Management and Privatizers: Reading from the Same Script

(This article appeared in the September/October 2012 issue of The American Postal Worker magazine.)

Greg Bell, Executive Vice President

Instead of developing a strategy to preserve the Postal Service in the digital age, top management executives have been undermining public confidence in the USPS — angering communities and lowering employee morale with plans to close thousands of post offices, consolidate hundreds of mail processing facilities, and cut service in ways that will drive away customers and devastate our treasured institution.

They’re not implementing a plan to save the Postal Service; their plans will destroy the Postal Service as we know it.

The USPS provides a public service, as envisioned by the U.S. Constitution. For more than two centuries, it has served America’s citizens and businesses. Today, it is the center of a $1 trillion mailing industry that employs close to 9 million people.

Postal Service executives should be doing everything possible to preserve this institution. Instead, they are determined to dismantle the postal system in order to “save” it. But their proposals are so severe and wide-ranging that it’s reasonable to ask: Save it for whom?

Closing rural post offices is not “saving” the Postal Service if you live in a rural area. Slowing delivery standards is not “saving” the Postal Service if you are a business owner who relies on the mail to send bills and receive payments. Eliminating Saturday delivery is not “saving” the Postal Service if you depend on weekend delivery for medicine or other packages.

Not Just the Usual Suspects

When the Postal Service defaulted on its annual $5.5 billion payment into the Retiree Health Benefit Fund (RHBF) on Aug. 1, as everyone knew it would, calls for privatization could be heard far and wide. Some came from predictable sources like the Wall Street Journal and the right-wing Cato Institute, both long-time advocates of privatization.

But the calls to dismantle the USPS as a public institution weren’t limited to the usual suspects.

In a column in Bloomberg News, the former head of the U.S. Office of Management and Budget (OMB) in the Obama Administration, Peter Orszag, wrote that “the best fix for the Postal Service is to take it private.” (It is worth noting that after leaving OMB, Orszag went to work for Citigroup as vice chairman of corporate and investment banking and wasn’t speaking on behalf of the Obama Administration.)

While pointing to the default as justification for privatization, advocates of selling the USPS to the highest bidder made no mention of the primary cause of the Postal Service’s financial “crisis” — the pre-funding mandate imposed by Congress in the 2006 Postal Accountability and Enhancement Act. This poisonous legislation requires the USPS to pre-fund 75 years worth of future retiree health benefits in a 10-year period. No private business or government agency bears this crushing burden, which drains $5.5 billion a year from operating revenue, and is responsible for more than 82 percent of the Postal Service’s red ink.

Pushing Their Plan

Advocates of privatization are using this congressionally-manufactured crisis to promote their plans to dismantle the Postal Service. Rep. Darrell Issa (R-CA) and Rep. Dennis Ross (R-FL), who head the committees responsible for congressional oversight of the Postal Service, are co-sponsors of a bill (H.R. 2309) that would require the USPS to close hundreds of mail processing plants, shut tens of thousands of rural post offices, end Saturday delivery, and empower a financial control board to tear up union contracts — while doing nothing to correct the pre-funding fiasco.

It doesn’t have to be this way. If it weren’t for the pre-funding mandate, the Postal Service wouldn’t be in a crisis and it could take the steps necessary to adapt to a changing mix of mail. Despite the rise of the Internet and the diversion of hard-copy mail to email, last year the Postal Service generated more than $65 billion in revenue and delivered 167 million letters and parcels. Parcel delivery is growing at double-digit rates as online purchases increase. This is hardly a dying industry as some would have us believe.

Encouraging Subcontracting

Unfortunately, postal executives seem to be reading from the same script as those who want to privatize the USPS. They have consistently sought to contract out work, even when APWU members could perform the work at a lower cost. They also have implemented a policy of granting excessive discounts to companies that pre-sort mail. By granting these excessive discounts, the USPS denies itself much-needed revenue and encourages the growth of private mail-sorting houses.

Pitney Bowes is a good example. The company, which is known as a provider of mail equipment, also operates a network of mail processing centers in the U.S. designed to take advantage of pre-sort discounts offered by the USPS. In 2009, when the U.S. economy was in a tail-spin and the Postal Service was in the early stages of what would become massive retrenchment, the mailing industry powerhouse opened a new mail facility in Corona, CA.

Clearly, Pitney Bowes is making money from sorting mail, but what about the USPS? Pitney Bowes is performing work that used to be performed by postal employees. This is just one example of how USPS management is participating in and encouraging the privatization of the Postal Service.

A Lack of Strategy

Management is also responsible for the total lack of a strategy to remain relevant in a digital age. When coupled with their plans to dismantle the USPS infrastructure, it appears that top-level managers are actively sabotaging the future of the Postal Service.

In a report issued in January of this year, the USPS Office of the Inspector General (OIG) recommended that the USPS partner with the Federal Communication Commission’s National Broadband Infrastructure Initiative. The OIG concluded that the USPS, with its network of over 33,000 facilities, including in rural areas that are currently underserved by broadband providers, would make it an ideal partner for a government initiative to extend broadband access to rural areas.

Management rejected the OIG’s recommendations. It appears that management is of the same mind as the advocates of privatization.

Brothers and sisters, we have our work cut out for us.