter in 1985.
PRC To Meet September 9, 2010 To Consider Postal Rate Case
Filed under: postal, postal news, PRC, rate increase, usps
From the Postal Regulatory Commission web site:
The Commission will meet in CLOSED session at 10 a.m. on Thursday, September 9, 2010 to consider Deliberations and Decision in Docket R2010-4, Rate Adjustment due to Extraordinary or Exceptional Circumstances
Affordable Mail Alliance: Don’t Allow the USPS to Continue Costly Business Practices
Filed under: postal, postal news, PRC, press releases, rate increase, usps
Businesses and Non-profits cannot afford to Pay for the Postal Service’s Excessive Costs
Washington, DC – The Affordable Mail Alliance – a growing coalition of non-profits, Fortune 500 companies, small businesses, major trade associations, consumer groups, and citizens representing the vast majority of the mail sent in the United States – filed comments urging the Postal Regulatory Commission to help rein in the USPS’s excessive costs by denying the proposed rate hike.
“The Post Office needs to reevaluate their approach,” said Jerry Cerasale, Affordable Mail Alliance Spokesperson and Senior Vice President of the Direct Marketing Association. “Instead of trying to keep things afloat with a giant tax on consumers, the USPS should focus on improving management and controlling costs to get out of this mess. To do otherwise is just bad business.”
This is the Alliance’s final legal step before the PRC announces their decision on October 4.
The comments also highlight the Postal Service’s flip-flop on the cause for their request. The USPS previously claimed that such a severe rate increase was needed to alleviate an immediate and unforeseen cash crisis. But at the public hearing held on August 10, a top official admitted that the “crisis” would not prevent them from operating in their current fashion for at least the next year. The Postal Service now claims that the rate increase is needed to prevent a longer-term profit slowdown over the next decade.
“Our comments make the same case that businesses and working families are making all over the country,” said Cerasale. “The Postal Service’s proposed rate hike is unreasonable, unhelpful, and unlawful, and the more than one thousand members of the Alliance are not going to let the Postal Service take advantage of its customers.”
The comments reiterate what the Alliance has argued all along – that the Postal Service has failed to show that it would suffer from its projected losses if it followed “best practices of honest, efficient and economical management,” and has failed to meet the “extraordinary or exceptional” circumstance test of the 2006 Postal Accountability and Enhancement Act. The increase thus should be rejected, especially at this time of economic uncertainty for America.
Senator Susan Collins (R-ME), a key author of the 2006 law, has supported the Alliance’s position. In her statement following the Postal Regulatory Commission hearings, Senator Collins said that the law being cited by the Post Office was intended for use in circumstances such as natural disasters and terrorist attacks. The Post Office’s “failure to sufficiently update its business model,” she said, was not sufficient for special consideration.
Formed in response to the US Postal Service’s July 6th announcement that it would seek to raise rates far beyond those currently allowed by law, the Affordable Mail Alliance grew from a small group of concerned USPS customers to a membership of over a thousand in less than two months. The Alliance has been gaining momentum in the wake of recent Postal Regulatory Commission Hearings, and this most recent action provides a strong argument to the PRC in advance of its coming decision on the issue.
Related link: Affordable Mail Alliance Document Submitted to PRC
Postmasters: PRC Denial Of Rate Increase Could Compel USPS To Cut Services Provided To American Public
Filed under: NAPUS, postal, postal news, Postmasters, PRC, rate increase, usps
National Association of Postmasters of the United States (NAPUS) submits the following comments in support of the Postal Service’s July 6 request of the Postal Regulatory Commission to approve a rate adjustment due to “extraordinary or exceptional circumstances:
It would be shameful if those who argue for furloughs would have the unintended consequence of advocating against our veterans.
Since enactment of PL 109-435, global and domestic economic conditions have deteriorated sharply. In fact, 2005 was the last year in which the United States Gross
Domestic Product (GDP) exceeded 3%. While the normal business cycle experiences economic waxing and waning, the ongoing financial turmoil is quite different. As of yet,
our country is still languishing in a unrelenting recession. In fact, over the past three years, the Congress and two successive Administrations felt the necessity to take drastic
steps, attempting to stabilize the economy. As illustrated by falling mail volume and revenue decline, the Postal Service is not immunized from these dire economic
circumstances. Furthermore, the statute does not state that the circumstances must be unique to the Postal Service to prompt an exigent rate case.
