Affordable Mail Alliance Calls on PRC to Dismiss Postal Service Rate Hike Request
Filed under: postal, postal news, press releases, rate increase, usps
Press Release
Wrong on the Law, Wrong on Policy, Wrong on the Economy, and Wrong on Jobs:
Washington, DC – The Affordable Mail Alliance (AMA) today called on the Postal Regulatory Commission to dismiss the Postal Service’s rate hike proposal filed on July 6, 2010. AMA’s motion argues that the rate hike violates the cost controls Congress put in law to protect consumers and that the Postal Service needs to cut costs and modernize rather than raise rates an average of ten times the rate of inflation.
“Allowing the Postal Service to raise prices above the Consumer Price Index in this case would nullify the single most important safeguard for mailers and the public in the Postal Accountability and Enhancement Act of 2006 (“PAEA”),” AMA argues in its motion. Senator Susan Collins (R‐ME), an author of the 2006 law, has already said the proposed increases do not qualify for an exception under the standards established by Congress.
The Affordable Mail Alliance (AMA) is a coalition of over 700 large and small businesses, nonprofit organizations, and associations of mailers that together account for a majority of the mail sent in the United States. Its members employ over 7.5 million workers and contribute nearly one trillion dollars to the economy each year.
The PAEA limits the average postal rate hike to inflation as measured by the Consumer Price Index (CPI).There is an exception to the CPI cap only for “exigent circumstances” when the Postal Service could not continue operating without overall price increases above the CPI. But this exception is intended only for “extraordinary or exceptional circumstances” that would leave the Postal Service short of funds to provide necessary services despite “the best practices of honest, efficient and economical management.” The AMA argues that the Postal Service has not met that test, pointing out:
• Economic downturns are a part of life. The ups and downs of economic cycles, like changes in the weather, are not “extraordinary” or “exceptional” circumstances.
• The trend toward internet communications away from mail has been taking place over the past fifteen years, giving the USPS years to prepare for the decline in volume. It hasn’t.
• While the recession, which began in December 2007, caused sharp declines in volume and revenue, competitors of USPS, such as FedEx and UPS, had comparable or even greater declines.
Those and other well‐run firms, made the necessary and painful cuts in operating costs and capacity to increase productivity. The USPS did not and its productivity has fallen.
“The result has been devastating,” the motion argues. “In Fiscal Year 2009, when prices in the overall economy actually declined, the Postal Service costs per unit of output increased by more than six percent. Had the Postal Service merely held its costs to the level of inflation in the general economy, the Postal Service would have made a profit in 2009.”
The AMA noted that businesses large and small and individuals across America have tightened their belts, cut their spending, and made painful choices due to accommodate challenging times.
“Now the Postal Service expects customers to pay the price for its refusing to do what its customers had to,” the AMA said. “For our organizations, the Postal Service’s unwillingness to do its part will mean the loss of thousands of additional jobs, further cuts to pay and benefits. This is an issue about investing for possible future growth or paying higher taxes in the form of higher postal rates. At this time of a shaky economic recovery, this is the functional equivalent of a tax increase on every American postal customer, whether individual or business. If this takes effect January 2, 2011, and American businesses and consumers will be spending more on postal services, there will be less money for investment, payrolls, and business growth.
“Punishing customers with higher prices is not the way to make the Postal Service solvent. In fact, without effective cost control, trying to make the Postal Service solvent through financial infusions will be like trying to fill a bucket with a hole in its bottom. The Postal Service will lurch from one financial crisis to the next. The American people will sooner or later have to pay, through higher taxes or higher prices.”
For further information, please visit www.affordablemailalliance.org
Click here for a copy of the Motion to Dismiss
Major Mailers Go Ballistic Over Rate Increase
Attempt to Shift the Burden to Postal Employees
Burrus Update
The Postal Service has filed a request to increase postage rates effective Jan. 2, 2011, and is proposing to raise the price of first-class, single-piece letters from 44 cents to 46 cents. Increases for other mail classes would range from 5.4 to 8 percent.
As anticipated, large mailers have gone ballistic. They have formed a new organization, the Affordable Mail Alliance, dedicated to stopping the rate hike.
The mailers comprising the Affordable Mail Alliance want mail service, but they do not want to pay the actual cost of those services. Instead, they are seeking to shift attention to the employees. They are suggesting a renewed focus on closing stations and branches, consolidating mail processing facilities, and demanding concessions from workers.
The next step is a review by the Postal Regulatory Commission, which may accept, reject, or modify the proposed rates. This is the first rate request submitted under the “exigency provision” of the 2006 Postal Accountability and Enhancement Act (PAEA), and it faces stiff opposition because it would increase postage rates above the rate of inflation. The exigency provision allows the USPS to do so.
The APWU will intervene in the PRC proceedings to contest the absolute refusal by postal officials to comply with another provision of the law, which stipulates that postage discounts may be no greater than “postal costs avoided.”
Despite the Postal Service’s admission in previous rate requests that discounts exceed the costs avoided, this request would reduce the discount on five-digit pre-sorted mail by just 1/10 of 1 cent. This is preposterous!
Mailers Try to Make Employees Pay
Early indications are that the Affordable Mail Alliance will attempt to make employees the scapegoat, by claiming that postal workers — who have the benefit of collective bargaining — are paid substantially more than employees in comparable private-sector jobs.
