[Congressional Record Volume 142, Number 82 (Thursday, June 6, 1996)]
[Extensions of Remarks]
[Pages E1023-E1024]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]



                          HON. JOHN M. McHUGH

                              of new york

                    in the house of representatives

                         Thursday, June 6, 1996

  Mr. McHUGH. Mr. Speaker, on Monday, May 20, 1996, a column in the 
Washington Post discussed many of the issues facing the Postal Service 
  This guest column was written by David Ginsburg, a member of the 
former Kappel Commission on postal organization; Murray Comarow, its 
executive director and later the senior assistant postmaster general; 
Robert L. Hardesty, a former chairman of the Postal Service Board of 
Governors; and David F. Harris, former secretary of the Postal Service 
Board of Governors as well as the Postal Rate Commission.
  While, as Chairman of the Subcommittee on the Postal Service, I do 
not embrace their conclusions that yet another commission is the 
appropriate vehicle at this time to address postal reform, I believe 
their column is an excellent summary of the issues surrounding the need 
for postal reform today. It will be helpful for anyone wishing to 
educate themselves on the challenges facing the Postal Service.

[[Page E1024]]

                    Delivery for the Postal Service

       The U.S. Postal Service is in deep trouble. It is losing 
     market share to competitors in five out of its six product 
     lines: packages, international mail, correspondence/
     transactions, expedited mail and publications. The only 
     market share growth has been in advertising mail. By the end 
     of this century, the Postal Service estimates that a third of 
     its customers will have stopped using the mail to pay their 
       And the intensity of the technological assault increases 
     daily. Faxes, e-mail and expanding use of 800 numbers are 
     cutting into postal markets at a rising rate. Already, more 
     Americans order merchandise through 800 numbers than through 
     the Postal Service.
       In 1994 electronic messages grew 122 percent. Add to that 
     the growth of alternative delivery networks and the loss of 
     catalogue business to competitors such as UPS and FedEx. 
     These challenges will not go away; they will increase.
       To make matters worse, the money the Postal Service has 
     invested in modernization has had little impact on 
     productivity. Twenty-eight years ago, 83 percent of the 
     Postal Service's total budget went to wages and benefits. 
     Today, after the expenditure of billions of dollars for 
     automation, there has been a substantial increase in the 
     number of employees. Labor costs are still 82 percent of the 
     budget. It costs more to process a piece of mail today than 
     in 1991.
       To stay alive the Postal Service may have no choice but to 
     cut back on service and close thousands of facilities. This 
     in turn could lead to further losses, as dissatisfaction 
     mounts. The American people may well be left with a postal 
     service that has nearly a million employees and yet whose 
     only significant function is to deliver advertising mail and 
     greeting cars.
       What's to be done?
       Bear in mind that the U.S. Postal Service is an arm of the 
     government. It has been called ``quasi-government'' and 
     sometimes ``quasi-private,'' but it is not ``quasi'' 
     anything. It is a 100 percent federal government entity to 
     which Congress has granted limited independence and certain 
     powers, such as collective bargaining and the right to use 
     the money it collects. And even while Congress gave the 
     Postal Service its `'independence'' a quarter of a century 
     ago and transformed it into a ``businesslike,'' self-
     sustaining government corporation, it interposed a number of 
     obstacles that would make it impossible even for a team of 
     the best business executives in the country to run the Postal 
     Service efficiently. Among these constraints:

                    the postal rate commission (prc)

       Headed by five commissioners appointed by the president, it 
     is the only government agency whose primary job it is to set 
     rates on prices for another government entity. Thus pricing 
     authority is divorced from management responsibility and 
     also, substantially, from market considerations. Not only is 
     the Postal Service not free to set prices for its services--
     without PRC approval it cannot even determine what services 
     it will offer.
       When a business determines that it needs to raise its 
     prices, it is free to do so immediately--before it starts 
     losing money. With the Postal Service, it takes about five to 
     six months to prepare its rate case; the PRC then has 10 
     months in which to issue a recommended decision.

