Whether the U.S. Postal Service has lived up to its mandate depends on whether you are talking about the mandate recommended by the Kappel Commission in 1968 or the mandate imposed upon the USPS by Congress.
There are important differences. The commission operated on several powerful principles. One, the USPS should be as insulated from politics as is realistically possible. Second, patronage should be abolished. Third, postal managers should be given the tools and flexibility with which to manage. Fourth, it should be self-supporting.
Some of this has been realized. Patronage has been abolished. I honestly think that the postal service runs on the basis of merit. Until 1971, 30,000 postmasters and about the same number of rural carriers had been appointed essentially by members of Congress in whose districts the post office was located. The majority party, Democrats or Republicans, had the patronage.
Also, lobbyists played a heavy role in Congress to influence rates and wages. Congress set both. The lobbying went on – unions to Congress, mailers to Congress, postmasters to Congress, nonprofits to Congress.
Flexibility
The Kappel Commission’s view that postal managers should have sufficient flexibility and authority to manage has been only partially realized. The law permits an arbitrator, not the postal service, to set wages. Every time the USPS and the unions go into bargaining, they know that if they cannot agree, the matter will be referred to an arbitrator who has no responsibility for management or cost control.
Labor costs are 75 percent to 80 percent of total costs at the USPS. Since postal management lacks a substantial voice in controlling more than three-fourths of the costs, it is a formidable handicap to efficiency.
Another congressional action that was appalling to the Kappel Commission involves its recommendation for a bipartisan board of directors (that later morphed into a board of governors; the name change means nothing). The president appoints the nine governors and they appoint the postmaster general.
Previously, the postmaster general was a political appointee, a member of the Cabinet who did the president’s bidding, just as the postmaster in a small town was likely to do his congressman’s bidding. If you are accountable to the wrong individual, you are not focusing on good management.
But Congress established, on top of the board of governors, the anomalous entity called the Postal Rate Commission. There is no parallel or precedent for this arrangement in U.S. government. If you can’t trust nine presidentially appointed governors, will five presidentially appointed regulators be more honest or effective? That set up a system in which the USPS basically has little control over its prices.
Merely Recommendations
Technically, PRC decisions are merely recommendations to the governors. They may reverse the PRC or send the recommendations back on remand. There are other things they can do. But the board cannot set prices unless it acts unanimously, which has happened only two or three times in the 33 years since postal reform. And it has to make the case that the PRC’s recommended prices will not produce sufficient revenue to run the postal service. For all practical purposes, the PRC’s “recommended” decisions become final decisions.
Postal management has done a good job since the 1970s, considering the constraints under which it works. Costs have been cut severely, and service is at an all-time high. But it never can become truly efficient without substantial control over wages, prices and facilities. Legislation currently being proposed does not alter binding arbitration and it would result in even less management flexibility.
