August 14, 2003 -- It has been 35 years since the last Presidential Commission on the Postal Service made recommendations creating the United States Postal Service as we know it today — a quasi-governmental agency that evolved from the old Post Office Department of the federal government. Much has changed in that time. With the exception of the last two years, mail volumes have increased steadily and are now topping 200 billion pieces annually. Technology has changed not only the way mail is created and the information that it contains, but also the way it is processed. The future of paper mail remains in question.
Consequently, the most recent Commission’s report — issued to President Bush on July 31 — and the changes it recommends are long overdue.
Without signification modernization, the Commission says that the U.S. Postal Service will have three choices: dramatically roll back service, seek a rate increase of unprecedented scale or fall further into debt (the Postal Service currently has $92 billion in debt and other unfunded liabilities), potentially requiring a taxpayer bailout. None of these options are acceptable to the business community or to the American public.
As a result, the Commission proposed a number of recommendations, including making it easier for the Postal Service to close unnecessary offices, simplifying the ratemaking process and automating processes to cut labor costs. The following is a summary of some of the key issues and the Commission’s findings:
Privatization — Despite many calls for privatization, the Commission believes the Postal Service should remain a public entity. It should be noted that the Postal Service, in its Transformation Plan, came to the same conclusion, and the majority of the mailing community is also in agreement.
Universal Service — The cornerstone of the U.S. Postal Service is universal delivery: processing and delivering mail to every American household six days a week. The Commission believes the Postal Service should stick to that focus while maintaining affordable rates and providing convenient community access to retail postal services. Besides, the Postal Service has a poor track record when venturing into other business activities that are not closely related to these core values.
Board of Governors — The Commission recognizes a need to restructure and change the scope of the Board of Governors. Today, the Board of Governors is made up of political appointees, most of who know little about the Postal Service or the operation of a major business. That has to change. The board needs to be structured like all other major corporations in America. (If the USPS were a private company, it would rank 11th on The Fortune 500 list based on revenues.) In addition to changing the structure, the board also must take a more active approach in making management accountable for performance and cost control.
Labor — Eighty percent of all postal costs are related to labor. Currently, of the $92 billion of debt and unfunded liabilities, $48 billion are attributable to retiree health care costs and hundreds of thousands of grievances have been filed and are awaiting due process. Meanwhile, 47 percent of the agency’s current career employees will be eligible for retirement by 2010. Changes need to be made in a number of areas related to labor. Management and labor must work together to improve their strained relationship and come to terms with these issues in a way that is amenable to all parties. They need to bring the negotiation of benefits into the collective bargaining process, and they need to develop an incentive-based culture that encourages excellence and rewards employees for contributing to the success of the Postal Service.
While the mailing industry is pleased with the recommendations, the labor unions are already lobbying Congress to block any future legislation that contains language dealing with the labor recommendations of the Commission. The Postal Service, which has expressed gratitude to the Commission, is relatively pleased with the recommendations, but has not shown its hand yet. And Congress is Congress. Election years are not good times to pressure Congress on issues related to labor, especially the closing of post offices in small communities where there are eligible voters.
The Commission has done its work. Now it’s up to Congress, the Postal Service, the labor unions and the mailing community to make it happen. What will get done? What will be dead in the water? How long will it take to accomplish? The answers to those questions will become more apparent over the next few months.
Director of Postal Affairs