Oral Testimony of William Burrus, President
American Postal Workers Union, AFL-CIO
Before the U.S. Senate
Committee on Governmental Affairs
February 24, 2004
[written verson of testimony, submitted Feb. 3]
Good afternoon, Chairman Collins and members of the Committee. Thank you for the opportunity to testify on behalf of more than 300,000 members of the American Postal Workers Union, AFL-CIO, the largest single bargaining unit in the country. We appreciate the opportunity to share with you the views of our members on a most important issue, postal reform. Thank you for your continuing interest in this vital subject.
In compliance to your request to limit my testimony to 10 minutes I will summarize my oral statement and request that the full text be entered into the record.
This Committee has an historic opportunity to protect and preserve the United States Postal Service, but we must be careful to ensure that our efforts in fact preserve the Postal Service for the American public. Too often, in this rush for reform, special interests have been considered without balancing the broader needs of our nation and its individual citizens. The debate has been driven by the mailing industry as it seeks to shape the Postal Service in a way that will best serve its interests. This is neither surprising nor bad; but it is very important that the Committee distinguish between the public interest in universal mail service at uniform rates, and the interests of major mailers in maximizing their profits.
The Committee has requested that testimony be limited to an analysis of the Presidential Commission's workforce-related recommendations and I appreciate the flexibility that you afford the witnesses to expand beyond the official request.
As president of the union, foremost among my concerns in this review are the interests of our members, but the long-term health of the Postal Service is also a concern, and we promise to join with those who seek positive change.
Before I discuss the specific workforce recommendation in the Commission's Report, I urge that primary attention be focused on the Commission recommendation that the Postal Service be relieved of the military retiree costs, and that the escrow of the CSRS contribution be resolved.
A third consideration that is also important is resolution of the OPM decision to shift to the Postal Service $86 billion in costs for service attributable to previous federal government employment.
These would be enormous burdens to the Postal Service, to consumers, and to the mailing industry and the correction of these problems, may be the most important actions that Congress could take to preserve and protect the Postal Service.
The Commission's Deliberations
In considering the recommendations of the Commission Report, I want to emphasize that the Presidential Commission did not give sufficient consideration to the needs of individual Americans and small businesses. As a result, there were no recommendations in the report addressing concerns of the public. The Commissioners' hearings and private meetings were dominated by large mailers and while their interests should be considered it should not be to the exclusion of all others. It is now up to the members of Congress to examine the public interest.
Technological Impact on Hard-Copy Communications
The widespread support for postal "reform" is based on the premise that the Postal Service is a failing institution - one that is at risk of entering a "death spiral." I believe it is premature to make a final determination on this matter. We must remember that postal volume continues to recover from the effects of several events. The terrorist attacks of 9/11, followed by the anthrax attack that took the lives of two postal workers.
These two events were superimposed over the recession that began in early 2001, from which we are only now experiencing a relatively weak and inconsistent recovery. If one were to extract the impact of technological diversion, these events standing alone would have had a serious impact on postal volume.
There are positive signs. The Postal Service recently reported that mail volume during the 2003 Christmas mailing season increased sharply over the previous year, resulting in the highest volume period in the history of the Postal Service. Are we to believe that technological impact took a holiday this Christmas season, or are other factors at work?
Throughout this period of technological upheaval, the Postal Service has shown a remarkable capacity to provide excellent service. Despite declining mail volume, productivity increased and service standards were maintained. A recent Privacy Trust Survey ranked the Postal Service at #1 in trust.
These are remarkable achievements, particularly because the Postal Service's mission requires providing universal service to a growing nation.
I raise these issues not to minimize the need for postal reform but to dampen the rhetoric that the sky is falling.
Because of the unprecedented productivity increases and efficiencies, there is strong reason to believe that Postal Service revenues could be sufficient to support universal service into the future, if rates are properly set.
The APWU has been a vocal critic of unfair rate-setting that benefits some very large mailers at the expense of consumers and small businesses. The Postal Service's own data show that worksharing discounts provided to major mailers exceed the costs avoided by the Postal Service. These excessive discounts cost the Postal Service hundreds of millions of dollars in lost revenue every year.
A recent personal experience highlights the inequities of excessive postage discounts. Several weeks ago I received two first class letters, one bearing a 37 cents stamp and one which paid 27 cents. Both letters were bar coded to be processed efficiently in the postal mail processing system. The letter with 27 cents postage was deposited in the mail stream in Charlotte, N.C. requiring processing and transportation costs to Southern Maryland while the one with 37 cents was deposited in Washington, D.C. The 27 cents letter, while including a pre printed barcode, required manual sortation, the most labor intensive activity in the postal mail stream. The postage rate for the most costly letter including transportation and processing was in fact 10 cents less.
The suggestion that mail volume will suffer if discounts are adjusted to represent accurate cost avoided is ludicrous on its face. This argument taken to its logical conclusion is that unless the Postal Service loses money on discounted mail, mailers will find other alternatives. If this were true, it would make sense to discharge the logic that there must be some connection between postal costs and discounts. Certainly, free postage would guarantee increased volume.
The problem of discounts was acknowledged by the Presidential Commission's recommendation that all future discounts be limited to the costs avoided. This is simply not good enough. That horse has left the barn and we need to get it back to preserve universal service in the public interest.
Some interested parties, have responded by calling for "bottom-up pricing or bottom-up costing." These concepts would establish a system whereby mailers pay a pro rated share for the services they use. I would urge the Congress or Rate Commission to be extremely careful in pursing this rate strategy. The primary consideration must be adequate funding for universal service at uniform rates. Lurking on the horizon would be exceptions that could result in surcharges for service.
