Is the Postal Service Really Broke?

The U.S. Postal Service would be in Chapter 11 if it were a business, the Postmaster General points out, but others claim he and some political conservatives are manufacturing a crisis.

There has been much debate and confusion regarding USPS’s financial status. It helps to break the issue down into three questions:

Question #1: Is the Postal Service broke?

This is a debatable point, though the Postal Service’s financial reports show that it is indeed broke and about to exhaust its ability to borrow.

Those who say USPS’s finances are OK point out correctly that it has prepaid billions of dollars to the federal government to cover future retirees’ health benefits and overpaid billions more into a joint federal/USPS pension fund. A Congressional accounting game designed to mask the size of the government’s budget deficit basically has the Postal Service borrowing billions of dollars each year so that it can turn around and lend billions back to the government in the form of prepaying into the retiree-benefits fund.

Business-style accounting would treat that $21 billion loan to the federal government as an asset, giving USPS about $2 billion in net capital at the end of Fiscal Year 2011 rather than the -$19 billion net value it reported.

It's Time for Liberals To Rethink USPS Downsizing

Thurgood Marshall Jr.

Liberal conspiracy theories about the Postmaster General’s plan to downsize the U.S. Postal Service ran head on into reality yesterday.

The plan “would return the organization to sustained profitability,” Thurgood Marshall Jr., chairman of USPS’s Board of Governors, said in a prepared statement. In contrast, legislation recently approved by the Democratic-controlled Senate would “not provide the Postal Service with the flexibility and speed that it needs to have a sustainable business model.”

Marshall reiterated his support for "the tremendous job" being done by PMG Pat Donahoe, commending him ”for his excellent work in communicating internally and externally about the changes that we are implementing, the long-term future of the Postal Service and the future of mail” and for ”keeping our eyes focused on the long-term horizon.”

Scion of a liberal icon
If you’re going to attack a plan as an anti-labor Tea Party plot, it doesn’t help to have the name “Thurgood Marshall” singing its praises. Marshall’s father is an icon of the Civil Rights Movement for creating and implementing the brilliant legal strategy that gradually dismantled Jim Crow education laws before becoming the first African-American Supreme Court justice.

Marshall Jr. has his own liberal credentials, having served under Bill Clinton, Al Gore, and Ted Kennedy.

Unlike bleeding-heart senators who can’t stand the thought of closing a single post office, Marshall has actually looked at the numbers. The math is simple: The Postal Service’s expenses are billions of dollars higher than its revenues (even if the retiree-benefits and pension accounting games are excluded). Without aggressive action, revenues will continue declining faster than expenses.

We Already Have A Veterans Job Corps -- It's Called the Postal Service

Hours after a leading Congressman urged massive job cuts at the largest civilian employer of military veterans, President Obama proposed creation of a Veterans Job Corps.

"With the bipartisan support of this Congress, we are providing new tax credits to companies that hire vets," Obama said Tuesday night during his State of the Union address. "Michelle and Jill Biden have worked with American businesses to secure a pledge of 135,000 jobs for veterans and their families. And tonight, I’m proposing a Veterans Job Corps that will help our communities hire veterans as cops and firefighters, so that America is as strong as those who defend her."

Those 135,000 jobs don't quite equal the estimated number of vets who already work for the United States Postal Service.Veterans preference has long been part of USPS's hiring practices and culture, leading to approximately one-fourth of its current employees having military experience.

Do We Really Need New Laws To Get More Postal Employees To Retire?

Congressman Darrell Issa complained this week that not enough U.S. Postal Service employees are retiring and hinted at legislation that would force more retirements. But, like USPS executives, he doesn't seem to be looking at the major reason postal employees are reluctant to leave.

First, consider the California Republican's comments during a House Oversight Committee hearing about the Postal Service on Tuesday (starting at about the 2:31:30 mark):

"You already have 100,000 too many [employees] today. I've asked my staff to look at a lot of areas that we may legislate." (He seems to be getting soft on the Postal Service: Six months ago, he said USPS had "200,000 people who should be retiring.")

"What we probably need to do is bite the bullet one time and figure out how we’re going to retire people that are over 55 and have over 20 years of service to help get your number down," he said at Tuesday's hearing. "Voluntary departures aren't working." Citing an attrition rate of barely over 1%, he added, "Any private company would love to have the attrition you have. You still have two people that are 98 years old on the payroll."

