Thursday, October 31, 2013

Layers of Redundant Management Have Been Eliminated, USPS Says

The U.S. Postal Service's public relations department responded last night to a recent Dead Tree Edition article. We are publishing the response in its entirety, without comment, except to note that article was based on a combination of verifiable facts and readers' opinions. We also note that many postal employees -- supervisors and "suits" as well as worker bees -- have complained vociferously about USPS's organizational structure. And that a significant overhaul of that structure would probably face legal hurdles.

To Dead Tree Edition

Your recent blog post, 17 More Ways USPS Is Not Like a Real Business, provides some good examples of how the Postal Service’s inflexible and outdated business model hinders our ability to compete in today’s marketplace and why there is an urgent need for passage of comprehensive postal reform legislation. We would, however, like to debunk a few myths in your list.

First, the claim that the Postal Service has “many layers of redundant management” and bureaucracy, is not true. In FY 2000, the Postal Service had 74,877 PCES [Postal Career Executive Service] and EAS [Executive and Administrative Schedule] employees. At the end of FY 2013, we only had 54,473. We have also reduced the number of Areas and Districts significantly, going from 10 Areas and over 100 District offices to 7 Areas and 74 Districts.

Regarding the item about electrical safety hazards, employee safety has always been a top priority of the Postal Service. Under terms of a recent settlement with OSHA, the Postal Service has agreed to modify its Electrical Work Plan Management Instruction and Maintenance Management Order so that significant amounts of personal protective equipment are purchased and significant hours of electrical safety training are administered. These changes are being phased in over a two-year period. We will be investing more than $5 million for 123,000 hours of training for nearly 20,000 maintenance employees. We also have distributed more than $2 million in protective safety gear.

As for the safety of our vehicle fleet, the Postal Service maintains a very stringent vehicle inspection program that requires a minimum of two comprehensive inspections performed each year. Inspections are performed by both contractors and USPS maintenance facilities.

The Postal Service operates under the laws that apply to it and does have the power to exercise eminent domain in the name of the United States. The courts, including the Supreme Court, have cited that power as evidence of how we are a government entity.

The Postal Service continues to take the responsible actions needed as outlined in our Five-Year Business Plan to return the organization to long-term financial stability. We need Congress to do its part by passing the legislative requirements in our plan so that the Postal Service can operate more like a “real business” and provide the mail and package service our customers expect and deserve for decades to come.

Corporate Communications
U.S. Postal Service

Related articles:

Tuesday, October 29, 2013

Viagra in a Printing Plant? What's Up with That?

A TV ad for Viagra that features a printing plant has been getting plenty of air time during World Series broadcasts – and stirring up lots of questions.

What exactly is Viagra trying to tell us – that the printing industry is inhabited mostly by old guys who, how shall we say, suffer from slow makereadies? Is the ad making a subtle reference to the industry’s limp profits in this age of digital media and online bill payment.

The ad takes place at the “K.L. Printing” plant, with the focus on a guy running a Heidelberg sheetfed press. He’s your typical star of an erectile dysfunction ad – a slightly over-the hill guy with a gleam in his eye and a bit of a lone-wolf swagger. And played by an actor who probably doesn’t know his fountain solution from a fountain soda.

Why show a printing plant rather than a more generic-looking factory?

And here's the real mystery: What is it about being a pressman that causes our handsome-but-not-too-handsome star to need Viagra? Dead Tree Edition hopes to clear up this mystery by offering a few theories (with some explanatory links for those of you who aren't printing geeks):
  • He needed more bulk and stiffness in his sheets. 
  • The plant had produced a mail piece that had failed the Postal Service’s droop test
  • The excitement had gone out of K.L. ever since they fired the strippers – when the prepress department went all digital. 
  • His butt roll got caught in a tail clamp, though I’m not exactly sure how taking Viagra would solve that problem.
  • The press’s low-rub ink was rubbing him the wrong way. 
  • Maybe it had something to do with blow-ins, but I’ll leave it at that. 
So what’s your theory?

Related articles:

Monday, October 28, 2013

17 More Ways USPS Is Not Like a Real Business

Please see the U.S. Postal Service's response to this article, Layers of Redundant Management Have Been Eliminated, USPS Says.

The recent article Nine Ways the Postal Service Is Not Like a Real Business apparently struck a chord, or maybe a nerve, generating numerous insightful comments on this blog, various LinkedIn groups, and private emails.

