Guest Column: Paying actual costs of the Post Office — an idea worth trying

By Gary Haynes

In his commentary (Sept. 21-27, 2011), Charles Miller, Lakeland District Postal Service manager, writes about the plight of the USPS, bu doesn’t really address major parts of the problem — failing to make all USPS customers actually pay the cost of handling their mailings. And addressing union workforce inefficiencies. Labor costs represent 80 percent of USPS expenses, a very high percentage in this day of automation.

Quasi-independent, the Postal Service must pay high salaries and benefits because of collective bargaining, and put aside $5.5 billion per year for future retiree medical coverage — an obligation not required of other federal agencies. Unions reacted angrily in August to a proposal by the USPS to lay off 120,000 workers by breaking labor contracts, and to shift workers out of the federal employee health and retirement plans into cheaper alternatives.

But with mail volume down, USPS must pay millions every year paying full-time employees to report to work and “stand by” doing nothing — currently more than 45,000 hours a week, the equivalent of 1,125 full-time employees sitting idle, and costing more than $50 million per year, to fulfill their contractual obligations. “Volume has dropped, we don’t get the same mail receipts we used to get, and our overtime is already pretty much nil,” Edward Jackson, a Washington, D.C., mail plant supervisor, says. “But we still have to keep [employees] in a pay status. So we put them in standby rooms.”

A “standby room” can be anything from an empty conference room to a 12-by-8-foot storage closet. “It’s awful,” one employee said. Employees on “standby” get full pay and benefits, and are forbidden to engage in any activity that they wouldn’t do while performing normal work if they were doing any — but that provision is often overlooked. “Most of us bring books, word puzzles. Sometimes we just sleep.”

The USPS is the single-largest employer in the U.S. after Wal-Mart — 650,000 union members driving 260,000 vehicles. In 2007, an FTC report noted that the service pays no taxes, including property tax on its 38,000 facilities; pays no vehicle registration fees, and can borrow at subsidized interest rates from the U.S. Treasury.

USPS handles 167 billion pieces of mail to 150 million addresses. The service is “self-funded,” but falling mail volume has forced it to borrow from the federal government to cover operating expenses — 80 percent of which are labor-related. With benefits, the average postal employee is paid $83,000 per year.

By law, we must use the United States Postal Service (USPS) for delivery of first-class mail, and USPS makes money on it. But it loses money on almost everything else it handles, so in just the past five years, that loss totaled $43 billion, $8.5 billion of it in 2010 alone.

First-class mail is forecast to decline from 78 billion pieces in 2010 to 52 billion in 2020 as users migrate to electronic alternatives, according to the Postal Service’s 2010 annual report. But standard mail – a category that includes direct advertising – is expected to increase from 83 billion pieces to 88 billion in that same time. Mail still captures roughly 12 percent of media spending across all advertising channels, the Postal Service says, citing external sources.

Why not charge bulk mailers the actual cost of handling the torrent of catalogs, magazines, charitable solicitations and other forms of “junk” mail that USPS loses money on while delivering it to all of us? Charging the actual cost of handling such mail would likely lead to a reduction in the sheer volume of such mail, a blessing for those of us who toss most of it away unopened, anyway.

Miller talks about cutting costs and tinkering with various mandated programs because Congress won’t let the “independent” USPS be run like a business. There is talk of closing post offices and outsourcing basic services, like selling stamps and shipping flat-rate packages, to local businesses like pharmacies and groceries. Nobody wants their postal facility closed; 3,700 such facilities have been “targeted.”

Postmaster General Patrick Donohoe wants to reduce the workforce by 120,000, and critics fear that many layoffs might ignite racial and ethnic grievances, since minorities make up 39 percent of the workforce. Critics think a shrinking of 220,000 would be more realistic. The genius of the real private economy is that firms that are really poorly run go out of business. But because the USPS is not quite “private” along with being overstaffed and its employees overpaid, it controls a lot of votes — the only reason the USPS still exists. If we could eliminate the albatross by giving away the USPS infrastructure, it would be a great deal for the taxpayer.

Gary Haynes is a retired photojournalist who lives in Oregon, Ill.

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