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Postal Reform: Good News, But Only a Start



By
12/14/2006

By Marrecca Fiore

The long-awaited passage of postal reform may have garnered the praise of the magazine and printing industry earlier this week, but the postal counsel for American Business Media cautions that the passing of the bill is just one small step in the right direction. "Until they find a way to control labor costs, we're really just nibbling around the edges," said David Straus. "It's better than not nibbling around the edges, but the postal service has to become less labor-intensive and that has to be reflected in the rates.

The postal service currently employs some 700,000 employees nationwide. The average postal carrier currently makes between $60,000 and $70,000 annually (including benefits). Straus says that's just too much and little can be done to politically to change that. "The postal service just pays a whole heck of a lot more for labor costs than the private sector," he said. "The president's commission suggested something be done to bring labor costs more in line with the private sector and maybe they can be controlled through attrition and automation."

The bill, passed late last week by the Senate and House of Representatives, requires that future postal rate increases will be capped and linked to the consumer price index; eliminates the mandate requiring the U.S. Postal Service to pay pension costs for postal employees who previously served in the military; and frees up the postal service from making postal pension payments into an escrow fund, which is expected to save it $78 billion over the next 60 years.

The bill also eliminates the need for the postal service to go before the Postal Rate Commission (renamed Postal Regulatory Commission in the bill) to raise rates. Currently, the postal service has a rate case pending before the commission that could raise rates for publishers upwards of 12 percent.

Straus says he worries that giving the sole power to raise rates to the postal service could have negative consequences down the road. "It's more of a crap shoot," he said. "Now they don't have to convince the commission that they need to raise rates through a rate case. And the complaint procedure to challenge a rate increase is extraordinarily expensive. So we just have to hope, and I believe they will, that they continue to use restraint in setting rate increases."

Straus said despite beliefs to the contrary, postal rates have, for the most part, been in line with the cost of inflation and that controlling labor costs would help to ensure that rates increase below the rate of inflation. "Productivity is improving and they should be able to increase at a rate less than the CPI," he said. "Maybe this will give them more incentive to do so."

By
12/14/2006







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