Though the U.S. Postal Service must live off of the revenue it generates rather than on government appropriations, it differs fundamentally from private enterprises in numerous ways. Those distinctions are more than just an interesting point of discussion. They are a key to understanding the Postal Service and how it might be reformed.

So, with thanks to many Dead Tree Edition readers, here are xxx more ways the USPS is not like a real business:
  1. The concept of “investment” is nearly absent from the Postal Service, which must live from one annual budget to the next. It is not able to access private capital markets, such as the bond market, to finance major capital investments. That prevents it from making investments that would probably pay off in the long run, such as replacement of its aging, inefficient delivery fleet and more of the kind of automation that has enabled it to increase labor productivity.
  2. Similarly, the Postal Service is hamstrung when it comes to launching new products that are not immediately profitable. 
  3. The Postal Service does enjoy low interest rates on its debt because it can borrow from the federal government. But it has reached the legal limit of its ability to borrow. And much of its debt was racked up to cover subsidies to the federal budget that were dressed up as prepaid retiree health benefits and pension-fund payments. 
  4. “Real businesses are not required to invest ALL their pension assets in low interest government bonds but instead can choose to invest then in a balanced portfolio,” noted one anonymous commenter. “The difference in average returns on pension assets of the USPS and the average returns of a typical businesses pension assets amount to over $10 billion per year.” 
  5. “They are forced to deliver to unprofitable addresses,” notes Mike Seethaler, president of Raintree Graphics in Jacksonville, FL. “If a customer is too far out and too small for us to make a profit, we don’t do business with them.” In contrast, one commenter noted, USPS “is mandated to serve all areas of the country, every address, every day.” 
  6. Speaking of unprofitable customers, USPS can’t charge higher prices for customers who are expensive to serve. People who get front-door delivery pay no more than those who receive their mail curbside or in cluster boxes. When USPS has to rely on airplanes, boats, or donkeys to get mail to remote places, it can’t charge a premium for those services. And it costs you 46 cents to send a letter from Maine to Alaska, or to send it across town. 
  7. “Real businesses report long term liabilities, like retiree health benefit liability, on their balance sheet, and only report them as an expense when money is set aside to fund the liability,” wrote Liam Skye. “USPS is the only organization that is required by law to report fixed amounts of the liability as expense, whether they put the money aside to fund the liability or not!” 
  8. Unlike most postal agencies around the world, the U.S. Postal Service is legally restricted from straying outside of its core business of offering postal services. And even its delivery-related ventures can run into problems if they compete with private businesses. “Consider the fact that USPS came up with the concept of overnight mail first,” says R.E. Perry. “It made so much money for the service that USPS bought a bankrupt airline rather than continue to pay other carriers to provide that service. Complaints that private companies could be making this money led to Congress ordering the service to sell the airline, and return to paying others to move their mail.” 
  9. The Postal Service is subject to a regulatory agency, the Postal Regulatory Commission, that has no authority over USPS’s private-sector competitors. 
  10. “Another way USPS is not like a business: It is mandated by the Constitution of the United States,” wrote Kofi M. G. W. Opantiri. (Technically speaking, the Constitution authorizes but does not require Congress “to establish Post Offices.”) 
  11. It is exempt from income, sales, and real estate taxes. On the other hand, USPS is not eligible for the kind of tax breaks that incent private businesses to expand and to become more energy efficient. 
  12. “Real businesses don't have two private police agencies who have to enforce thousands of federal rules and regulation WITHOUT reimbursement,” noted one commenter. 
  13. By law, postal workers cannot strike. But impasses in labor-management negotiations at the Postal Service lead to an unusual step – binding arbitration. 
  14. Private businesses are not subject to the Freedom of Information Act. But nor do they have the power of eminent domain, exemption from many state and local laws, and some protections from being sued. “USPS considers itself above the law,” wrote “a lady veteran.” “Some of their trucks should never be on the road.” 
  15. “Not even Wal-Mart risks electrocuting its employees,” tweeted Dave Berdych, alias Dry Mail Man, referring to OSHA’s four-year investigation of electrical safety hazards in numerous postal plants. 
  16. ‏ “No real business would have this many layers of redundant management. (bureaucracy),” responded one reader, echoing a complaint often heard from postal workers. 
  17.  “Real business management incompetence is usually dealt with a demotion or termination,” wrote another. “Postal incompetence is rewarded with a promotion.” 