A number of intervenors have commented that the private-sector institutions were able to ride out the recession through retrenchment, radical structural and pruning labor costs.
For the most part, these private-sector profit-maximizing strategies are unavailable or improper in a governmental public service agency. The Postal mission is to maximize
service to the American public. Moreover, the Postal Service must comply with a series of statutes and regulations (e.g., veterans’ preference, pre-funding retiree health benefits,
fully funding retirement benefits, and the universal service obligation); those who urge the Postal Service to freeze, furlough and fire are exempt from these requirements.
A number of intervenors and commenters have suggested that the Commission should reject the Postal Service’s request, since the federal agency has not exercised such cost-cutting strategies as freeze, furlough and fire. Those who have associated with these views have a total disregard for the impact on the service provided to the American
public, the affect on the postal workforce, and the long-term implications for the future of the Postal Service’s universal service obligation.
The intervenors seem to overlook the huge decline in postal employment over the past decade. The agency has shed more than 164,000 positions and this represents an almost
21% decline since fiscal year 2000. The Commission should recognize that “Reductions-in-Force”, within the federal government, are subject to various statutes, which among
other safeguards, protecting former members of the U.S. Armed Forces. It would be shameful if those who argue for furloughs would have the unintended consequence of
advocating against our veterans.
Unlike private sector companies that have undergone recession-necessitated retrenchments and initiated sizeable layoffs, the Postal Service provides a vital and
constitutionally mandated public service. Moreover, profit-driven entities, by their very nature, may be dismissive of the public-service aspect of their mission, if they have one at all. For the Postal Service, however, public service is its raison d’être; and, any action that undermines its core mission needs to be considered unfavorably.
NAPUS is concerned that the recently announced hiring freeze is undermining the capability of front-line postal managers and their employees to deliver quality services to
the mailing public. This compounds a major problem that is being experienced throughout the country, a concerted strategy to close statutorily protected Post Offices
through the abuse of the Post Office suspension process. (Last year, the Commission initiated an investigation of this abuse – PI2010-1.) In response to POIR-4, in the present
docket, the Postal Service disclosed that, beginning in fiscal year 2010, the agency estimates that 3,248 Post Offices will be without a Postmaster; the number of Postmaster
vacancies almost doubled over the past year. Additionally, in fiscal year 2010, 12% of all Post Offices would be without a Postmaster and foreshadows Postal efforts to suspend
(aka to close) those Post Offices.
Commission denial of the requested rate adjustment, in NAPUS’ view, would compel the Postal Service to wield its cost-cutting axe against service provided to American citizens,
small businesses and rural America. These are the prime constituency for which the universal service obligation was established.
NAPUS suggests that the Commission consider degradation of postal service standards (e.g., delivery standards, postal window hours, customer service, etc.) in its assessment of
the exigent rate request. To do otherwise, would force the Postal Service into noncompliance, which would only come to light when the Commission issues its ACR for
2011.
NAPUS urges the Commission to approve the Postal Service rate increase, which is necessitated by “extraordinary and exceptional circumstances.” We believe that the
current economic conditions are of such magnitude that the request is justified and that the Postal Service has striven to reduce costs, including cuts that Postmasters continue to
believe are harmful to customer service. Rejection of the Postal Service request will result in a cascade of service reductions that will utterly destroy our Postal Service.
read full document submitted to Postal Regulatory Commission
NALC: Mailers And Senator Collins Misreading Congress’ Intent Of USPS Seeking Rate Increases
Filed under: NALC, postal, postal news, postal reform, PRC, rate increase, usps
REPLY OF INTERVENOR NATIONAL ASSOCIATION OF LETTER CARRIERS, AFL-CIO
TO COMMENTS OF AFFORDABLE MAIL ALLIANCE AND SENATOR COLLINS
The AMA argues that the price-cap regulatory system established by the Postal
Accountability and Enhancement Act (“PAEA”) will be “dead” if the Commission interprets the
exigency clause in 39 U.S.C. §3622(d)(1)(E) to apply to the circumstances currently facing the
United States Postal Service (“USPS”). See AMA Comment at 5. Senator Collins echoes that
position, asserting “unequivocally” that the PAEA “does not provide for an exigent rate case”
under the circumstances set forth in USPS’s request.
