April 20, 2010 — National media report Saturday mail delivery may go the way of the milk wagon, and that a wide majority of Americans think that’s OK.
Congress must act first, and that is not likely to happen soon. Some Congressional leaders worry about trimming mail service, even if only 35 percent of people surveyed by Gallup last summer disapprove.
Poll results are guided by the way questions are asked. They don’t give a full picture. Knowing that, Congress is not yet ready to decide.
The poll questions ran like this: Would you rather give up Saturday mail, lose your local post office or lay off postal workers in the worst recession in 70 years?
Cast that way, Saturday mail loses every time. But that may not be the wisest choice.
USPS is in grave financial danger. It lost $3.8 billion last year and would have lost more than $7 billion if Congress had not delayed payments into a retiree healthcare fund.
USPS is under pressure from competitors. It expects far less mail, down from 213 billion pieces in 2006 to maybe 150 billion in 2020.
USPS needs to close some post offices and mail processing plants, regardless of what happens with Saturday mail. Approving five-day delivery will not spare these offices, unless Congress artificially props them up. But it must not. The system has to reshape itself.
USPS is also required to prepay its retiree health benefits, leading to annual payments of about $5.5 billion, along with $2 billion in current payments. These go into the federal treasury and make the deficit look lower.
Other federal agencies have far better payment terms. Some worry USPS may not be around to pay retirees in the long run. By requiring USPS funding so far up front, Congress may have created a self-fulfilling prophecy.
One worrisome issue is that USPS inherited a compensation system for its huge workforce from Congress in 1970, when post offices were governed by patronage. Since then, USPS worker organizations have successfully bargained for one of the richest benefits packages in the nation.
USPS contributes 100 percent of life insurance benefits and 85 to 88.75 percent of health insurance, compared to 33 percent of life insurance and 72 to 75 percent for most federal workers.
Labor contracts typically call for a cost-of-living increase and an increase in base pay each year. Last year the price of labor was up about 7 percent. Those decisions are often made not by postal management but by labor arbitrators. The result is a per-employee cost of about $81,000 yearly.
No fair blaming the workers. Part of collective bargaining is to get the best deal. In the golden age of letters, people and businesses buying postage were inured to regular rate increases to pay for raises and benefit increases.
But life has changed. USPS now has a price cap on postage to suppress rate increases. The bad news is that e-mail has sucked away personal and business letters.
The good news is that USPS is coming up with new products like the successful Priority Mail flat-rate box. In-county periodical mail is growing as some daily newspapers convert to mail. Many have Saturday editions, both daily and non-daily, and need Saturday delivery. That will require workers, and create jobs.
USPS labor is 80 percent of its total cost, about 30 percent higher than national competitors. Admittedly, it has to reach every household, which competitors may not. Even so, the next generation of contracts has to slice that percentage or the next generation of workers may have no jobs at all.
Much of the workforce will retire in the next five years. USPS can restructure its compensation system without pulling the rug out from under a loyal workforce. It needs to bring new-employee compensation into line not just with the rest of the government but also with the businesses that are the primary buyers of postage.
There are still nearly 309 million reasons to keep a viable mail service because every American needs the mail. We still need packages delivered. Most still get bills by mail. We need a fallback for the day — if and when it comes — when the Internet falls prey to evildoers. Also, you may have received this newspaper, a greeting card or a catalog you wanted by mail. We believe this service helps to create an informed public and we stand by the Postal Service’s mission to bring it to you.
Perhaps Saturday mail will vanish. But that should be the final step, not the first, in reinventing USPS, because cutting service never helps a business grow. It is a national treasure. We need to keep it viable.
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