Thursday, October 17, 2013

USPS Responds To Criticism of Its Annuity Estimates

For the first time I can remember, the U.S. Postal Service issued a formal response today to a Dead Tree Edition article, USPS Comes Up With Yet Another Way to Discourage Early Retirement. The response was submitted as a comment on that article, but I think it deserves to be called out as a separate article. I won't comment on the response, except to say that I'm glad USPS is apparently taking seriously the need for accurate FERS annuity estimates.

According to OPM’s audit results, the U.S. Postal Service leads all agencies in retirement application accuracy with a score of 97% for its August 2013 submissions.

Through our partnership with OPM Retirement and the National Personnel Records Center, the Postal Service has worked diligently to provide accurate and timely information, which reduced the backlog at OPM from a 7- to 10-month delay to currently 30 days or less before retirees are placed in interim payment status.

The Postal Service recently sent offers to approximately 16,000 Voluntary Early Retirement (VER) eligible employees; twelve employees reported receiving blank annuity estimates due to a processing issue. These employees were immediately provided a revised annuity estimate.

The Postal Service provides its employees with annuity estimates that display the estimated annuity amount for employees with and without a survivor annuity. It also provides the following information listed below on its annuity estimate:
  • Retirement eligibility date 
  • Annuity computation date 
  • High-3 average salary 
  • Total actual service 
  • Accrued sick leave credit
  • 50% for FERS retirements effective through 12/31/2013 
  • 100% for FERS retirements effective on or after 01/01/2014 
  • 100% for all CSRS retirements 
  • Annual leave earned balance 
  • Terminal leave payment 
  • Cost of life insurance and FEHB coverage in retirement
The annuity estimate is based on up-to-date individual employee data and a comprehensive, validated service history for each employee, determined according to CSRS and FERS regulations. The service history identifies not only Postal Service service but also periods of military and prior civilian service and whether those periods of service are creditable for retirement eligibility and/or annuity computation.

OPM has validated Postal Service results as highly accurate as compared to actual OPM annuity determinations. The process is continually updated to reflect changes in retirement regulations; for example, estimates reflect the creditability of sick leave for the FERS annuity computation and the ability to make FERS redeposits.

The Postal Service does not provide annuity estimates for the FERS Special Retirement Supplement at this time -- the FERS Special Retirement Supplement is based on an OPM calculation of FERS service as a portion of 40 years of estimated Social Security earnings -- but we are currently working with our Supply Management office to find suppliers capable of leveraging their retirement software applications with our retirement applications to provide an estimated numeric value of the Special Retirement Supplement amount. We anticipate that this project will be completed this fiscal year. In the meantime, the Postal Service does provide a formula on the annuity estimate that shows the employee how to calculate the estimated amount of the Special Retirement Supplement using their own Social Security earnings.

We greatly value the service of all our employees, and we endeavor to do everything we can to contribute to a rewarding retirement.

Tuesday, October 15, 2013

USPS Comes Up With Yet Another Way to Discourage Early Retirement

Please see the Postal Service's response to this article: USPS Responds To Criticism of Its Annuity Estimates.

Amidst all of the postal reform proposals that went nowhere the past few years, the one tactic that has definitely worked for the U.S. Postal Service is getting employees to retire early.

The tactic would work even better if the Postal Service stopped confusing or misleading potential retirees – by providing them with incomplete or just plain wrong information about what their retirement benefits will be.

Here’s the latest chapter in this sorry saga: In the most recent round of VERA (Voluntary Early Retirement) offers, many among the thousands of affected postmasters have received annuity estimates containing no calculation of what their monthly annuity payments will be, reports Roseanne Jefferson, a retired USPS benefits manager, in her Postal Retirement column.

Drop dead
She notes that the postmasters have to decide by “an irrevocable drop dead date” whether to retire without knowing what their retirement income will be.

“Who does that?!" she asks. "Who retires not knowing how much EVEN the gross annuity is, even before any deductions are made? Seriously….do you apply for a job, get the job, and then go home and tell your spouse, hey honey, I got a job…and the spouse says….GREAT!!!, how much will you be making….and the newly employed spouse says, gee I don't know, I guess I will find out when I get my paycheck.”

“The Postal Service has done NOTHING to improve their FERS [Federal Employee Retirement System] annuity estimates,” says Don Cheney, who has been working on USPS early-retirement issues for a decade, often on behalf of fellow APWU members. “They still don’t include the FERS Annuity Supplement when it is applicable."

Confusion is rampant
"Employees don’t know when they are eligible for the FERS Annuity Supplement or how much it is,” Cheney adds. “The rules in FERS are complex, unlike the old CSRS [Civil Service] Retirement System. Confusion is rampant, because local personnel offices were abolished in 2007” when the work was contracted out.

