One of the most interesting things that happens here at the shop is when we get feedback from our listeners or readers on something we’ve talked about, and that’s the case with this article. Most people have heard rumblings that the Post Office is in trouble, but the troubles facing today’s Post Office aren’t the result of market pressures. They are, in part, the result of a Bush-era Congressional edict requiring the Post Office to pre-fund retiree health benefits 75 years in advance, and to do it in a 10-year period. This issue has been on Tom’s radar for a while and he’s done a couple radio spots on it. It was one of these spots that caught the attention Ted Lulich, trustee and regional steward for Branch 82 of the National Association of Letter Carriers (NALC), and prompted him to add more fuel to the fire.
We sat down with Ted and Kevin Card, Secretary Treasurer of NALC Branch 82 and President of the State Association of the NALC. “We aren’t broke. We don’t need a bailout”, said Kevin. “We’ve been a completely self-sufficient service for years.” It may need a brief history lesson to tell us how they got here. The Post Office was still a cabinet-level agency in 1970, but that made little difference to postal workers themselves. They were forbidden by law from engaging in collective bargaining, and had been informally attempting to obtain better working conditions and a raise. When Congress gave the postal carriers a 4% raise at the same time they gave themselves a 41% raise, it was too much. The postal workers went on strike on March 18, 1970.
It became one of the largest wildcat strikes in US history, crippling the nation’s mail system, disrupting distribution of government checks, documents, and draft notices, and dropping the value of the stock market. President Nixon called out 24,000 military personnel to begin distributing the mail, but they met with limited success. When the Postmaster General agreed to recognize and negotiate with seven unions, the employees ended the strike and negotiations began on March 25. They agreed to a general wage increase of six percent retroactive to December 27, 1969 for all federal employees, plus an additional eight percent increase for postal workers that would take effect if the parties could agree on legislation reorganizing the Post Office Department and if the legislation could be enacted.
That additional 8% was a big carrot, so management and the unions agreed to work together. On April 16, 1970, they announced agreement on a plan that became the Postal Service Reorganization Act of 1970. Workers won the right to negotiate, but the Post Office went through some major structural changes. It was no longer a cabinet-level agency, but instead became a corporate-like, quasi-independent agency separate from the Federal government but under the oversight of Congress.
That change from inside-the-government to outside-the-government is one of the pivotal outrages of the retiree pre-funding requirement. The USPS used to pay into two federal retirement programs for its employees- the Civil Service Retirement System (CSRS) and the Federal Employees Retirement System (FERS). “Right now, we have overpayments of $50-$75 billion in CSRS and another $6.9 billion in FERS” said Ted. “Transferring the money that ALREADY EXISTS IN THESE ACCOUNTS would almost completely wipe out the pre-funding requirement the USPS currently faces.” However, since Congress has plundered the money from these accounts it is unable to hand it back, and has no plans to do so.
While the pre-funding requirement is a burden faced by no other governmental agency or private company, it’s not the only bizarre regulation the USPS operates under. Did you know that they operate on a year to year budget? This means that at the end of the year, any losses they have are put on the books to be paid the next year. What about profits? “When it comes to the Post Office, there are none”, said Kevin. “Any profit we make is given to the US Treasury.”
But neither Kevin nor Ted wanted to dwell on the injustices the USPS is fighting. They were both optimistic about the future, and wanted to talk about what the Post Office is doing to be ready for it. They started by acknowledging the real issues they face- “Email, paperless billing, and other electronic communication have certainly taken a huge chunk out of our mail volume”, said Ted. “We realize that, and we’re responding aggressively to the new reality. But we’re doing it effectively, and we have been for many years.” For instance, immediately after the Reorganization the Post Office set a goal of self-sufficiency by 1991. They achieved it in 1982. “We get no tax money at all for operating expenses” said Kevin. “All the money we get comes from the sale of postage. This is even more impressive when you consider that much of the mail we carry is unpaid- Congressional subsidies for the blind, congressional franking, military mail, and others.”
Far from being a bloated bureaucracy, the USPS is a model of efficiency. In 2006 they had an operating budget of $78 billion, and 6 years later they’ve reduced the budget by 20% to $62 billion. “Most of this savings has come from automation,” Kevin said. “It’s the efficiency that has allowed us to reduce the number of clerk positions. Most of our carriers used to spend half their time sorting and half their time delivering their mail. Now it comes mostly sorted, and they can spend more of their time actually on their routes.” Ted came up with one of the most amazing indicators of efficiency- “We’ve added over 15,000,000 households to our delivery area since 1978, but we’re handling that increased workload with the same staff levels we had back then.”
Despite all the doom and gloom about the USPS’s future, Kevin and Ted seemed most excited about the possibilities that future might hold. Each had a program they were particularly interested in. Kevin told us about the antidote delivery test program that had been such a success. “One of the big threats facing our country is the threat of biological warfare. If a terrorist were to release a pathogen in a city, it could be a huge logistical problem to get everyone in the area into treatment in a timely manner. Any delay could cost lives. However, the letter carriers go to every address every day, and they know the people on their routes. They would be ideally placed to deliver antidotes to everyone they serve. Pilot programs in Tampa and Philadelphia proved this would work. This is something no other agency or company is equipped to do.”
Ted told us about a way for the Post Office to earn extra money, lots of it, if only Congress would let them do it. “We were approached by Walgreens about a project to deliver prescriptions from pharmacies to people who can’t go pick them up by themselves. The patient would phone in their prescriptions, and then the letter carrier would pick them up at the pharmacy and deliver them to the patient’s door. This would result in same-day, or even within-the-hour delivery. Wal-Mart and CVS are also interested in the program, which would bring in an estimated $5 billion to the Post Office each year.”
Kevin and Ted are bullish on the Post Office because they know where they are, what they can do, and where they want the USPS to go. “Year after year, postal workers are the most respected Federal workers”, said Ted. “The US Postal Service is the most trusted and most efficient postal service in the world, far beyond the privatized systems of Europe. Rates went up there between 2 and 30% when the post offices switched to privatization. It costs .61 to carry a letter in Canada right now.” Kevin summed things up well… “The Post Office can’t cut its way to success, but we can and must become more efficient to stay up with the times. The country depends on us, even UPS and FedEx count on us as ‘last mile’ carriers to deliver to the areas where they can’t make a profit. The problems we’re facing aren’t problems of the Post Office, they’re problems created by Congress that Congress can fix. They aren’t Red or Blue problems, they’re American problems. And they need a solution that America will want to live with.”