[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]
ISSUES FACING THE POSTAL SERVICE
______
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
today.
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
bills.
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
Office.''
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
consider:
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
customers?
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.
____________________