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Hypocrisy Has No Bounds
Burrus Update #4-2005, March 15, 2005
I am often amazed at the hypocrisy found in political debate when large sums of money are at stake. And in the debate over postal “reform” legislation, some major mailers have taken hypocrisy to new heights.
These corporate and advertising mailers seem willing to go to any length to protect the excessive postage discounts they have come to enjoy. And while they vigorously defend the postage discounts they receive for “worksharing” – even when the discounts exceed the costs the Postal Service avoids – they decry postal wages, claiming that postal workers are overpaid.
Some History
As a part of a 1976 postage rate case, the Postal Rate Commission approved “worksharing” postage discounts, which the commission asserted would facilitate the Postal Service’s transition from manual and mechanized sorting to automation. The justification for the reduced postage was that the mailers would perform functions – such as affixing bar codes to their mail – that would otherwise require labor by postal employees. Under the plan approved by the Postal Rate Commission (PRC), the savings to the Postal Service that resulted when mailers performed these functions would reduce the postage rates for those who engaged in worksharing.
The American Postal Workers Union opposed the postage discounts from their inception. The discounts were arbitrary exceptions to the principle of uniform rates, a hallmark of the Postal Service, we pointed out. And they were a gift to mailers with influential lobbyists that would ultimately harm the Postal Service, we said.
Under the guise that these rate reductions would be phased out as USPS sorting was automated, discounts were approved as “transitional rates.” Yet now, after 29 years and more than $10 billion invested in postal automation, worksharing discounts continue unabated.
No Longer Justified
There is no longer justification for postage discounts based on barcoding by mailers. Bar codes are just one of the indicia that identify recipients – no different than the name, street address, and city.
In fact, during the 29-year period that postage discounts have been in effect, manufacturers in virtually every industry have added bar codes to their products – bar codes that are used by the retailer – with no cost reduction. Manufacturers who affix bar codes to cans of peas don’t get a discount because they make it easier for grocery stores to track purchases and conduct inventory, and publishers don’t get discounts because they add bar codes to the covers of the books they provide to bookstores. Computerization has transformed bar codes from an added identifier to a routine means of identification.
The postage discounts of 1976 simply can no longer be justified. The costs to the Postal Service for applying bar codes have declined dramatically in the intervening years, as automation has taken hold. But despite the erosion of the rationale for these excessive discounts, large mailers continue to offer illogical and contradictory arguments in an attempt to justify their continuation.
Even worse, the corporate and advertising mailers are currently engaged in an all-out effort to convince the Senate Committee on Homeland Security and Government Affairs, which is preparing postal reform legislation, that these excessive discounts should be codified into law.
Our Efforts
In 2003, in response to testimony by the American Postal Workers Union, the President’s Commission on the U.S. Postal Service recommended that “all new worksharing discounts be limited to the postal cost avoided.” [Emphasis added.] APWU believed this recommendation was insufficient, because it would have permitted excessive discounts that were already in existence to continue indefinitely.
The following year, after intense efforts by the APWU, language was added to a bill introduced in the House of Representatives that would limit worksharing discounts. The bill included several exceptions that were intended to protect the USPS revenue stream and minimize the disruption to large mailers and private mail-processing operations.
In a Senate bill, the language governing worksharing discounts granted additional exceptions that were so broad they would have rendered the provisions meaningless. Fortunately, through the efforts of Sen. Joe Lieberman (D-CT) and Sen. Arlen Specter (R-PA), an amendment was adopted that would have limited the exceptions to an appropriate standard – the costs avoided by the Postal Service.
The bills were not acted on during the 108 th Congress, but similar legislation is again under consideration. A bill pending in the House of Representatives (H.R. 22) includes the same language on worksharing discounts as last year’s bill, and legislation is expected to be introduced in the Senate soon.
Under Attack
But the limitations on excessive discounts are now under renewed attack, as the mailers’ lobbyists attempt to obscure the relationship between postage discounts and postal costs.
At stake is the amount to be paid in postage by the large mailers who account for more 90 percent of letter mail. Excessive discounts have a devastating effect on postal revenue and, as a result, on the funds available for service to small businesses and individual customers, as well as on postal wages.
The debate over postage discounts exposes the rank hypocrisy of the large mailers who complain that the wages of postal employees are too high, while they scramble to ensure that they continue to receive discounts that are larger than the postal labor cost.
I have previously challenged the large mailers to accept a cost-avoided standard and in several published papers they have responded to the challenge. These responses have been in editorials that differ dramatically from their posture on Capitol Hill.
When hundreds of millions of dollars are at stake in unjustified subsidies, truth is the first casualty and irrational logic becomes the norm.
William Burrus
President
