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April 5, 2011

$8.5 billion in Losses but Pay Raises for Postal Workers?

By J. Robert Smith

What enterprise that lost $8.5 billion in one year (2010) would give employees a pay hike?  Yes, you've guessed it.  The U.S. Postal Service has hammered out a deal with the postal workers' biggest union to raise salaries over the course of a four and half year deal - pending rank and file approval. 

The pay hikes are fairly modest, essentially cost-of-living increases, provided the Fed's money printing orgy doesn't lead to galloping inflation.  But even cost-of-living increases add up.  The U.S. Postal Service has an estimated 580,000 employees.     

The Washington Post reports:

Rep. Darrell Issa (R-Calif.), who chairs the House Oversight and Government Reform Committee (which has primary jurisdiction over postal affairs), has called the agreement "a missed opportunity" and is trying to determine whether USPS could have fought for greater savings.

Issa is onto something.  Patrick R. Donahue, the Postmaster General, contends that the USPS is cutting costs, but that cost-cutting has much more to do with the postal service's ongoing hemorrhage of red ink and congressional pressure than it does with any desire for efficiencies or improvements to service.  In other words, it isn't reform that drives Donahue and USPS execs to make cuts.

The latest agreement with postal workers would supposedly save $3.8 billion over four years.  But with the USPS losing $8.5 billion in 2010 alone (the projection had been $7 billion), the four-year savings doesn't even cover 2010's losses.  And you can bet there will be more staggering losses over the next four years.  The $3.8 billion doesn't do nearly enough to bring the postal service to just breakeven.      

Either Donahue was deceitful or hadn't visited a post office in a long time when he was quoted in the Washington Post account as saying that "this agreement continues to allow us to take costs out while still providing quality service to the American public."

Perhaps to Donahue quality service means the proposed cessation of Saturday mail deliveries and long waits at post offices due to inadequate staffing (with 580,000 employees, go figure). 

Evidently, removing clocks from the retail areas in post offices in 2007 didn't do a thing to improve customer satisfaction with service.  So, what's next? 

Rather than getting into an elaborate kabuki dance with the USPS or merely tinkering with the service, Issa and his GOP colleagues should cut to the nut by simply lifting the monopoly on first class mail that the postal service enjoys.  More competition would do wonders for mail service customers, who top the Postmaster's list.    

Oh, and one more suggestion for Issa: stop Uncle Sam from subsidizing USPS failure.
    

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