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APWU Capitol Hill Testimony:
Postal Service’s Economic Crisis
Requires Swift Congressional Action

APWU Web News Article #031-09, March 25, 2009

“The most important thing Congress can do is to pass H.R. 22, which will provide [the Postal Service] temporary relief from the crippling obligation to pre-fund future retiree healthcare costs,” APWU President William Burrus told a congressional panel, March 25, 2009.

APWU President William Burrus told lawmakers March 25 that Congress must act swiftly to avert a collapse of the nation’s postal system.

“The most important thing Congress can do is to pass H.R. 22, which will provide temporary relief from the crippling obligation to pre-fund future retiree healthcare costs,” Burrus said in testimony [PDF] before the House Subcommittee on Federal Workforce, Post Office, and the District of Columbia.

Absent relief from the pre-funding requirement, it is unlikely that the Postal Service can survive in its present form, he said.

Like most institutions in our society, the Postal Service has been adversely affected by the nation’s economic downturn, the union president noted. “Mail volume has declined precipitously, leading to deficits that threaten the very foundation of the postal system.”

In addition, Burrus said, the USPS has been significantly hampered by a so-called “reform” measure, passed in December 2006, which included the pre-funding requirement that H.R. 22 would rectify.

Unprepared for the Challenges

In the debate that preceded passage of the legislation, advocates of the Postal Accountability and Enhancement Act (PAEA) focused on the impact of e-mail, the Internet, and the cost burden associated with serving an additional 1.8 million delivery addresses each year, Burrus testified.

Suggesting that these factors would spell the doom of the Postal Service unless reform legislation was adopted, he said, supporters of the PAEA overlooked the true driving force of hard-copy communication: the economy.

“The postal community identified the wrong threats and was totally unprepared for the challenges we now face.” In doing so, Burrus said, “They ignored the burden that pre-funding retiree healthcare liabilities would pose on a service that would soon suffer double-digit volume reductions as a result of the nation’s economic decline.”

Flawed Strategy

The USPS strategy to respond to the crisis is seriously flawed, Burrus asserted. “The numbers speak for themselves. Annual deficits are expected far into the future, yet the only solutions postal management has offered are reductions in work hours and the consolidation of facilities.”

APWU-represented postal workers, he testified, have already suffered significant reductions in jobs and work hours. “The APWU complement has declined at a much greater percentage than other postal employee groupings,” he said. “We would expect that reductions and other sacrifices will be shared equally among the entire postal community.”

“But no business can exist for long with a strategy based on cost reduction,” Burrus cautioned. “Eventually it will become impossible to maintain an acceptable level of service, and there will be nothing left to cut.”

A Different Approach

Instead, the APWU leader said, postal managers should adopt a different approach. “They could begin with a fundamental shift in the relationship between the Postal Service and commercial mailers.” He quoted an observation by Joy Leong, a contributor to the newsletter Mailing Systems Technology: ‘Mailers are customers of the Postal Service, not shareholders. Printers, mail fulfillment services and other vendors are contractors of the Postal Service, not shareholders.’ ”

In recent years, Burrus said, major mailers have assumed the role of shareholders, and they are routinely included in planning and decision-making meetings. “The cozy relationship between postal executives and major business mailers is unhealthy and counterproductive,” he observed.

“One of the byproducts of this relationship is the preservation of workshare discounts that benefit the mailers at the expense of Postal Service stability,” the union president asserted. “I have repeatedly shared with the members of Congress the views of my union on excessive workshare discounts and their corrosive affect on postal finances.

“The law specifically requires universal service at uniform rates, yet the standard has been nullified with the growth of discounts that were intended to be temporary. Over time, workshare discounts have morphed into a disgraceful policy that rewards large mailers with rate reductions so extreme as to be absurd.”

Pales in Comparison

“But even if postal management could be convinced to revise its approach,” Burrus said, “such changes would pale in importance compared to the issue of Congressional relief from the smothering obligation to fund future retiree healthcare costs.

“This is the immediate problem, and it is serious,” he concluded. “The APWU has strongly-held differences with the Postal Service about rate policies and other decisions, but we are united that passage of H.R. 22 is essential to the survival of the United States Postal Service. We ask that it be adopted expeditiously.”

Also testifying at the hearing were the presidents of the other three major postal unions; Postmaster General John Potter; Carolyn Gallagher, chairman, USPS Board of Governors; Dan Blair, chairman, Postal Regulatory Commission; David Williams, USPS Inspector General; Phillip Herr, director Physical Infrastructure Issues, Government Accountability Office; and the presidents of the management associations.

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