Seven Misconceptions About the Postal Service's Action Plan

Despite the Postal Service’s massive communication effort surrounding the introduction of its long-range action plan last week, the news media and general public have misunderstood some aspects of the plan. Even mailers and postal officials are confused on a few points.

Here are seven misconceptions about the plan gleaned from news accounts, conversations, and the Postal Service’s own presentation:

1. The Postal Service wants to cut retirees’ healthcare benefits. Absolutely wrong. The plan is too polite in describing the problem as "retiree health benefits prefunding." In reality, the Postal Service in essence has been lending the federal government billions of dollars annually, interest free, to make the federal deficit look smaller. These “pre-payments” into the retiree health fund do nothing to help retirees or current employees. That’s why postal unions actually oppose the pre-payments; they weaken the Postal Service without doing anything for postal workers. Union leader William Burrus (whose math I have criticized in the past) was right on the money last week when he said that "the central cause of USPS financial difficulties" is "the congressionally imposed requirement to pre-pay retiree healthcare obligations."
   
   
2. Taxypayers subsidize the Postal Service. Talk of the Postal Service losing money and being “bailed out” by Congress has led to the logical – but incorrect – conclusion that the federal government provides financial support to the Postal Service. The Postal Service has actually subsidized the federal government with the retiree-fund pre-payments, and the supposed bailout was actually just a reduction of the pre-payment. The USPS has also paid billions of dollars more than its share into a federal pension fund -- another way that the supposedly independent Postal Service has been a cash cow for the federal government.
   
   
3. The Postal Service is planning massive layoffs of full-time employees. The USPS is indeed planning to downsize further but plans to do it through attrition, mostly from retirements. It wants to replace some of the retirees with part-timers, whose hours can be adjusted in accordance with fluctuating mail volumes.
   
   
4. If Saturday delivery is ended, people will have to mail their bills sooner to avoid late payments. Large organizations that receive numerous mailed bills, such as banks and utilities, will still be able to get this “remittance mail” six or even seven days a week. Although postal officials want to eliminate Saturday delivery, their proposal would not affect people and organizations that pick up their mail from post offices, which will remain open.
   
   
5. If Congress lets the Postal Service close thousands of post offices, service will suffer and lines will become even longer at post offices. In addition to closing post offices, postal officials want to be able to sell stamps and to offer other services through thousands of retail businesses, such as convenience and discount stores. Such outlets may be better suited than post offices to dealing with the natural fluctuation in demand for retail postal services.
   
   
6. The Postal Services loses money on Periodicals. Actually, the Postal Service doesn’t know its true costs for handling magazines and newspapers (or catalogs, for that matter). Greater automation and declining mail volume have led to the Postal Service having excess employees. Rather than letting them sit idle, postal management often puts these “automation refugees” to work doing unnecessary tasks, such as opening and sorting carrier-route bundles of flat mail -- and thereby inflating the cost of handling magazines and catalogs. “That is the prerogative of the USPS, but it should not be counted against flats as an extra cost,” writes Joe Schick, Director of Postal Affairs for Quad/Graphics. “Correct the costing problem before penalizing mailers.”
   
   
7. The exigent rate increase slated for early next year will be relatively small for all mailers. Postal officials have said officially that they would seek an increase of less than 10%, and a 5% estimate has circulated in some quarters. But those are averages. Postal officials have also indicated a desire to hit Periodicals and non-profit mailers with higher-than-average increases, a process that could start with the exigent increase. It’s possible that some mailers will pay 2011 rate increases that are much higher than the rate of inflation while others hardly pay any increase.

For more information , please see:

• How USPS Could Bypass Congress on Saturday Delivery, which explains in more depth the accounting shell game involving the retiree healthcare account.
• Pensions: Another Government Rip-off of the Postal Service describes how the Postal Service has paid $75 billion too much into the Civil Service Retirement System.
• Postal Service Plans to Use More Part-Time Employees provides details on the USPS's plan to replace retirees with part-timers.
• Postal Service Inefficiency Drives Up Periodicals Costs: A postal expert says that unnecessary manual processing of magazines and other flats has caused the supposed cost of handling Periodicals to rise, even though publishers are mailing in ways that should reduce the Postal Service's costs.