They hope to make postal employees pay for the legislation that requires the USPS to pre-fund $56 billion in future retiree healthcare obligations over a 10-year period.
The 2010 exigency rate request is a direct response to the requirement that the Postal Service assume this cost in 10 successive annual payments ranging from $5.4 to $5.8 billion. Absent this payment, a rate increase in 2010 would have been unnecessary.
Can you guess who the principal supporters of the legislation that requires the onerous payments were? Yes, the large mailers. Now the same mailers who supported the requirement cry that the payments should be made from the wages and benefits of postal employees.
When postal employees retire, they assume responsibility for approximately 30 percent of health insurance premiums, which is a significant increase from what they paid when they were active employees covered by the Collective Bargaining Agreement. For example, an employee who is enrolled in the Blue Cross Standard Family Option pays $132.83 biweekly or $287.80 monthly during active employment; upon retirement, this payment escalates to $400.97 monthly. The balance of the premium is paid by the government, which is reimbursed by the USPS.
The PAEA requires the Postal Service to pre-fund the USPS share of this future payment, and now the mailers want to force postal employees to pay the USPS share through wage-and-benefit reductions equal to the PAEA-required payments. This would result in postal retirees paying 100 percent of their retirement healthcare premiums — by shifting the pre-funding requirement to employees through cuts in their pay and benefits.
Exigency Case Was Inevitable
The simple truth is that the exigency rate case was inevitable. The 17 percent decline in mail volume, coupled with the pre-funding requirement, has left the USPS on the brink of insolvency.
Because the Postal Service does not earn or set aside profits, any USPS deficit bears a direct relationship to the cost of postal operations – including mail collection, processing, transportation, delivery, retail services, and support. By law, the postage that funds these operations must equal the costs.
The mailers comprising the Affordable Mail Alliance want mail service, but they do not want to pay the actual cost of those services. Instead, they are seeking to shift attention to the employees. They are suggesting a renewed focus on closing stations and branches, consolidating mail processing facilities, and demanding concessions from workers.
The 2010 rate adjustments proposed by the Postal Service are not a response to declining mail volume caused by the recession, or the diversion of hard-copy mail to electronic forms. This adjustment is to pay the future healthcare bill, aggressively lobbied for by the mailers who now cry foul when payment is due.
I feel compelled to tell them: “You wanted the PAEA and its payment schedule, but now you want to avoid paying for it through higher postage rates.”
William Burrus
President
Affordable Mail Alliance Forms to Fight Major Postal Service Rate Hikes Announced Today
Filed under: postage rates, postal, press releases, rate increase, usps
New coalition of mail customers call on Postal Regulatory Commission to reject rate increases
Washington, DC – The Affordable Mail Alliance, an unprecedented coalition of Postal customers, is today calling on the Postal Regulatory Commission to reject the United States Postal Service’s new proposal to increase postal rates by ten times the rate permissible by law. The new coalition includes charities, large and small businesses, American household names and the customers who use the Post Office every day – customers that will suffer if USPS successfully raises rates again.
“This proposed rate increase amounts to another tax imposed on Americans at a time when the economy can least afford it,” said Tony Conway, Executive Director of the Alliance of Nonprofit Mailers and Spokesperson for the Affordable Mail Alliance. “Consumers everywhere will pay more for the letters and packages they need to send; struggling businesses – large and small – will suffer and even more jobs will be lost.”
The Postal Service claims that a rate increase is essential to maintaining its solvency. However, USPS has done little to improve its business model. For example, the average USPS employee is paid substantially more than comparable private sector jobs. In 2009, USPS volume went down 13%, but labor costs only went down 1%. Because of work force issues, many USPS employees are under-used or sit idly, forcing consumers to subsidize them.
This rate increase will decrease mail volume, making the USPS’ economic situation even worse through declining number of customers. And that, in turn, will be multiplied into job losses to publishers, printers, paper manufacturers, marketers – jobs that can hardly afford to be lost in this economy.
While the USPS retained consulting companies to create a plan to tackle the crisis, little has been done to implement the cost saving recommendations. For example, facility consolidation is moving at a glacial pace.
“The first rule of business is if you’re in the hole, stop digging,” said Conway. “Increasing rates won’t put the Postal Service back on track – it will just drive more customers away, making their situation even worse. USPS needs to stop avoiding the difficult decisions and stop taking out their problems on the customers they desperately need.”
“Rather than gouging its customers with ten times the rate permissible by law, USPS should be eliminating its costs; inflation in postal costs was over 6% in 2009,” said Jerry Cerasale, Senior Vice President, Government Affairs and Spokesperson for the Affordable Mail Alliance. “They should be making the hard business decisions and not raising rates.”
The Postal Service is asking the five-person Postal Regulatory Commission to waive a rule requiring that postal rate increases stay in line with inflation – a law designed to protect Americans from just this kind of rate hike. The Affordable Mail Alliance is calling on Postal Regulatory Commissioners not to exploit a legal loophole to let the USPS make egregious rate hikes.
For more information on the Affordable Mail Alliance, contact Jessica McCreight (202) 464-6959; jmccreight@skdknick.com