Sunday, May 15, 2011

How the Postal Service Subsidizes The Wall Street Journal -- and Why It Should Stop

In an error-filled editorial, The Wall Street Journal chided the U.S. Postal Service Saturday for not acting more like a business and for being too slow to cut costs. Be careful what you wish for.

"If this were a private business, the obvious response to these losses would be urgent cost-cutting to avoid insolvency," the editorial said in response to USPS's latest quarterly numbers. Good point. Let's start with cutting the Postal Service's subsidization of the Journal.

Within the Postal Service, the Journal is famous for complaining vociferously if any of its newspapers are delivered a day late, even if the Journal misses the deadline for getting the papers to a postal facility. Postal managers generally acquiesce, creating special (and labor-intensive) procedures to expedite handling of the Journal.

"Wall Street Journal gives the USPS all of the addresses that they can’t service with alternate delivery and then expects to receive next-day delivery regardless of the arrival time. I’ve witnessed this first hand at USPS facilities," says an executive for a major Postal Service customer.

Such unofficial "Hot 2C" or "Hot Periodicals" expedited mail-processing programs are a major reason that so much Periodicals mail is sorted manually rather than on machines, according to a recent USPS Office of Inspector General report.

"These informal procedures increase mail processing costs and may distort service performance measurements for Periodicals," the report said.

Over the years, magazine-industry representatives have been nearly unanimous in pleading with the Postal Service to stop such manual processing of Periodicals mail. The added cost helps make the entire Periodicals class unprofitable for the Postal Service, creating pressure on USPS to jack up postage rates for all publishers.

“Periodicals publishers have repeatedly made clear that they do not desire and are not willing to pay for 'hot' processing," Jim O'Brien of Time Inc. wrote in response to the OIG report. But people inside the Postal Service said they would catch hell if they stopped hot processing of the Journal and certain other publications.

If the Postal Service were a private business, it would charge customers for such special handling. If the Postal Service were a private business, it would realize how much money it is losing on such customers. If the Postal Service were a private business, it would conclude that losing such customers would be better than continuing to subsidize them.

(Side note: Critics of five-day delivery have noted that if daily newspapers had to find another means of delivering their Saturday editions, they would probably use that network for other days of the week as well. Is it possible that postal executives are viewing that as a benefit of ending Saturday delivery rather than as part of the down side?)

The Journal editorial was written by someone who hadn't bothered to do much research -- or who purposely misrepresented the Postal Service's situation. It mentions the small pay raises for current employees in the recently ratified contract with the largest postal union, but not the huge savings USPS will get in return -- such as "eat your young" pay rates for new hires and the increased use of part-time employees.

It also calls ending the prefunding (really, overfunding) of postal retiree health benefits "a taxpayer bailout" when no tax money would be involved. And it completely garbles the issue of the Postal Service being overcharged for its share of pension payments to employees who used to work for USPS' government-run predecessor.

If the Postal Service were a private business, it would not be subsidizing The Wall Street Journal.


Anonymous said...

This article states pure truth. Unfortunately the "Dead Tree Edition" is not mainstream media and has no real influence over the masses such as that of the WSJ. That is the real shame.

Anonymous said...

All the entities should get all the facts related to the postal service before stating something negative about this great institution. GET YOUR FACTS FIRST!!!!!!!!!!!

Anonymous said...

I have worked for the USPS for fifteen years and I guarantee this article is spot-on about the special treatment the WSJ gets each and every day.

Anonymous said...

Instead of going into my plant, the WSJ's are manually handled on the platform in the 2/C set up! The only bundles going inside are the ones that the WSJ sorted to the 3 digit level verus 5. We also do this for other periodicals as well. When the WSJ's come in everything stops!!

Anonymous said...

The situation is worse that the Postal Service Periodicals P&L Would suggest. A postal lifer who was once a carrier supervisor in Kansas City told me that it was routine to hold all the city carriers in the office until the Wall Street Journal arrived. The USPS costing system would not attribute the cost of waiting carriers to Periodicals.

O'Brien's comments are disingenuous. He knows damn well that Sports Illustrated delivered on Saturday or the following Monday is of little value to its readers.

What makes this situation worse is the postal executives including the PMG and CMO who have argued for years that carrying Periodicals at a loss is good, because it increases the value of the mailbox. Why not carry everything at a loss?

The sad part about the USPS financial situation is that it is very easy to fix. Close a hundred or so mail processing facilities, and 15,000 post offices. Then stop the $5.5 billion Collins poll tax that would be very difficult to pay even in prosperous times.

Anonymous said...

Dead Tree writer I love you!! Thank you for this wonderful piece. What shitheads (hand is over my mouth not!) they are over there. Take advantage of us at every turn & then back stab us so hard every chance they get. Pleassssse let's just dump them.

Anonymous said...

They left out the Deltack 5 that are also HOT Pubs- Time, SI, EW, People and the Time Warner mags all get special treatment

Anonymous said...

The prefunding as required by the postal reform act is NOTHING more than congress establishing it's own piggy bank in order to take from to pay the national debt. The same way they have been stealing from the G Fund and Social security. There is NO taxpayer money involved. This is a congressional money grab...and they will NEVER reverse that portion of the Postal Reform Act...they've gotten used to stealing from it.

Anonymous said...

Cutting cost is a joke for the USPS. Main objective is to talk and continue to operate in same losing mode. Sat. mail delivery is a total waste delivring junk mail. The INTERNET connects people not the USPS AS IT DID 25 YEARS AGO.

Anonymous said...

USPS had its place in history but no longer has significance in connecting people. Advanced technology has eliminated the need to purchase a postage stamp enter it into the postal system and wait for a 1-2 delivery time. The INTERNET provides instant messaging and is used by individual and business to communicate for business and social needs.
The USPS refuses to face reality and eliminate Sat. mail route delivery which is a total wasted cost. The American mail customer has Sat. mail delivery FORCED ON THEM AND MAJORITY HAVE NO NEED FOR

johnd said...

What do the other branches of government pay into the retirement and health benefits? OPM does not want to refund the over payment to the Postal service because they do not have it The Postal service has been a cash cow for the Government.

Anonymous said...

To you people that comment sooo negatively to the 570,000 or so Postal Employees and our "worthless" jobs...what about the "mailing industry" and the millions of jobs tied to it? You gonna foot the unemployment bill? Try thinking things THROUGH just a bit more before giving your uninformed opinion...

Anonymous said...

great comments, the mail doesn't leave my plant til the WSJ arrive, spent many nights waiting to tie out and get the trucks on the road, waiting on the WSJ three digit sorts.

The prefunding issue is a joke, a raid by congress on five billion or so a year.

And stealing from the TSP G fund the same!

Anonymous said...

I'm a WSJ reader. I switched to delivery to my Kindle instead of hard copy. I like it much better. You can all retire now.