The Postal Service’s practices violate the Office of Personnel Management (OPM) instructions, Cheney claims.In a list of annuity estimates an employing agency must provide upon request, OPM’s handbook provides this instruction (in Section 40A2.1-3, pp. 20-21): “For FERS employees eligible to receive an annuity supplement, estimate the monthly amount payable to age 62.”

The case of the missing annuity estimates is just another chapter in a story that has been unfolding for years. In 2009, for example, only 3% of the 150,000 employees offered a VERA accepted, partly because many mistakenly thought they would be subject to a penalty.

Those eligible for a VERA frequently receive FERS annuity estimates that understate their annuity payments by more than $1,000 per month. And at times many postal retirees have had to wait seven to nine months to receive their full retirement payments.

No winners
No one wins when such incompetence discourages employees from retiring. Certainly not the Postal Service, which is desperate to reduce expenses in light of declining revenues. And with half of the postal workforce being 50 or older, plenty of employees are eager to leave if they could just be sure what their retirement income will be.

By enabling USPS to replace long-time employees with lower-paid new hires and to eliminate jobs without violating no-layoff clauses, the various early-retirement drives are probably saving the Postal Service billions of dollars annually.

Just think how much greater the savings would be if the Postal Service could just do what is commonplace among large businesses – provide accurate and timely retirement information to its employees.

Related articles:

Sunday, October 13, 2013

On the 5th Birthday of Dead Tree Edition, It's Time To Reveal the Real D. Eadward Tree

Five years and 601 articles ago today, a magazine-publishing veteran took on the identity of D. Eadward Tree and launched the Dead Tree Edition blog.

Rarely has the blog focused on Mr. Tree himself, under the assumption that the 700,000-plus unique visitors (some more unique than others) who have visited over the years were looking mostly for advice, insight, or maybe even entertainment. But the true identity of Mr. Tree has become a subject of great speculation and discussion in some publishing and printing circles, prompting a few of the blog’s followers to request that Dead Tree Edition celebrate its fifth birthday by spilling the beans.

A thorough reading of all 601 of those articles provides many hints as to Mr. Tree’s identity. It’s also a great cure for insomnia, unless you are that rare bird who happens to share all of Mr. Tree’s obsessions – such as making print more environmentally friendly, getting accurate benefits information to potential U.S. Postal Service retirees, reforming the way USPS calculates the cost of Periodicals mail, exposing “black liquor” government subsidies to U.S. pulp mills, and battling “go paperless” greenwash.

So to save you the trouble, here are some clues we dug up about Mr. Tree from his writings:

In 2010, a postal executive startled a meeting of postal officials and mailers’ representatives by announcing that Mr. Tree was none other than Patrick R. Donahoe, then the #2 man at USPS. Five months later, Donahoe became Postmaster General. A coincidence? You decide.

A couple of months later came another clue – that Mr. Donahoe, aka Mr.Tree, had starred in those “If it fits, it ships” Postal Service commercials. But Mr. Tree soon pooh-poohed that by claiming he was actually married to a prominent publishing-industry pundit.

Confused yet? Just wait.

Only a Jew could have written this headline: Call a mohel, this baby's growing!. But the article Re-Righting The Bible: No More Namby-Pamby Peacemaking suggests a familiarity with the New Testament that only a Christian would have. And articles like Playboy and Virgin Fail to Hook Up suggest a total lack of spirituality.

An object of fantasies?
What’s clear is that he works in the magazine industry and is a self-described “print guy” (even a printing geek) and “an environmentalist who buys a lot of paper.” But he’s definitely not part of what he calls “the New York publishing elite.”

His LinkedIn profile places him in Hawaii, which should narrow things down a lot. But he claimed in an interview that the Hawaiian thing was a (lame) joke and that he actually inhabits a parallel universe.

He hangs around bookstores and doesn’t date Cosmo readers, he told us three years ago. And regarding a magazine cover of Rosie O’Donnell that has now appeared three times on Dead Tree Edition, we note Mr. Tree’s comment, “Hubba, hubba, Rosie in a bathrobe!” Perhaps a glimpse of his secret, twisted fantasies?

In early 2010 he revealed that he has a nephew – and an apparent appreciation for James Brown. An article he wrote last year for Publishing Executive magazine pays homage to The Who (See me, Sniff me, Touch me, Peel me) and Madonna. And the opening sentence of his next PubExec article ripped off “should threaten to undo us” from Martin Luther’s “A Mighty Fortress.”