These comments misconstrue Congress’ intent when it allowed USPS to seek an
exigent rate increase under “extraordinary or exceptional circumstances.” 39 U.S.C.
§3622(d)(1)(E).
Although she now opposes USPS’s exigent rate request, Senator Collins, in an April 6, 2007 letter to the Commission that she co-authored with Senator Carper (see Collins Comment, at Attachment 1), explained that Congress meant the PAEA’s exigency exception to apply to “significant and substantial” declines in mail volume caused by events beyond USPS’s control:
the “extraordinary and exceptional circumstances” referenced in
the language may include terrorist attacks, natural disasters, and
other events that may cause significant and substantial declines in
mail volume or increases in operating costs that the Postal Service
cannot reasonably be expected to adjust to in the normal course of
business.
The letter cited “terrorist attacks” as an example of an event whose impact on
mail volume could qualify under the statute as an exigent circumstance. See id. In her comment,
Senator Collins now explicitly embraces the idea that “the terrorist attacks of September 11,
2001, or the anthrax attacks later that year could serve as the basis for an exigent rate case.”
Collins Comment at 3; see also id. at Attachment 4, at 11 (S. Rep. 108-318 (2004)) (citing
September 11, 2001 and anthrax attacks as examples of exigencies).
The AMA and Senator Collins argue that the PAEA’s exigency clause must be
read narrowly and only to apply to unforeseen events. See AMA Comment at 12-16; Collins
Comment at 3. Even if that were correct, the current circumstances would still apply. That the
business cycle will ordinarily produce crests and troughs may be foreseeable, but no one could
have foreseen the economic tsunami now known as the “Great Recession” and the carnage it
would leave in its wake: a contraction of the GDP in 2008-2009 of nearly 4%, a drop in private
employment of 7.3%, and a fall in real investment spending of 35.7%; the closure of 228 banks
since January 2008; and the majority of the American workforce in the 30 months preceding July
2010 having faced unemployment, experienced a cut in pay or a reduction in hours, or been
forced into part-time status. See July 6, 2010 Statement of Joseph Corbett in Docket No. R2010-
4, at 14.3 That this was no ordinary recession is evidence by Congress having appointed a
special commission to investigate its causes. And while some argue that the mail-volume loss
was aggravated by a long-term migration of communications to the internet, there is no dispute
that the bulk of the loss was due to the macroeconomic nightmare.
In any event, the claim that the PAEA’s exigency clause only applies in the
narrowest of circumstances and only to unexpected events is wrong, and based on a misreading
of the statute’s text and legislative history. In the original Senate bill, introduced in March 2005,
the exigency exception would only have applied to “unexpected and extraordinary
circumstances.” S. 662, 109th Cong. §3622(d)(1)(D) (2005) (emphasis added). But the statute as
enacted in December 2006 lacks the requirement that the exigent circumstances be
“unexpected.” See 39 U.S.C. §3622(d)(1)(E). Congress not only dropped the unforeseeability
requirement, but also broadened the exigency clause by replacing the restrictive conjunctive
language, marked by the word “and,” with the disjunctive phrase “either … or.” Id. (PAEA
referring to “either extraordinary or exceptional circumstances”) (emphasis added).
3 In fact, recent revisions to Commerce Department data show that the recession, with a 4.1%
drop in GDP, was worse than originally thought. See “A Deeper Hole,” The Economist (Aug. 7,
2010), at 28 (confirming that recession was “the worst of the post-war years”).
The April 2005 congressional testimony quoted by Senator Collins that the
exigency clause establishes a “‘very high bar,’” Collins Comment at 2-3 (quoting testimony in
Attachment 5, at 2) is thus inapt, as it expressly refers to the Senate bill that never became law.