Now consider this recent statement from Roseanne Jefferson, a former USPS human resources manager, in her monthly retirement column for PostalMag.com:

Afraid to retire
"I'm always surprised at the incredible misconceptions that our employees have about their retirement plan. Particularly in the last years of their employment, they are so sure of their retirement benefits, and are so surely wrong. It has always amazed me how our organization is OK with the understanding that employees are afraid to retire, because they don't trust the newly HRSSC to get their retirement correct."

"Many . . . have said the lack of information given during an on-the-phone seminar is lacking real substance as it relates to the individual employee. Many have stated it sounds scripted and is overly generic when you call and ask questions."

USPS employees have good reason to fear retirement, including inaccurate pension estimates, inconsistent answers to retirement-related questions, and months-long waits to receive full benefits after retirement.

Before politicians and postal executives consider new legislation that would push employees into retirement, shouldn't they first fix what's hindering voluntary departures? And if, as widely rumored, many employees will be offered early-retirement incentives in the next few months, wouldn't it make sense to provide retirement counseling without first making them commit to retiring?

Other articles related to barriers to retirement at USPS include:

• The Postal Service's Early-Retirement Snafu: Response to a USPS early-retirement incentive program in 2009 was low because benefits estimates were too low and because employees had to commit to retiring before the Postal Service would give them retirement counseling. 
• USPS Getting Its Retirement Act Together? Nope: USPS automated the process of providing retirement information to employees, but left out some sources of retirement income.  
• USPS Retirement Mess: A Major Barrier To Downsizing: Many newly retired Postal Service employees are receiving lower pension payments than they should while waiting months for the correct payments to be calculated.

Here's What Darrell Issa Actually Said -- But Don't Ask What He Meant

A couple of people have complained that my article yesterday on Rep. Darrell Issa (Is Darrell Issa Getting Cold Feet About Postal Service Downsizing?) misrepresented his comments at a recent Congressional hearing on the Postal Service.

Here is the passage in question, starting at the 2:28 mark in the video (which was uploaded to YouTube today):

"Postmaster General, I appreciate the fact that you have come in and re-looked anew at your predecessor's initial ideas, and I have seen some innovative and, I think, very worthwhile suggestions you have made, and some of them are tough. As we were talking before we came out here, the good news is there are at least two post offices that need to be closed in every congressional district in America. Let's hope there is not one or three in mine."

Issa's words are open to interpretation, but seeing the video leads me to believe he was making a joke and not a threat. (Some advice, Congressman, if you're thinking about becoming a comedian: Don't give up your day job.)

I'm guessing he meant that if an average of two post offices were closed in every Congressional district, fewer than two closings in his district would look like special treatment and more than two would get him into trouble with his voters. But I welcome other interpretations (and think I fixed the problem that prevented readers from commenting on this blog).

After a long history of politicians complaining about inefficiency at the Postal Service but then blocking any austerity moves in their own district, some of us may have been too quick to conclude that Issa was playing the "not in my district" game. The proof will be when the inevitable post office closings and USPS job cuts hit home in his district.

Issa's brief statement also left room for interpreting his position on ending Saturday delivery. Saying that the Postal Service should deliver "a level of service that Americans have come to expect," he added: "If at all possible, we want that to include all categories of mail, all types, and all delivery dates, meaning six days a week is a goal if we can achieve it."

But this statement is certainly clear: "The cost of mail is a cost to American commerce and to the American people, so every time there is an increase in postal rates, it is to the detriment of American efficiency and disposable income to the American people."

Amen to that, Congressman!

Is Darrell Issa Getting Cold Feet About Postal Service Downsizing?

Please also see the follow-up article Here's What Darrell Issa Actually Said -- But Don't Ask What He Meant.

Rep. Darrell Issa, the Republican Congressional leader who has been boldly advocating a downsizing of the U.S. Postal Service, suddenly doesn't sound so brave.

At a recent Congressional hearing, according to postal commentator Eddie Mayhew in his newsletter for publishers, Issa said there were probably post offices in every district that could be closed but that he hopes “there isn’t one or three in mine." Is this really the same man who just four months ago told The Washington Post, "There are too many postal workers, too many distribution centers, too many post offices and a reluctance to make those changes"?

Or the same one who told The Heritage Foundation in October that "the Post Office has 200,000 people who should be retiring"? (See USPS Has Too Many Supervisors And Too Many Employees, Congressman Says.)