                binding arbitration and labor relations

       The U.S. General Accounting Office (GAO) calculates that 
     the Postal Service has 860,625 employees. Of these, the 
     Postal Service bargains over the wages and benefits of 
     760,899, represented by four unions. If there's an impasse, 
     the law mandates binding arbitration. The consequence? Of the 
     32 cents you pay for a first-class stamp, 26 cents is paid to 
     postal employees. The rest goes for post offices, vehicles, 
     automated equipment, etc.
       In arbitration, one person with no responsibility for the 
     consequences decides how much should be paid to clerks, 
     carriers and others, as well as their health benefits and 
     their grievance rights. In effect, the arbitrator determines 
     how much you pay for stamps.
       Another labor issue turns on that phrase in the statute 
     that speaks of compensation for postal employees ``comparable 
     to . . . compensation paid in the private sector.'' This was 
     clearly intended to refer to compensation for similar work. 
     Yet the postmaster general in 1971, pressed by mailers who 
     feared an unlawful strike, agreed to interpret the phrase to 
     mean comparable to wages in other highly unionized industries 
     unrelated to the sorting and delivery of mail. That 
     interpretation, plus concessions on COLAs, layoffs and part-
     timers, laid a foundation for subsequent arbitrators' awards 
     resulting in today's average pay for clerks and carriers of 
     more than $45,000 a year including fringe benefits. Most 
     private-sector employees doing similar work make far less.
       Grievance procedures are further barriers to efficiency. 
     Any union employee dissatisfied with his wages, hours or 
     other aspects of his job, may initiate a complex 14-step 
     procedure. The GAO reported that in 1993, 51,827 such 
     grievances were appealed beyond local management-union 
     levels. By 1995 that number was up to 73,300.

                          legislative controls

       The law requires a complex and lengthy procedure before the 
     Postal Service can close a small, inefficient post office. 
     William J. Henderson, the Postal Service's chief operating 
     officer, estimates that 26,000 small post offices cost more 
     than $4 for every dollar they take in, and asserts that other 
     ways are available to provide better service. We certainly do 
     not suggest that all these 26,000 post offices should be 
     closed, but in clear cases, postal managers should be able to 
     move decisively.
       There is also congressional resistance when postal 
     management undertakes moneymaking activities. This is 
     especially true with respect to competitive activities and 
     experimental rates. Postal Rate Commission approval, even for 
     experimental rates, can take months. Most business mailers 
     support the concept of a postal service with more freedom to 
     set rates and introduce new products and services. Some 
     believe it should be allowed to make a profit, to negotiate 
     prices, to innovate and to reward customers who prepare the 
     mail efficiently.
       Congress has also disregarded its own mandate for an 
     efficient, self-supporting postal service by using it as a 
     ``cash cow,'' milking it over the years for $8.3 billion for 
     deficit reduction a disguised tax on postal customers.
       Why can't these obstacles be removed by legislative action? 
     Some could if there were a consensus among the mailers' 
     groups and labor--and in Congress. But experience has shown, 
     as Sen. Ted Stevens, chairman of the Postal Affairs Committee 
     acknowledged, that these groups are too diverse to develop 
     such a consensus.
       And even if a partial legislative solution were possible, 
     it would be only patchwork. It wouldn't speak to the future 
     of the Postal Service and its ability to master change. Only 
     a nonpartisan, blue-ribbon commission, free of administrative 
     and other constraints, is capable of doing all that now needs 
     to be done.
       There is precedent for just such a commission. In 1967, in 
     the wake of a massive mail stoppage in Chicago, President 
     Lyndon B. Johnson appointed a Commission on Postal 
     Organization (headed by Frederick R. Kappel, then board 
     chairman of AT&T) to look at the post office. In June of 
     1968, the commission announced its finding that ``the 
     procedures for administering the ordinary executive 
     departments of Government are inappropriate for the Post 
       The Kappel Commission recommended that the Postal Service 
     be turned into a self-supporting government corporation; that 
     patronage control of all top jobs, all postmaster 
     appointments and thousands of other positions, be eliminated; 
     that postal rates be set independently of Congress; and that 
     the postmaster general be named by a presidentially appointed 
     board of governors, which would also become the Postal 
     Service's policy-making arm.
       The commission's proposal formed the basis of the Postal 
     Reorganization Act of 1970. Despite flaws, that act saved the 
     Postal Service from disaster--at least for a while.
       Now the time has come for another commission. To be 
     credible, it should be made up primarily of leaders of 
     business, finance and labor with no special connection to 
     postal matters. Among the basic questions it needs to 
       Should universal service, whether or not at uniform prices, 
     be required by law?
       Should any part or all of the Postal Service be spun off to 
     the private sector?
       Should the postal monopoly on letters (and some advertising 
     mail) be rescinded or modified?
       What is to be done about binding arbitration, postal 
     unions' right to strike, the comparable pay provision, work 
     rules and grievance procedures?
       How do we speed up and simplify the rate-making process?
       Should private deliverers have access to residential 
     mailboxes? (At present they do not.)
       Should nonprofit organizations, ranging from local 
     charities to the AARP, continue to pay less than other postal 
       Should the Postal Service be permitted to bid against 
     private companies for major contracts? (It was precluded from 
     bidding for the governmentwide contract for expedited 
     delivery that was awarded to FedEx.)
       Is a part-time board of governors still an appropriate body 
     to direct the Postal Service?
       These and other matters the commission will deal with are 
     controversial and do not lend themselves to quick legislative 
     solutions or patchwork solutions. The sooner a first-rate 
     nonpartisan commission gets to work on them the better. Time 
     is running out on the U.S. Postal Service.