See Collins Comment, Attachment 5, at 2. The April 2004 testimony she quotes that exigent
circumstances must be “‘unexpected’” came even earlier in the legislative process and was thus
even further removed from the actual statutory language. See id. at 3 (quoting testimony in
Attachment 6, at 20).
The Commission itself has made clear that exigencies under the PAEA can be
either foreseen or unforeseen. In its original proposed rules on exigent rate cases, the
Commission would have required USPS, when filing for an exigent rate increase, to justify why
“the circumstance giving rise to the request was neither foreseeable nor avoidable by reasonable
prior action.” Order Proposing Regulations to Establish a System of Ratemaking, Docket No.
RM2007-1 (Aug. 15, 2007), at Proposed Rule 3100.61(a)(7) (emphasis added). But the
Commission changed this language after receiving comments that the assumption behind the
proposed rule — that exigent circumstances must be unforeseen — was inconsistent with the
statutory language. The rule as promulgated by the Commission now only requires USPS to
provide an “analysis of the circumstances giving rise to the request, which should, if applicable,
include a discussion of whether the circumstances were foreseeable or could have been avoided
by reasonable prior action.” Commission Rule 3010.61(a)(7) (emphasis added).
Finally, the AMA devotes much of its comment to arguing that current
circumstances cannot qualify as an exigency because, it claims, USPS’s private-sector
competitors weathered the economic storm while USPS, burdened by purportedly above-market
labor costs and other inefficiencies, has floundered.
This argument ignores the fact that, unlike USPS, its private-sector competitors have no
universal service obligation nor do they bear the unique burden of having to pre-fund retiree
health benefits.4 Moreover, AMA’s argument is based on highly contested assertions that raise
issues that are beyond the scope of the instant rate proceeding and unsupported by anything in
the evidentiary record in this case. For example, AMA’s assertion that USPS pays wages above
wages paid for comparable work in the private-sector, see AMA Comment at 30-31, raises
complex legal and economic issues regarding the meaning and application of the comparability
standard in the Postal Reorganization Act (“PRA”). See 39 U.S.C. §1003 (a) (providing for
postal compensation and benefits “on a standard of comparability to the compensation and
benefits paid for comparable levels of work in the private sector of the economy”). NALC and
its economic experts have argued elsewhere that proper application of the comparability standard
requires comparing letter carrier pay to the pay of employees in large, comparable firms such as
employees of other parcel delivery enterprises — not, as others have argued, to the pay of all
employees throughout the private-sector. In any event, the legislative history makes clear that
the comparability standard leaves ample room for differences over how it is to be interpreted and
applied and that such differences are to be worked out in collective bargaining between USPS
and the postal unions or, failing that, in interest arbitration.5 That comparability is beyond the
For a discussion regarding the impact on USPS of the obligation to pre-fund retiree health
benefits, see Frank Clemente and Tom Kiley, “Congressional Mandates Account For Most Of
Postal Service’s Recent Losses,” Economic Policy Institute, Briefing Paper #268 (June 2010).
5 See, e.g., Post Office Reorganization: Hearings on Various Proposals to Reform the Postal
Establishment Before the House Comm. On Post Office and Civil Service, 91st Cong., 1st Sess.
221 (Postmaster General testifying that “there is a wide variety of difference as to what
comparability might mean” and “that has to be bargained between the parties”); 39 U.S.C.
§1207(c) (providing for interest arbitration in the event that collective bargaining fails to produce
an agreement). Under the PRA, the compensation of bargaining unit postal employees is to be
determined through collective bargaining between USPS and the postal unions in accordance
with the applicable principles of the National Labor Relations Act.
NC Postmaster: USPS Must Re-Evaluate Its Management Culture to Face Challenges Ahead
The following are excerpts of comments by North Carolina Postmaster Mark Jamison submitted to the Postal Regulatory Commission regarding exigent rate case :
The truth is that until the PRC, the Board of Governors or Congress are willing to
truly look at how those measurements are constructed, reported and managed
they will never know the true state of the Postal Service. In the Five Day case
you were given customer survey data that reflected a certain resignation on the
part of the public to a set of equally poor choices. In that case some of the
surveys asked which, given a choice of rate increases or reduction in delivery or
perhaps closure of a local facility, a customer might find preferable. The results
that were publicized clearly showed a preference for reduction in delivery days.
