With the exigent price hikes finally removed from USPS rates, business mailers have been enjoying the first postal decrease in a century. The breather, it appears, could soon be over…and mailing professionals are not taking it sitting down.
While the temporary rate increase was designed to get the Postal Service through the recession and accompanying drop in mail volume, some have been arguing for months that the hike should be permanent. The USPS argues that removing 4.3% hike is a leading reason for their bleak economic outlook. That, plus the onus of having to prefund their retiree health plan, is unsustainable, according to Postmaster General Megan Brennan. They want hikes that are higher than the inflation-based cap currently in place.
The mailing industry isn’t buying it, saying the organization has plenty of opportunities to fix their own situation instead of relying on their captive audience of mailing customers to foot the bill.
“The MPA, along with the Alliance of Nonprofit Mailers (ANM) and the Association for Postal Commerce (PostCom), disagrees with that assessment, submitting comments to the PRC this week calling on it to ‘retain the inflation-capped pricing structure that has protected captive users of the Postal Service’s monopoly services for the past decade’,” writes Greg Dool in Folio.
“The Postal Service wants to raise rates faster than inflation because it says its finances are upside down,” said ANM president Stephen Kearney, 33-year veteran and former treasurer of the USPS. “But our expert analysis shows that USPS is actually in good shape and in fact has made an operating profit in each of its last three fiscal years.”
Other mail industry executives agree: “On the one hand, USPS assiduously guards the mail and mailbox monopolies that federal law guarantees, protecting it from the competitive market forces that private industry has had to withstand,” said Linda Thomas Brooks, MPA president and CEO, in a statement. “But at the same time, USPS seeks unfettered pricing freedom, with only minimal regulatory oversight.”
Freeport Press’ Mailing and Distribution Manager Tom Watry thinks the USPS’s claims that it needs the higher rates ring hollow, saying “this is the same argument they have been having for the last few years, just coming at it from a different angle.
“The Postal Regulatory Commission (PRC) has an important role in controlling the rates and the USPS,” says Watry. “When the recession hit the USPS lost a lot of revenue like a lot of us. The PRC ruled for the exigency surcharge of 4.3% added to the rates to help offset some of their losses but that rule had a time deadline.”
Watry claims that the USPS got used to the additional revenue and now needs it to help maintain regular operations – even though the economic crisis of the recession is over.
“Last year the PRC ruled against keeping the exigency surcharge and we actually saw a postage decrease, this is the first decrease in my career,” Watry continues.
Meanwhile, the Postal Service Reform Act of 2017, introduced in January and amended this month, attempts to help the USPS, without adding to the tax burden of the U.S. consumer. It’s still not clear if there will be any rate hikes higher than those allowed by the legislated inflation cap.
The mailing industry, for its part, submitted some specific suggestions to the PRC on how the USPS might improve its own financial well-being, Dool notes.
“Among them: reducing compensation for employees, which the associations argue are overpaid compared to their counterparts in the private sector; placing renewed emphasis on driving productivity; conceiving new sources of revenue, like advertising on mail trucks; and, simply, making better decisions when it comes to management and pricing,” he recounts.
As with anything related to the Postal Service, don’t expect any quick answers.
“In January, the MPA filed a request — backed by several other organizations, as well as UPS — to delay the March 20 deadline for submitting comments on the upcoming rulemaking until after the PRC had conducted its review,” Dool notes. That request was denied, but the PRC still isn’t expected to reveal its findings — or any recommended rule changes — until ‘early Autumn’.”
March 29, 2017, 12:27 pm
What is the major problem with the Post Office. It is not the service, or the workers who sort and deliver your mail to every address nearly every day. It is in stead the very heavy levels upon levels of management and micro-management who bog down the system and cost over $100,000 average in salaries plus benefits, as well as the real estate and associated costs of transportation and such. The Post Office has an unheard of 1:4 ratio of manager to worker, with the majority in postal management contractually unable to even touch any mail. The Ponzi scheme of management is this: Headquarters in Washington DC houses the highest levels of managers, including the Postmaster General and a number of assistants, Vice Presidents, etc. Below them are the Area offices, housed in various parts of the country, overseeing the next lower level of managers, the Districts, who in turn micromanage the actual post offices and mail processing stations that acutally sort and deliver the mail. With today’s technology, there is no reason to have the redundant Areas or District offices, as each post office and processing station has their own levels of management, which should be sufficient.
March 29, 2017, 1:39 pm
Well said, my friend!
March 29, 2017, 6:34 pm
This is in response to the article, not anyone’s comment.
I must take exception with some of the logic used in this article. It is stated that the USPS has shown an “operating profit” since the economic recovery has progresses. While this is true, it ignores the $5.5 billion annual expense imposed by congress when they passed the Postal Accountability and Enhancement Act in 2006. The USPS rates are supposed to be set to allow it to ‘break even’ over time but are based on operating expenses. The $5.5 billion annual expense is not part of operating expenses. In my opinion, it was a guise used by congress to pick the USPS’s pocket in order to lower the federal deficit. That having been said, it remains an serious burden on the bottom line for the USPS. Keep in mind that the USPS receives $0 taxpayer dollars. All of its revenue is derived from the the postage rates. If the postage rate calculations do not consider all expenses, they will be lower but will not allow the USPS to remain solvent.
It was also stated that employee compensation should be reduced because it is greater than “…counterparts in the private sector.” I disagree. I have heard this many time before, but rarely are these private sector counterparts ever referenced by name. UPS and FedEx are the closest private sector counterparts that I can name. It is unfair to include smaller upstart company employees whose compensation will likely rise as the company grows and the hourly jobs become careers. Below, I list the company, position & salary range for The USPS, UPS & FedEx.
(I rounded Down by the thousand for simplicity)
USPS letter carrier $30,000 – $60,000 year
UPS driver $35,000 – $88,000 year
FedEx driver $35,000 – $81,000 year
March 30, 2017, 12:23 pm
I agree with the above comments entirely. There are currently around 100,000 people in postal management, and like Route 666 said, most cannot even do any sorting or delivery work, only the small town postmasters can. The Post Office, under the plan to remove these Area and District offices, would be able to eliminate over half of the management system, which now does nothing but micromanage and recirculate emails and needless reports. Do the math, eliminating 50,000 (at least) management positions at the average pay of $100,000 each and you save $5 Billion in salaries alone. Without the relentless micromanaging that now goes on, service would improve more, also.
As far as employee salaries go, I think Robert showed that the private carriers do indeed make more in money and retirement that postal workers do, so comparing postal clerks and carriers to grocery store and pizza delivery personnel is going down the wrong road. That is like comparing a low paid librarian to a famous writer making millions of dollars a book.
April 18, 2017, 1:33 pm