How the postal reform bill may help the Postal Service slow down the mail

How the postal reform bill may help the Postal Service slow down the mail

Steve Hutkins

In August 1970, Title 39, aka the Postal Reorganization Act, created the Postal Service. The first section, 39 U.S. Code § 101, is entitled “Postal Policy.” It’s just over 400 words long, but it is probably the most frequently quoted passage in the history of postal legislation. It’s often cited in litigation, academic articles, and the dockets of the Postal Regulatory Commission.

In some respects, Section 101 is like the Preamble to the Constitution. It sets forth the basic principles on which the Postal Service is established:

(a) The United States Postal Service shall be operated as a basic and fundamental service provided to the people by the Government of the United States, authorized by the Constitution, created by Act of Congress, and supported by the people. The Postal Service shall have as its basic function the obligation to provide postal services to bind the Nation together through the personal, educational, literary, and business correspondence of the people. It shall provide prompt, reliable, and efficient services to patrons in all areas and shall render postal services to all communities. The costs of establishing and maintaining the Postal Service shall not be apportioned to impair the overall value of such service to the people.

Section 101 also protects small rural post offices by including this oft-cited passage:

(b) The Postal Service shall provide a maximum degree of effective and regular postal services to rural areas, communities, and small towns where post offices are not self-sustaining. No small post office shall be closed solely for operating at a deficit, it being the specific intent of the Congress that effective postal services be insured to residents of both urban and rural communities.

In 2008 Congress amended Section 101 on “Postal Policy” to remove part of a sentence in subpart (f) that required the Postal Service to “make a fair and equitable distribution of mail business to carriers providing similar modes of transportation services to the Postal Service.” The passage was deleted under Pub. L. 110–405, the Air Carriage of International Mail Act, which modified how the Postal Service made air transportation contracts, apparently rendering the line unnecessary.

Aside from this minor change, there have been no other revisions of section 101. It reads today as it did in 1970.

Yet for some reason, buried deep in the postal reform bill gaining traction in Congress right now — H.R. 3076, “Postal Service Reform Act of 2021” — is a section that would amend 39 USC 101. (The text of the Senate version of postal reform, S.1720, isn’t available yet, but NALC says it includes a similar passage.)

The proposed modifications in the wording of the text may seem small, but they have huge implications. Here’s how part (f) reads now:  Read More

A talk with the founder of the “Save the Post Office” website

A talk with the founder of the "Save the Post Office" website

The administrator and founder of the “Save the Post Office” website, Steve Hutkins, joins Bob Levi on NAPS Chat to discuss the website’s purpose and impact. Bob and Steve also talk about the Postal Service’s on-time performance problems and the plan to downgrade service standards, now being reviewed by the PRC for an Advisory Opinion.  Listen on GooglePodcast, Spotify, and Apple Podcasts.

Mapping out the changes in USPS service standards

Mapping out the changes in USPS service standards

By Steve Hutkins

The Postal Service has requested an Advisory Opinion from the Postal Regulatory Commission concerning its plan to relax service standards on First Class mail and Periodicals. Much of the mail that is now expected to be delivered in 2 days would shift to a 3-day standard, and a lot of 3-day mail would change to a 4 or 5-day standard. The main rationale for these changes is to allow more mail to be transported by ground rather than air, which takes a day or two more, and to help the Postal Service achieve higher and more predictable on-time performance scores. (A dashboard with more details, documents and charts can be found here.)

This is not the first time the Postal Service has asked for an Advisory Opinion on relaxing service standards. In 1989 the Postal Service proposed reclassifying some destinations from overnight to 2-day service, and others from 2-day to 3-day. Its rationale was that market research indicated that customers preferred “consistency” to “speed.”  A slower standard would, the Postal Service said, reduce its reliance on air transportation, which suffered “randomness of failures.”

In its Advisory Opinion, the Postal Rate Commission found that “the Postal Service’s market research, which formed the main justification for the proposal, failed to measure customer preferences accurately.” Plus, said the Commission, “the Service did not present estimates of the cost savings to itself or cost effects on its customers.”

In December 2011, the Postal Service again proposed relaxing service standards, this time to make it possible to consolidate over 200 mail processing plants. The PRC’s Advisory Opinion was skeptical of the USPS cost savings estimate and also recommended “alternatives that would preserve service levels.”  The Postal Service went ahead with the plan anyway.

In July 2012 it implemented the first phase of the plan, and the “interim” service standards eliminated overnight delivery for about 20 percent of the mail and added a day to some 2-day mail. In January 2015, the “final” standards were implemented and overnight delivery was ended all single-piece mail. Together, the two phases added an extra day of delivery time to more than a third, maybe half, of First Class Mail.

