Is Postal Service Headed For Biggest Overhaul Since 1970?

The Postal Service seems headed for its most significant overhaul since 1970.

The U.S. Postal Service seems headed for its biggest overhaul since 1970 if officials with USPS, the Department of Treasury, Office of Personnel Management, and Government Accountability Office have their way.

Each of those agencies reiterated their support for comprehensive reform of the Postal Service at a special hearing Thursday of the Senate Homeland Security and Governmental Affairs Committee, which examined the reforms necessary to ensure the postal service’s future viability. Senators Susan Collins (R-Maine) and Tom Carper (D-Del.) have introduced comprehensive postal reform legislation that represents the first major overhaul of the USPS since 1970. They contend their legislation will strengthen the USPS, which is the linchpin of a $900 billion mailing industry that employs more than 9 million people nationwide. Collins is the chairman and Carper is a member of the Senate Homeland Security and Governmental Affairs Committee, which has jurisdiction over the USPS.

“The health of the Postal Service is essential to the vitality of thousands of companies and the millions that they employ,” said Collins. “For example, the owner of a small Maine business that manufactures down comforters and pillows, called Cuddledown, told this Committee that the last rate increase in June 2002, which raised Standard Mail an average of eight percent, meant an increase of $240,000 in the company’s postage bill – the equivalent of the salaries for eight jobs. Excessive and unpredictable rate increases clearly are a recipe for business failure and job loss. High rates also further reduce mail volume, aggravate the threat to universal service, and lead to even more rate increases. The only way to avoid what the GAO refers to as a ‘death spiral’ is through the comprehensive reform we propose.”

“We have a once-in-a-generation opportunity this year to pass meaningful, comprehensive postal reform legislation,” Carper said. “The Postal Service, under the leadership of Postmaster General Potter, has done an excellent job in recent years in cutting costs and making themselves more efficient. This will only take them so far, however. In the coming years, Americans will continue to turn to faxes, e-mail and electronic bill pay to communicate with friends and family and conduct business. We need to make fundamental changes in the way the Postal Service operates in order to make them as successful in the 21st century as they have been for more than 30 years. We also need to take swift action to shore up the Postal Service’s finances and prevent potentially crippling rate increases. Our bill does both of these things. Just as postal workers don’t let anything stand in their way of delivering the mail every day, Congress shouldn’t adjourn this year without doing our jobs and sending this vital piece of legislation to the President’s desk.”

The Collins-Carper postal reform legislation grants the Postal Service Board of Governors the authority to set rates for competitive products like Express Mail and Parcel Post, as long as these prices do not result in cross subsidy from market-dominant products. It replaces the current lengthy and litigious rate-setting process with a rate cap-based structure for market-dominant products such as First-Class Mail, periodicals, and library mail. The bill also introduces new safeguards against unfair competition by the Postal Service in competitive markets. The legislation transforms the existing Postal Rate Commission into the Postal Regulatory Commission with greatly enhanced authority to ensure that the Postal Service management has greater latitude and stronger oversight. The Commission is charged with reviewing proposed rate changes before they can be enacted.

The legislation repeals a provision of Public Law 108-18 which requires that money owed to the Postal Service due to an overpayment into the Civil Service Retirement System Fund be held in an escrow account, which would essentially “free up” $78 billion over 60 years. These savings would be used to not only pay off debt to the U.S. Treasury and to fund health care liabilities, but also to mitigate rate increases. It also returns to the Department of Treasury the responsibility for funding CSRS pension benefits relating to the military service of postal retirees.

The bill also includes provisions that:

– reaffirms USPS employees’ right to collectively bargain, replacing the rarely used fact-finding process with mediation, and shortens statutory deadlines for certain phases of the bargaining process;

– converts workers’ compensation benefits for total or partial disability to a retirement annuity when the affected employee reaches 65 years of age;

– puts into place a three-day waiting period before an employee is eligible to receive 45 days of continuation of pay;

– supports the principle that workshare discounts should generally not exceed the costs that the Postal Service avoids as a result of the worksharing activity while spelling out certain circumstances under which workshare discounts in excess of avoided costs are warranted.

The legislation has been endorsed by the National Association of Postmasters of the United States, National Rural Letter Carriers’ Association, National Association of Postal Supervisors, Financial Services Roundtable, and the Coalition for a 21st Century Postal Service, which represents thousands of the major mailers, employee groups, small businesses, and other users of the mail.

The Senate Committee on Homeland Security and Governmental Affairs last year held a series of eight hearings, including a joint hearing with the House, during which it reviewed the recommendations of the President’s Commission on the United States Postal Service.

About the Author

Ralph Smith has several decades of experience working with federal human resources issues. He has written extensively on a full range of human resources topics in books and newsletters and is a co-founder of two companies and several newsletters on federal human resources. Follow Ralph on Twitter: @RalphSmith47