I have news for you, Congressman: Every postal worker, every distribution center, and every post office is in some Congressman's district. If you, as the chief proponent of USPS downsizing, can't "man up" and drop the "reluctance to make those changes," how can you expect your Congressional colleagues to cooperate with any meaningful rightsizing of the Postal Service?

While grandstanding politicians yack about making the Postal Service more efficient, the Postal Service has been busy actually doing something -- like eliminating 25,000 career positions in the past year. This Friday, it will announce another 7,500 job cuts – this time including real employees instead of just vacant positions – along with the closing of some facilities.

If some of those places and people are in Issa's district, will he remain true to the cause of downsizing the Postal Service? Or will he start whining like a West Virginia Democrat about how his district needs every Postal Service job it can get?

The Santa Ana, CA processing and distribution center is within commuting distance of Issa's district -- and is the kind of small distribution facility often targeted for consolidation. If it becomes the subject of an Area Mail Processing study, will Issa still proclaim there are "too many distribution centers" and let the Postal Service carry on with consolidation? Or will he demand an investigation and use his committee chairmanship to punish the Postal Service for practicing what he preaches?

Say what you will about the Postal Service, its cost-cutting moves the past few years have dwarfed anything done by other government agencies -- including Congress. Especially Congress. Postal executives are making the tough decisions. Now let's see if Issa and other Congressional leaders have the cojones to do the same.

Democrats in the last Congress tried to dress up giveaways and pork-barrel projects as "economic stimulus," but the voters didn't buy it. Seeking fiscal sanity, millions who had voted for Obama two years earlier decided to hand the House's reins over to the GOP.

By the same token, if Issa and his allies talk "austerity" but really mean "not in my district," voters will turn on them as well.

Congressman Issa: Where Are All Those Postal Supervisors?

The response to an article two weeks ago that quoted Rep. Darrell Issa as saying one in seven U.S. Postal Service employees has stirred up an unprecedented amount of reaction.

So far, 57 comments have been made to USPS Has Too Many Supervisors And Too Many Employees, Congressman Says -- a Dead Tree Edition record -- and the response was even greater on other sites that linked to the article. Postalreporter.com, for example, has 204 comments. The head of the postal supervisors union also objected to the California Republican's "trash talk" and challenged his statistics.

"Without doubt, the supervisory ratio within the Postal Service is far, far higher than 1:7," said Louis M. Atkins, president of the National Association of Postal Supervisors. Many comments, though acknowledging that the Postal Service has too many layers of management, also questioned Issa's numbers.

I agree with these folks. After looking at USPS employment statistics (see chart at right from the last annual report), I can't find that many supervisory or managerial employees.

Of the approximately 712,000 employees at the end of last year, more than 90% are in categories like carrier and mail handler that seem clearly to be non-supervisory. Adding the "Postmasters/Installation Heads", "Supervisors/Managers", and all headquarters and area-office employees (even though some are non-supervisory) yields abou t 65,000 -- only 1 in 11 USPS employees.

Perhaps Issa excluded non-career employees from his count. But, assuming he recognizes that part-timers and temps are an efficient way to handle fluctuating workloads, that wouldn't make sense. And, besides, that would only change the ratio to about 1 in 10.

Some commenters wondered whether Issa was including 204Bs (substitute supervisors), but they can hardly be called true supervisors.

And one commenter had an insightful response to Issa: "In fairness, the '1 of 7' that Representative Issa refers to also includes low-level Postmasters at thousands of small post offices in small communities throughout the nation. Many of these Postmasters are the only employee in their office, or have just a few clerks or rural carriers. Their salary is less than that of a city letter carrier. Incidentally, many of these same small offices are ones that Congress prevents USPS from closing!"

Other highlights from the comments:

• "There are far too many managers. I am a manager and I've seen it from both sides. But it is not so much local management as it is people that don't even see the mail, touch the mail or have been inside a post office WORKING for decades and have no clue what is going on. Some district jobs are an all day cake party,"
• "I've been in offices where I was the only one supervising 50+ employees."
• "If the USPS restricted access to Facebook and personal email accounts, our office could eliminate two supervisors."
• "There are 35 routes and 6 clerks in my office yet we have 5 custodians [not techs] to pick up empty trays and trash and mow the lawn. Ridiculous."
• "You all can come work at a REC where the ration is 1:200...and you will never see one of your employees if you don't want to."