Post Office a bad business or being made into a bad business?

[c1ue]

Don't know if this is true, but if it is, quite a big deal.

Certainly puts the $8.5 billion USPS loss in 2010 in perspective: http://www.voanews.com/english/news/...129474258.html

http://www.opednews.com/articles/Des...10905-492.html

The big lie seems to be working. Most Americans now believe that the U.S. Postal Service is on the verge of a financial collapse. The explanation seems logical: email, too many post offices, unnecessary six-day delivery, overpaid and underproductive workers. Unfortunately, these are half-truths, misinformation or outright lies.

It is true that the nature of mail has changed because of the Internet but it is also true that three biggest years in volume in the 236-year history of the Postal Service were 2005, 2006 and 2007, well into the Internet era. The bigger impact upon the Postal Service was the financial collapse of 2008.

But the root cause of the financial distress that the Postal Service is going through is overwhelmingly caused by Congressional mandates that were imposed upon the Postal Service. Congress passed the Postal Accountability and Enhancement Act (PAEA), which was signed into law by President G.W. Bush on December 20, 2006. Under the guise of modernizing the Postal Service for the 21st Century, it actually doomed the Postal Service. If not for the PAEA, the Postal Service would be functioning fine even with the impact of email and the financial collapse of 2008.

One of the provisions of the PAEA was to mandate that the Postal Service fully pre-fund future retiree health benefits for the next 75 years, and to do it within a ten-year window. This means that the Postal Service is required to send to the U. S. Treasury $5.5 billion each September 30. Remember, this is to pay for the future retirement health benefits of people who haven't even been born yet. The Postal Service is the only entity that is mandated by law to do this. No government agency, corporation or organization is required to fully pre-fund future retirees' health benefits.

But that is not the worst of it. Both the Postal Service's Office of Inspector General (OIG) and the independent Postal Regulatory Commission (PRC) commissioned audits to look into possible overpayments that the Postal Service has made into the Civil Service Retirement System (CSRS). Both audits show that the Postal Service has overpaid at least $50 billion into the pension fund over the years.

There is a piece of legislation, H.R. 1351, introduced by Stephen Lynch (D-MA), which now has 183 co-sponsors, which calls upon the Office of Personnel Management (OPM) to do an audit to determine the definitive amount of the overpayments to CSRS and transfer that amount to the future retirees' health care funding. Basically, it is a bookkeeping adjustment that saves the Postal Service billions and does not cost American taxpayers any money at all.

What also isn't being told to the American public is that the Postal Service workforce has been reduced by over 100,000 workers in the past four years through attrition and that the American Postal Workers Union (APWU) and the United States Postal Service (USPS) negotiated and signed a 4 --year collective bargaining agreement in May of this year. The agreement, which was hailed by Postmaster General Patrick Donahoe, saved the USPS $4 billion in labor costs over the life of the contract. In exchange for the givebacks, including the creation of a lower-tier (non-career) category of worker, no pay increases for two years, postponement of cost-of-living adjustments, the union won an extension of its no-layoff clause.

Within three months Postmaster Donahoe was calling upon Congress to pass laws to gut the new contract enabling him to layoff 120,000 workers. Nothing has changed between May when Donahoe signed the contract, and August when he made his frantic call to Congress. Enter Darrell Issa. Representative Issa (Rep-CA) is the chair of the House Government Oversight and Reform Committee. After the contract had been negotiated, and while members of the APWU were voting either up or down on it via a mail ballot, Issa called hearings on the contract before his committee. During that hearing Postmaster Donahoe was called out by Issa and Representative Dennis Ross (FL) on his negotiations.

Since that time Donahoe has abandoned any pretense of honoring the contract, or fulfilling his responsibilities to the American people who depend upon the Postal Service.

One clear action that needs to be taken is for Postmaster General Patrick Donahoe to tender his resignation. If he doesn't, he should be fired. It would also be wise to institute a complete investigation into the unprecedented retirement package his predecessor John E. Potter received. Their legacy has been a damaging one.

Cutting back on service by reducing delivery, closing post offices and mail processing facilities will damage the ability of the Postal Service to carry out its mandate for universal service. To the people who most depend upon the Postal Service: the elderly, the disabled, the poor, and small business owners, it will be devastating. The impact on a local community when a post office is closed is only negative.

Mail and package delivery will still have to take place if the Postal Service fails. It will take place by a privatized system that does not employ union workers making a living wage and it will not provide universal service to those who need the Postal Service the most. What is taking place is a kind of "wisconsining" of the Postal Service, an excuse to break postal unions and siphon off the profitable aspects of mail delivery to private enterprise and demanding that those most in need sacrifice again.

The saddest part of all of this is that is doesn't have to happen. It would help to start by telling the truth about the financial crisis. After that was done it would be easy to remedy the problem. What is needed is for President Obama and Congress to do their jobs on behalf of the American people by lifting the suffocating Congressional mandates that have prevented the Postal Service from doing its job. Pass and sign H.R.1351 and then you won't have to close 3700 post offices, cut back in delivery, close hundreds of mail processing facilities and lay off 120,000 workers.

Chuck Zlatkin is the Legislative and Political Director of the New York Metro Area Postal Union, the largest local of the American Postal Workers Union, AFL-CIO.

[jiimbergin]

Re: Post Office a bad business or being made into a bad business?

I am not a big union fan, but it does appear that the post office has been given the short stick in the funding of future health benefits and also probably in the amount they had to give to civil service retirement. At least there should be a ture actuarial audit to confirm it one way or another.

[wayiwalk]

Re: Post Office a bad business or being made into a bad business?

"One of the provisions of the PAEA was to mandate that the Postal Service fully pre-fund future retiree health benefits for the next 75 years, and to do it within a ten-year window. This means that the Postal Service is required to send to the U. S. Treasury $5.5 billion each September 30. Remember, this is to pay for the future retirement health benefits of people who haven't even been born yet. The Postal Service is the only entity that is mandated by law to do this. No government agency, corporation or organization is required to fully pre-fund future retirees' health benefits. "

Can we pass a law requiring congress to fully fund their future benefits (hey, out of their salary, no less), with the hope to put Congress out of business?

Just a crazy, pointless thought.

Yes - it looks like the post office is getting screwed here.

[thriftyandboringinohio]

Re: Post Office a bad business or being made into a bad business?

People love to hate the postal service. Too bad, we'll miss it after we destroy it.

Until the 1990s sane national leaders considered the national mail system to be one of the key features of an important nation, like the currency, the courts and the navy.
First class mail has always been highly secure, so that important and sensitive documents would not be lost and would not be intercepted and examined by third parties.

Try to walk in to your local FedEx office with a letter in one hand and single dollar bill in the other hand, and tell them you want the letter to arrive at some remote rural location in central Idaho in a few days.

[Milton Kuo]

Re: Post Office a bad business or being made into a bad business?

Don't know if this is true, but if it is, quite a big deal.
Mail and package delivery will still have to take place if the Postal Service fails. It will take place by a privatized system that does not employ union workers making a living wage and it will not provide universal service to those who need the Postal Service the most.

This OpEd article is not entirely reliable: UPS (the brown van people) delivery workers are unionized. Of course, the author may be saying that if the USPS fails, a new privatized system, not using UPS, will arise. However, being that the author has a built-in bias, being a postal union leader, this oversight casts everything else he writes about in doubt.

At this point, I question whether the USPS pension fund is "overfunded." I've never seen a pension that is truly overfunded except for those that are raided by executive management for enhancing earnings and executive bonuses. Of course, years later, we discover that the pensions were not overfunded at all and the PBGC is put on speed-dial.

[jiimbergin]

Re: Post Office a bad business or being made into a bad business?

This OpEd article is not entirely reliable: UPS (the brown van people) delivery workers are unionized. Of course, the author may be saying that if the USPS fails, a new privatized system, not using UPS, will arise. However, being that the author has a built-in bias, being a postal union leader, this oversight casts everything else he writes about in doubt.

At this point, I question whether the USPS pension fund is "overfunded." I've never seen a pension that is truly overfunded except for those that are raided by executive management for enhancing earnings and executive bonuses. Of course, years later, we discover that the pensions were not overfunded at all and the PBGC is put on speed-dial.

You are right, it would be a very very rare exception for a pension fund to be overfunded. However, compared to the other contributions to the civil service retirement system it does appear that there is a good chance the post office was required to have a higher funding level.

[c1ue]

Re: Post Office a bad business or being made into a bad business?

This OpEd article is not entirely reliable: UPS (the brown van people) delivery workers are unionized.

This is true.

It is also true that FedEx - one of the other Post Office employers - forces all its delivery drivers to own their own trucks so as to avoid having to pay Social Security much less benefits.

However in both cases the 'private' firms concentrate on the most profitable routes and services.

The USPS, as is noted in the article, is chartered to provide universal service.

[dcarrigg]

Re: Post Office a bad business or being made into a bad business?

This is true.

It is also true that FedEx - one of the other Post Office employers - forces all its delivery drivers to own their own trucks so as to avoid having to pay Social Security much less benefits.

Something like 30 states have gone after them on that. Google FedEx misclassification of workers.

[flintlock]

Re: Post Office a bad business or being made into a bad business?

Its not all bad news for the postal service. At least their pensions are funded.

I'm also one of those who would miss the USPS. I think they still do a pretty good job. I' ve had plenty of problems with ups and fedex as well. Like tnb mentioned, its the rural areas that would suffer.

I think home mail delivery is on the way out anyway. We have so much stolen out of our box these days, we don't dare receive anything important via usps. But then ive had packages stolen off the front porch as well. Sign of the times I guess.

[flintlock]

Re: Post Office a bad business or being made into a bad business?

This is true.

It is also true that FedEx - one of the other Post Office employers - forces all its delivery drivers to own their own trucks so as to avoid having to pay Social Security much less benefits.

However in both cases the 'private' firms concentrate on the most profitable routes and services.

The USPS, as is noted in the article, is chartered to provide universal service.

I've never heard it explained like that. I have a friend who owns three franchised fedex routes. People line up for a chance to buy them and must meet rigorous standards, ( and pay big bucks!) for the rights. I'm sure he doesn't feel exploited. Quite a lot of these owners were first drivers who worked their way into ownership. Now they make far more than they ever could have just driving. What fedex has done is to spread out all the intensive micro management that this type business demands to owner operators, in return for a bigger piece of the action. Those willing to bust ass and seek delivery perfection are handsomely rewarded. Slackers just trying to get by won't cut it. I suspect this is fedex's way of avoiding a lot of the employment law hassles involved with firing non productive workers, as now the relationship becomes one between two businesses, not employer/employee.
There's always two sides to every story.



SS is still being paid regardless. Just someone else paying it. Market forces will adjust eventually if fedex thinks its saving them money.

[thriftyandboringinohio]

Re: Post Office a bad business or being made into a bad business?

...SS is still being paid regardless. Just someone else paying it...

That's only true for the W2 wages paid to employees of the little driving contractor. If the drivers are working alone as an independent contractors, and presuming they are smart enough to spend 50 buck to incorporate, they can avoid SS tax by taking the income as business earnings due a stockholder on a K-1 rather than as W2 wages. They still pay income tax, but escape FICA.

[flintlock]

Re: Post Office a bad business or being made into a bad business?

That's only true for the W2 wages paid to employees of the little driving contractor. If the drivers are working alone as an independent contractors, and presuming they are smart enough to spend 50 buck to incorporate, they can avoid SS tax by taking the income as business earnings due a stockholder on a K-1 rather than as W2 wages. They still pay income tax, but escape FICA.

Regardless, companies don't really pay that half share of ss like many think. They take it out of what they would have paid the worker.

This is about cutting middle management and making each driver more responsible for results. They are passing the buck downhill you could say. They put incredible pressure on the owners to perform. A lot more pressure than they could put on say, a union employee. (Perhaps this was a move to short circuit any attempt to unionize?) And of course they get the use of the franchisee's capital. Plus the previously mentioned reduction in labor issues, which in today's world can be huge. Now it becomes the franchise owner's problem.

[aaron]

Re: Post Office a bad business or being made into a bad business?

Where do you live? That is really bad. I forget I have it "so good"; my mail does not get stolen and packages have sat on our front porch for days.

[lektrode]

Re: Post Office a bad business or being made into a bad business?

This is true.

It is also true that FedEx - one of the other Post Office employers - forces all its delivery drivers to own their own trucks so as to avoid having to pay Social Security much less benefits.

However in both cases the 'private' firms concentrate on the most profitable routes and services.

The USPS, as is noted in the article, is chartered to provide universal service.

i believe that only the fedx _ground_ svc - not the air div - req's that (its a buy-in, route-type of operation, not unlike snack distributors - - nears i know this is a holdover from a prev aquisition, RPS / see: http://en.wikipedia.org/wiki/FedEx

[c1ue]

Re: Post Office a bad business or being made into a bad business?

I've never heard it explained like that. I have a friend who owns three franchised fedex routes. People line up for a chance to buy them and must meet rigorous standards, ( and pay big bucks!) for the rights. I'm sure he doesn't feel exploited. Quite a lot of these owners were first drivers who worked their way into ownership. Now they make far more than they ever could have just driving. What fedex has done is to spread out all the intensive micro management that this type business demands to owner operators, in return for a bigger piece of the action. Those willing to bust ass and seek delivery perfection are handsomely rewarded. Slackers just trying to get by won't cut it. I suspect this is fedex's way of avoiding a lot of the employment law hassles involved with firing non productive workers, as now the relationship becomes one between two businesses, not employer/employee.
There's always two sides to every story.

SS is still being paid regardless. Just someone else paying it. Market forces will adjust eventually if fedex thinks its saving them money.

Yes, but the other side of the story still isn't necessarily so clean.

By outsourcing the trucks and delivery, FedEx now has managed to both offload mechanical/maintenance of the delivery trucks as well as management of employees to some other party. This arrangement neatly prevent collective bargaining (i.e. unionization) - be that bad or good.

The arrangement also brings in franchise fees - i.e. FedEx get paid for outsourcing the dirty ugly delivery part of its business.

As for drivers becoming owners: I'm sure that's happened somewhere.

The drivers that I talk to in SF have zero change of becoming owners - because there is simply no way for them to save enough from their $12/hour jobs to pay the 6 digits necessary to buy truck plus route. They do work mighty hard though - a typical day sees them delivering 200+ packages to 100 or so locations.

I should still note, however, that this is for a prime location like the city of SF.