But was that really the choice? You have before you this exigent rate case in
addition to the reduction case. The strategic plan currently publicized by
headquarters includes several parts that are portrayed as essential in total.
Those parts include reduction in delivery, rate increases and rationalization of the
network
In recent years the Voice of the Employee surveys have been used to portray the
mind and sentiment of the work force. Yet when those surveys are administered
managers are told to instruct employees to provide either positive or negative
responses and to avoid neutral responses. Survey behavior and administration is
a well studied field. Encouraging or discouraging particular choices by an
authority figure administering a survey has certainly been shown to influence and
perhaps limit the effectiveness of the results.
The EXFC measurement system is designed to measure the effectiveness of the
delivery network. All over the country postmasters, supervisors and management
personnel have been detailed to make second trips and extra trips to deliver
missent or misdirected mail. I have personally, at the direction of my manager,
driven less than a foot of mail to an office thirty miles away at a cost of over $100
to avoid the possibility of an EXFC failure. I have gone on missions of even
greater futility, once driving an empty mail tub on a ninety mile round trip in the
middle of the night to satisfy a nonsensical protocol. These are not isolated
experiences, they occur every day all over the country. Under these
circumstances EXFC may become less a measurement of network efficiency
than a demonstration that we can develop extraordinary and wasteful protocols in
search of satisfactory numbers.
What these examples show is that the old aphorism that one measures to
manage can easily become a culture of managing to the measure. I do not cite
these examples to claim corruption or even incompetence. I do think they
demonstrate a management culture that has become a prisoner of a deleterious
institutional groupthink.
If the Postal Service is to successfully face the challenges ahead then it must be
willing to re-evaluate its culture.
Even if the Postal Service is able to resolve the issues surrounding its payments
to Treasury, even if the Postal Service is able to repair and reinvigorate its
management culture and if even if the Postal Service is able to capitalize on
some of its more promising revenue opportunities like providing last mile delivery,
it will still be saddled with a business model that is essentially unsustainable.
Following the current direction will not solve the challenges that confront the
Postal Service. The current recipes for recovery or sustainability still rely on a
bad fit between the promise of the Universal Service Mandate and a business
model that relies on downsizing. It has been argued that perhaps the Postal
Service could enter into some other businesses, that it could find additional or
alternative revenue streams.
In today’s polarized political environment there is virtually no business solution
that will offer the Postal Service sufficient additional revenues to meet future
challenges. Some countries, like Japan, assign basic savings bank capabilities to
the post office. At one time we did too but that isn’t feasible today. Neither would
it be realistic to think we could offer the Postal Service some opportunity to
compete with the private sector in some areas. We already have a rate and
regulatory structure that is far too cumbersome. The reality is that the Postal
Service has done best when it complements rather than competes with the
private sector as the example of recent successes with providing last mile
delivery for UPS and Fed Ex.
It is unlikely that we can downsize the Postal Service and still meet our goals of
universal service without ultimately being placed in a situation of requiring
increasing subsidies or rates. Mail is still an important part of the American
economy, especially for those at the lower end of the economic spectrum and
those in rural areas. Mail will continue to be important but volumes both of first
class and advertising mail will continue to decrease. Bill presentment and
payment will increasingly move to electronic alternatives and direct mailers and
marketers are in the business of selling. Their loyalty is to what works at the
cheapest prices. As data mining allows them to be more selective and mail less
for better response and as electronic and alternate media forms develop, their
businesses strategies and models will shift – one should also not discount the
possibility of do not mail initiatives returning if advertising volumes actually did
increase substantially.
Mail will continue to be important for at least another generation or two but any
model based on volume is bound to fail and if we raise rates and cut service as is
proposed we may accelerate the decline of the Postal Service without providing
for those who will need its services for years to come.