Tackling Postal Bloat

With a major Postal Service reform bill now having passed the House of Representatives, debate over the legislation among big business, big labor and bean counters from various branches of government is focused on Senate and White House approval.

Lost amid the political wrangling is the fact that the new law does little to fix the most fundamental problems that affect post office consumers: Exorbitant spending on labor, flat productivity, and murky accounting practices that make it impossible to tell whether the Post Office is unfairly hiking prices on Aunt Minnie to give discounts to big mailers.

The U.S. Postal Service has an oversized workforce of about 700,000 career employees who earn, on average, more than 25 percent more than their private-sector counterparts. That premium is one reason nearly 80 percent of USPS spending goes toward labor, which compares to about 50% at private delivery companies.

American consumers pay twice for this excess: Once as letter mailers, forbidden by the USPS monopoly from taking their business elsewhere, and again as taxpayers. In addition to being exempt from most taxes, the USPS has received $27 billion in federal appropriations since 1970.

The legislation offers no relief on labor issues. A serious reform plan would have strengthened USPS management’s power to negotiate with unions. Instead the bill explicitly states that no existing labor privileges, such as no-layoff rules, shall be affected.

The bill capitulates to unions even further by mandating that one slot on the USPS Board of Governors be filled by someone with unanimous backing from organized labor. How about a seat for someone representing the consumer?

Ken McEldowney, the executive director of Consumer Action, a San Francisco-based nonprofit that vigorously supports underprivileged consumers, would be a good choice. Testifying before a Presidential commission, he pointed out that the Postal Service’s forays into non-postal commercial ventures “involved large expenditures with near-zero revenues.” Those expenditures, he feared, were being shifted onto ratepayers in the form of stamp price hikes.

That’s the kind of voice consumers need on the Board of Governors – and the kind you might have expected from a bill that declares, “the Governors shall represent the public interest.”

In addition to failing on labor, Congressional lawmakers passed up an opportunity when they rejected a proposed amendment from Representative Jeff Flake(R-Mesa), who continues to build on his reputation as one of Congress’ free-market champions. It encouraged using pilot programs to test alternative methods of providing postal services, such as by allowing local postmasters to subcontract delivery routes to private companies.

It’s a shame that the new bill is so ineffective on these crucial matters, especially since it caps 25 years of Congressional efforts to repair the USPS.

The silver lining may be that many of the Postal Service’s bottom line problems can be fixed without legislation. Jim Miller, a veteran champion of free-market reforms, has been installed as the Service’s new Chairman of the Board. Independently of Congress, Postal Service managers already have some of the tools to make consumer-friendly improvements.

Miller and Postmaster General John Potter have a powerful opportunity of their own to make major strides to cut waste and prevent future stamp price increases. Of 35 specific reform recommendations made in the Report of the President’s Commission on the USPS, a full 17 could be implemented with no Congressional action whatsoever.

They include measures like “developing an appropriately-sized workforce” by encouraging retirement; improving procurement practices; and maximizing the use of outsourcing to the private sector.

Any one of these steps could have a serious cost-saving impact.

The Senate is not likely to vote on the postal bill until lawmakers return from the summer recess, and there’s no telling when, or if, the President will endorse it.

In the meantime, there’s no reason the USPS can’t move ahead with cost-saving reforms. With the legislation as weak as it is, passage is at any rate almost irrelevant in terms of actually improving the Postal Service. American consumers need USPS managers to move ahead on reform.

Don Soifer is Executive Director of the U.S. Consumer Postal Council, www.postalconsumers.org.