Attempt to Shift the Burden to Postal Employees

Burrus Update

The Postal Service has filed a request to increase postage rates effective Jan. 2, 2011, and is proposing to raise the price of first-class, single-piece letters from 44 cents to 46 cents. Increases for other mail classes would range from 5.4 to 8 percent.

As anticipated, large mailers have gone ballistic. They have formed a new organization, the Affordable Mail Alliance, dedicated to stopping the rate hike.

The mailers comprising the Affordable Mail Alliance want mail service, but they do not want to pay the actual cost of those services. Instead, they are seeking to shift attention to the employees. They are suggesting a renewed focus on closing stations and branches, consolidating mail processing facilities, and demanding concessions from workers.

The next step is a review by the Postal Regulatory Commission, which may accept, reject, or modify the proposed rates. This is the first rate request submitted under the “exigency provision” of the 2006 Postal Accountability and Enhancement Act (PAEA), and it faces stiff opposition because it would increase postage rates above the rate of inflation. The exigency provision allows the USPS to do so.

The APWU will intervene in the PRC proceedings to contest the absolute refusal by postal officials to comply with another provision of the law, which stipulates that postage discounts may be no greater than “postal costs avoided.”

Despite the Postal Service’s admission in previous rate requests that discounts exceed the costs avoided, this request would reduce the discount on five-digit pre-sorted mail by just 1/10 of 1 cent. This is preposterous!

Mailers Try to Make Employees Pay

Early indications are that the Affordable Mail Alliance will attempt to make employees the scapegoat, by claiming that postal workers — who have the benefit of collective bargaining — are paid substantially more than employees in comparable private-sector jobs.

They hope to make postal employees pay for the legislation that requires the USPS to pre-fund $56 billion in future retiree healthcare obligations over a 10-year period.

The 2010 exigency rate request is a direct response to the requirement that the Postal Service assume this cost in 10 successive annual payments ranging from $5.4 to $5.8 billion. Absent this payment, a rate increase in 2010 would have been unnecessary.

Can you guess who the principal supporters of the legislation that requires the onerous payments were? Yes, the large mailers. Now the same mailers who supported the requirement cry that the payments should be made from the wages and benefits of postal employees.

When postal employees retire, they assume responsibility for approximately 30 percent of health insurance premiums, which is a significant increase from what they paid when they were active employees covered by the Collective Bargaining Agreement. For example, an employee who is enrolled in the Blue Cross Standard Family Option pays $132.83 biweekly or $287.80 monthly during active employment; upon retirement, this payment escalates to $400.97 monthly. The balance of the premium is paid by the government, which is reimbursed by the USPS.

The PAEA requires the Postal Service to pre-fund the USPS share of this future payment, and now the mailers want to force postal employees to pay the USPS share through wage-and-benefit reductions equal to the PAEA-required payments. This would result in postal retirees paying 100 percent of their retirement healthcare premiums — by shifting the pre-funding requirement to employees through cuts in their pay and benefits.

Exigency Case Was Inevitable

The simple truth is that the exigency rate case was inevitable. The 17 percent decline in mail volume, coupled with the pre-funding requirement, has left the USPS on the brink of insolvency.

Because the Postal Service does not earn or set aside profits, any USPS deficit bears a direct relationship to the cost of postal operations – including mail collection, processing, transportation, delivery, retail services, and support. By law, the postage that funds these operations must equal the costs.

The mailers comprising the Affordable Mail Alliance want mail service, but they do not want to pay the actual cost of those services. Instead, they are seeking to shift attention to the employees. They are suggesting a renewed focus on closing stations and branches, consolidating mail processing facilities, and demanding concessions from workers.

The 2010 rate adjustments proposed by the Postal Service are not a response to declining mail volume caused by the recession, or the diversion of hard-copy mail to electronic forms. This adjustment is to pay the future healthcare bill, aggressively lobbied for by the mailers who now cry foul when payment is due.

I feel compelled to tell them: “You wanted the PAEA and its payment schedule, but now you want to avoid paying for it through higher postage rates.”

William Burrus
President