I believe that all will agree that postal reform will have marginal impact on future mail volume and if not, adjustments to the current business model must focus on future rates. Overlooked in this analysis is the fact that the current business model does not determine the relative contribution to institutional costs by first-class mail as compared to standard mail. If first-class mail grows or declines, the question of dividing institutional costs among all classes of mail will remain. At present, it takes approximately three pieces of standard mail to make up for one piece of first-class mail contribution to institutional cost. This distribution of costs is a rate-setting decision that will be unresolved by postal reform.
The elimination of excessive discounts, along with more appropriate pricing in the future, would bolster postal revenues and preserve universal service.
Discussion of Specific Workforce-Related Commission Recommendations
As the Committee specifically requested, I will now state our views on the workforce-related recommendations of the Commission. I begin with our conclusion that the workforce-related recommendations are outrageous and totally unacceptable to me and to the workers I represent. And, as I have previously said, on the subject of workforce issues, the Report is fundamentally dishonest.
The Report repeatedly states that the Commission supports the right of postal workers to engage in collective bargaining. Nevertheless, it recommends the establishment of a Regulatory Board, appointed by the President, with the authority to set compensation of postal employees.
It is completely inconsistent, and totally unacceptable, for the Commission to espouse a commitment to collective bargaining, while simultaneously recommending that postal compensation be dictated by a political appointed board.
Testifying before this Committee on Sept. 17, 2003, Co-Chairman James A. Johnson testified that any employee compensation changes would be "prospective," and that current employees would "not be impacted." In fact, commission recommendations would authorize the Board to impose a cap on the compensation of new employees and to reduce the compensation of current employees. And while the Commission recommends "Pay-for-Performance," it fails to note that there is nothing in present law that prohibits or inhibits pay for performance:
The Commission seems to believe that postal workers are fools. The following disingenuous platitudes appear in the Report:
In contrast to these statements, the Commission's specific recommendations are an invitation to open conflict with employees. The Report paid lip service to the importance of good labor relations, while making recommendations that would guarantee labor conflict.
The Commission's recommendations to change the collective bargaining process are unwise and would be counterproductive. Current law permits the parties maximum flexibility in resolving contractual impasse. Over the years, the parties have negotiated every subject identified by the Commission - health benefits, flexibility, retirement, no-lay-off protection, wages, a two-tier workforce, and many others. When the parties have disagreed, they have used "last best final offer", fact-finding, mediation, fact-finding-mediation; and, at least once, the parties' mediator became the neutral interest arbitrator. But more importantly, most often we have agreed at the bargaining table and concluded negotiations without outside interference. The Commission is wrong to say that any one of these methods is the best way of helping the parties reach agreement. Each negotiation session brings its own challenges, and the best way to meet these challenges is to permit the parties to adjust to the conditions at hand, rather than to impose a fixed statutory process. We know how to reach agreement, and have done so 65 times over the 32-year period of collective bargaining.
The Commission urged Congress to consider removing postal employees from federal retirement and retiree healthcare plans. This would be a diametrical departure from appropriate public policy. We categorically reject the contention that it would be appropriate for postal employees, now or in the future, to be paid fringe benefits that are less than those provided to other federal employees.
In recent years, postal workers have repeatedly stood on the front lines of homeland security; when hired they must submit to background checks and fingerprinting, and they are administered a federal oath of office.
The anthrax attack that resulted in the death of two of our members and the recent ricin attacks exposed the perils of postal employment and our role in the defense of the nation. In the anthrax attacks, we rationalized the disparate treatment of postal employees as compared to the occupants of Senate office buildings but the ricin attacks expose the fact that there is a double standard. Senate office buildings are vacated and tested for a period as long as it takes while postal employees are not even informed that they have been exposed. The Administration has been quoted as saying that "Those who needed to know about it and needed to act upon it were aware of it" and the Administration budget includes the complete elimination of homeland security building decontamination research. No warning and no clean up. This is unacceptable. Postal workers will not be treated like the canaries of the mining industry in years gone by.
Health benefits, whether for active workers and their families, for people who have been injured on the job, or for retirees and their families, are very powerful and emotional issues. It would be a callous act to reduce the benefits of postal workers injured by anthrax or exposed to ricin. How would this be explained to the widows of Brothers Curseen or Morris?
Postal Compensation Under the PRA
The collective bargaining provisions in existing law have worked well. They have resulted in labor costs that have tracked the increase in the Consumer Price Index and the Employment Cost Index.
In comparison, we believe that the wages and fringe benefits paid by UPS and FedEx provide an appropriate and useful yardstick for postal compensation. These are the largest American companies whose workers perform some of the same tasks that we perform. They are, of course, also direct competitors of the Postal Service. These companies pay their career employees wages and fringe benefits that compare very favorably to the wages and benefits our members receive.
The American Postal Workers Union finds the Commission Report unacceptable in its recommendations on collective bargaining and in that regard not helpful in fashioning a business model for the future.
In conclusion, I want to return to the most urgent needs of the Postal Service. The Service needs to be relieved of the burden of paying for military retirement, at a cost of $27 billion. It also needs to be permitted to make appropriate use of the savings from the re-calculation of CSRS contributions, estimated at $10 billion. In addition, OPM's effort to shift to the Postal Service federal service retirement costs - estimated to be approximately $86 billion - must be reversed.
And that the position of my union not be misunderstood on the broad issue of postal reform, Because of our outspoken positions on the Presidential Commission and worksharing discounts, it is convenient to report that APWU opposes reform. This is not true and for the record, we could support structural change to the Postal Reorganization Act that would improve the Postal Service beyond relief from the financial burdens.
We could support:
These changes would insure the continued effectiveness of the Postal Service far into the future.
Thank you again for your continued interest and the opportunity to present this testimony. I would be pleased to answer any questions you may have.