Rather diverse musical tastes for one person, wouldn’t you say?

Has it ever occurred to you that Mr. Tree is confused about his own identity?

Tuesday, October 8, 2013

What's Weighing Down the Postal Service?

The internet and the economic downturn have not been kind to the nation's postal system, but it's also been burdened by problems that were, and are, completely avoidable.

I, and other postal commentators, have spilled a lot of ink (and pixels) explaining how billions of dollars have been needlessly taken from the U.S. Postal Service to overfund its pension and retiree health benefits. The chart above from Rafe Morrissey of the Greeting Card Association shows clearly that USPS's payments are way out of line with what's typical for government agencies.

"Both funding levels are substantial financial strains . . . and do not allow for fair competition in the marketplace," says the slide, which is taken from a free webinar that Morrissey is presenting tomorrow (Oct. 9, 2013, 2 p.m. Eastern, 8 a.m. Hawaiian) called "A commonsense solution to the postal service's budget crisis."

Morrissey, the GCA's Vice President of Postal Affairs, will present the association's plan for reviving the Postal Service, which advocates nationwide implementation of cluster boxes and adopting a host of other changes while preserving Saturday delivery and avoiding above-inflation rate increases.

For more information on the Postal Service's pension overpayments and "prefunding" of retiree health benefits, see Congress Hears the Truth About Postal Service Finances, which describes the USPS Inspector General's rather forthright Congressional testimony on the subject.

Saturday, October 5, 2013

Nine Ways the Postal Service Is Not Like a Real Business

The hand wringing about the U.S. Postal Service’s broken “business model” doesn’t fool us. The “dot com” at the end of “” doesn’t fool us. The nagging of politicians and pundits who say USPS should operate more like a business doesn’t fool us.

Despite all the talk about the Postal Service being a business, regular people understand it has the soul of a government agency and in fact is not allowed to act in a businesslike manner. Here are nine examples of how USPS is not like a real business:

  1. Real businesses underfund their pensions. The Postal Service overfunded its pension plan (to the benefit of the federal government, not postal employees).

  2. When a too-big-to-fail business gets into financial trouble, the federal government often props it up with interest-free loans in the name of economic stimulus. When the Postal Service ran into financial trouble, Congress insisted that it continue lending interest-free money to the federal government in the guise of prepaid retiree health benefits. 

  3. A real business with thousands of employees might pay its CEO $50 million a year, and no one bats an eyelash. But if the Postmaster General, who oversees 600,000-plus workers, earns 1% of that amount ($500,000), watch the politicians fall all over themselves lambasting the Postal Service’s lavish spending.

  4. Real businesses are governed by a board of directors, generally consisting of about a dozen leaders who are or soon become intimately familiar with the enterprise. But the supposedly independent Postal Service in reality is governed by a 535-member board known as Congress, whose members generally know nothing about the USPS’s operations except how to get a post office named and how to prevent it from closing.

  5. Board members of a real business have powerful incentives, like stock options, to make the company run more efficiently. But a member of the Postal Service’s real board (that is, a Congressman) only has incentives to preserve inefficiencies that maximize the number of postal employees and facilities in his district.

  6. When the board of a real business fails to act, board members get punished with a lower stock price and the prospect of not being re-elected. When the Postal Service’s real board of directors fails to act, postal customers get punished with higher prices.

  7. Real businesses make money on monopolies – at least until the trust busters come along. The Postal Service has a government-protected monopoly on the mailbox, but it comes with such onerous conditions that the monopoly is unprofitable.

  8. Real businesses make campaign contributions and use lobbyists to curry favor with members of Congress. The only “campaign donation” USPS makes is the franking privilege, which enables Congress members to send free mail to constituents (usually just before election time). USPS's lobbying efforts are limited severely by law.

  9. A real business that is billions in debt, has too many locations and employees, and is subject to strong union contracts would have declared Chapter 11 by now. The law would be on its side as it tried to walk away from most of its debts, scale back its operations, and even slip out of its union contracts. The Postal Service, however, apparently cannot turn to the bankruptcy courts – one more example of how the law treats it as just another government agency even though it’s supposed to operate like a business.
Do you know of other ways in which USPS is not like a business? Add a comment to this blog post or email them to me at I can keep your comments anonymous if you'd like. And please see the follow-up article, 17 More Ways USPS Is Not Like a Real Business, which is based on insights from Dead Tree Edition readers.

For background information on some of the items listed above, please see: