Rolando: “We don’t have to dismantle the Postal Service to save it”

Statement of NALC President Fredric Rolando
on the new version of S. 1789, The 21st Century Postal Service Act

April 17, 2012 — Today, the four co-sponsors of S. 1789 introduced a new version of their bill to reform the Postal Service and the Senate has voted to debate this legislation in the days ahead.

Although the National Association of Letter Carriers deeply appreciates the hard work of Sens. Lieberman, Collins, Carper and Brown in bringing this legislation to the floor, we cannot in good conscience support S. 1789 as currently drafted. We believe it will drive the Postal Service into a death spiral.

The legislation unwisely continues a policy adopted in 2006 that requires the Postal Service —and only the Postal Service—to massively pre-fund future retiree health insurance premiums decades in advance. No other company, agency or branch of government—including UPS, FedEx and the U.S. Congress—is required to pre-fund such benefits. The USPS has already set aside nearly $45 billion for future retiree health benefits, enough for nearly 30 years’ of premiums. Although S. 1789 would reduce the burden of pre-funding somewhat, the revised legislation retains a mandate on the Postal Service to plow $3.5 billion to $5 billion per year into its massive retiree health fund.

Despite this pre-funding burden, the bill maintains the current law’s rigidly inflexible price controls and strictly limits the range of services that can be provided.

To cover this unaffordable burden, the bill essentially endorses the gradual dismantling of one of America’s oldest and most beloved institutions, including eliminating the jobs of 18 percent of the nation’s postal workers—nearly 100,000 jobs—over the next three years.

Rather than using its limited resources to adapt and restructure its services to take advantage of an explosion in e-commerce deliveries and finding new uses for the Postal Service’s unmatchable networks, the bill opens the door to further downsizing. This would not only damage the nation’s No. 1 employer of veterans, but also threaten the entire mailing industry that employs nearly 7.5 million private-sector workers—particularly those employed by millions of small businesses and rural-based enterprises.

The bill would all but guarantee the elimination of Saturday delivery in two years, degrading the Postal Service’s most unique quality—a last-mile delivery network that gives America’s businesses (banks, utilities, magazines, shippers, prescription drug distributors and advertisers) access to 150 million addresses six days a week. This would weaken a crucial part of the nation’s economic infrastructure and undermine the USPS’ ability to continue to continue its recent growth in the booming e-commerce sector.

S. 1789 also would mandate the phase-out of door-to-door service for the 35 to 40 million households and businesses that enjoy such delivery in favor of curb or centralized (remote) service, and would open delivery to household mailboxes to unaccountable third parties on days the USPS does not deliver.

Lower quality, less frequent and slower service will simply drive more business away and do more harm than good. A recent internal USPS study predicted a 10 percent loss in mail volume if all these service cuts are implemented—the study was withheld from the Postal Regulatory Commission’s proceedings on the Postal Service’s network realignment plan.

Beyond the central “business strategy” flaw in the legislation, the bill includes a punitive workers’ compensation reform that could impoverish injured workers suffering from long-term injuries when they reach retirement age.

NALC is committed to working with senators from both parties to fix the worst flaws in this legislation. But as today’s white paper drafted by our consultants from the Lazard investment bank concluded, what really is needed is a new business model for the Postal Service. As drafted, S. 1789 will simply accelerate a failing business strategy. Our message to the policy makers is simple: We don’t have to dismantle the Postal Service to save it.

Congress and the Obama administration should commit themselves to developing a sensible restructuring plan for the USPS. Such a plan should embrace an ethic of shared sacrifice so that a more innovative, albeit somewhat smaller, Postal Service can emerge to meet the changing needs of the American economy. NALC members are willing to do their part to make this happen. We hope policy makers at both ends of Pennsylvania Avenue will do so as well.