What Is the Postal Panel Finding Out?

The President’s Commission on the U.S. Postal Service received more than 100 responses to its request for public comments. As you would expect, almost every trade association, company, union, postmaster group, supervisory association or individual with postal interests responded. Quite a few current and former postal employees submitted testimony as well.

Comments focused on problems of the U.S. Postal Service, its presumably broken business model and suggested solutions. That is, except for the American Postal Workers Union, which represents 300,000 current and retired postal workers.

APWU in its testimony said that the business model “is not broken” and that as long as mail volume grows faster than delivery points the postal service will be OK. Further, “neither new technologies nor electronic diversion will destroy mail volume.”

Based on most of the testimony submitted, the APWU seems alone in its view. Conventional wisdom believes that mail volume is in decline and will be hurt by new technologies, and thus there is a need to change the business model.

Several issues are key to a new model:

· Universal delivery service.

· The postal monopoly over the mailbox and the private express statutes.

· The labor contract negotiation process.

· Executive compensation.

First, let’s look at some positions regarding universal service. Note, since all these positions have some validity, I’ve chosen to provide them without attribution, though in many cases it can be guessed:

· Six-day-a-week delivery is important.

· Routine six-day-a-week delivery is unnecessary.

· Can the USPS afford six-day-a-week delivery to every address and to the front door to most?

· Meet the changing needs of customers.

· Universal service is not “all or nothing.”

It’s hard to conceive of an issue more important to any company than the level of service it should provide to customers. However, here the question is, should that level of service be carved into legislation? Or should it be left to management to determine based on economic conditions or customer requirements? I’m for leaving it for management to decide, subject perhaps to guidelines.

The second critical issue deals with the postal monopoly over the mailbox and the private express statutes. As is generally known, the USPS has control over who carries “mail,” who has access to the mailbox and what goes in it. Typical comments on these issues were:

· There must be sanctity of the mailboxes.

· The monopoly protects mainly the one class of mail most likely to decline in volume going forward.

· Retain the letter mail monopoly and the mailbox monopoly.

· Repeal the private express statutes.

· USPS control over the mailbox should not be absolute.

· USPS should maintain control over the mailbox but conduct limited experimentation with licensing access.

The mailbox-access issue is probably the toughest call of all. But I was struck by two comments: “competition should not be feared,” and “forces of competition should be harnessed to the maximum extent possible.”

I recall a comment made to me some years ago by Australia’s postmaster general. He said one of his best decisions was to open the mailbox to competition. The result was relatively modest competition, but a significant improvement in attitude, productivity and the relationship between management and labor. I’m for learning more about the Australian experience, then proceeding with limited testing. “Competition should not be feared.”

One of the most contentious issues deals with changing the labor/management contract negotiation process. As you might expect, comments fell into two general categories:

· Eliminate binding arbitration.

· Keep the current collective bargaining process.

Given the very strong position taken by the unions not to change the process, I’d suggest that the commission acknowledge the problem, perhaps recommend an independent study, but generally leave it alone. Discretion is sometimes the better part of valor.

With minor exceptions, there was agreement that more flexibility is needed for management compensation, including removal of the cap on salaries that limits the postmaster general to the cabinet-officer level of about $160,000. All other salaries are scaled down from that level.

This results in minimal compensation differentiation at the senior management level, minimal opportunity for bonuses based on results and minimal opportunity to draw senior managers from outside the USPS ranks.

The postal commission needs to suggest adequate controls to ensure, as much as possible, that compensation rewards are based on results.

Lastly, an issue lurks in the reeds that, as best I can determine, was raised by only one participant. It involves nonprofit postage rates. The testimony asked: “Should business mailers continue to subsidize nonprofit mailers?”

To date, regular-rate and nonprofit-rate mailers have an uneasy alliance. But in testimony submitted, one participant stated that “nonprofit mail was almost 12 percent of mail volume in 2002.” By my calculation, nonprofit mail volume wasn’t that high. What is clear, however, is that nonprofit volume is growing rapidly.

Whether the commission chooses to address this obviously sensitive issue, it is an issue that, if trends continue, will be hard to ignore.

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