The erosion of standards

Given that First Class mail volumes have declined steadily since 2006, one might think that it would have gotten easier to deliver the mail in a timely way. In fact, though, the average time it takes to deliver the mail has increased just as steadily as volumes have fallen.

The average delivery time for First Class mail in the early 1990s was about 1.6 days. As a result of the changes in standards in 2011 and 2015, it increased to 2.5 days. Under the latest proposal, the average delivery time would increase 18 percent, to nearly 3 days.

These delivery time numbers, it may be noted, are slightly different from the data reported by USPS witness Thomas Thress for the Advisory Opinion. Charts in his testimony indicate that the current average is 2.5 days for single-piece mail and 2.4 days for presort. That’s about 2.43 days for First Class overall; an 18 percent increase would lead to an average of 2.87 days. The numbers in the chart above were derived from the following chart, which shows the percentage of mail volumes subject to the various standards. The sources for this chart are N89-1 Advisory Opinion (p. 1); 2014 Fact Sheet; 9/21/11 Federal Register notice; and USPS Delivering For America 10-year plan.

 

With each change in service standards, the goal has been to cut costs and increase the “reliability” and “predictability” of delivery times. But the savings estimates have been consistently disputed because it’s not clear how much lowering standards has driven away business and accelerated electronic diversion. Operational changes have also not generally succeeded in reducing costs, at least as much as projected. And the speed-versus-reliability issue is tricky because it all depends on how you ask mailers the question, and besides, they don’t all want the same thing.

But what is clear is that the plan currently being reviewed by the Commission represents yet another stage in the continuing erosion of service standards and delivery times.

Making maps

The Request for an Advisory Opinion, the USPS witness testimonies and several library references explain the plan in considerable detail, but the materials don’t provide a very clear picture of what the changes will look like in terms of geography. What’s missing are some maps.  Read More

New dashboard on the PRC Advisory Opinion on the change in service standards

New dashboard on the PRC Advisory Opinion on the change in service standards

The Postal Service has requested an Advisory Opinion from the Postal Regulatory Commission concerning its plan to relax service standards on First Class mail and Periodicals. We started a new website page that provides easy access to the PRC’s docket (N2021-1), as well as some charts, tables, and blog posts about the proposal. You can find the page here; it’s also a tab, N2021-1, in the main menu above.

Spring 2021 CPWU Newsletter

Spring 2021 CPWU Newsletter

The Spring 2021 Newsletter from Communities and Postal Workers United (CPWU) has articles about Postmaster General Louis DeJoy’s ten-year plan, ironically named “Delivering for America”; the “People’s Postal Agenda” discussed at the online conference put on by the Grand Alliance to Save the Public Postal Service; Charlotte postal workers protesting mistreatment and harassment; and Washington state’s postal workers pushing to be eligible for the COVID-19 vaccine, following a recent breakout of the virus at the Kent processing facility. Read the newsletter here.

What the USPS 10-year plan may have to say about future rate increases

What the USPS 10-year plan may have to say about future rate increases

The mailers were probably disappointed that the Postal Service’s new 10-year plan released yesterday, “Delivering for America,” did not reveal how big of a rate increase the Postal Service intends to make using the new authority it was granted by the Postal Regulatory Commission. While they wait in suspense, here’s a guess: 3.6 percent.

We already know that the calculations the Postal Service submitted to the PRC in February indicate the hike could be as large as 5.56 percent (on top of the CPI increase), but the new system allows some of the rate authority to be banked for future years, so the increase could be smaller. And that is just what the following analysis suggests.

This analysis is based on two tables and a couple of comments that appear in the 10-year plan. The tables show revenue and expenses under two scenarios, a base case using the status quo and an alternative that uses the revenue and cost savings under the Delivering for America plan. The tables contain numbers for projected volumes and revenues over the next ten years that can be used to estimate what the Postal Service is planning for future price increases under the new rate authority.

The Base Case assumes total mail and package volumes will fall to 82.6 billion by 2030 (Figure 28, p. 46), with 6.6 billion pieces of that in packages (p. 42). Market Dominant volumes in FY 2030 are thus projected to be around 76 billion pieces. The Base Case table also provides Market Dominant revenues for each year, with revenues in 2030 falling to $32.2 billion.

The Base Case assumes rate increases at the current CPI cap, which has been about 2 percent over the past few years. Using these assumptions, one can calculate what the Postal Service is projecting for annual volumes for Market Dominant products.

The “Delivering for America” Case uses the new rate authority to make its calculations (Figure 35, p. 51). It projects that revenues in 2030 will fall to $37.2 billion (as opposed to $32.2 billion in the Base Case).

If one assumes volumes over the next ten years turn out to be the same as in the base case (which is optimistic, since a rate increase may negatively impact volumes), one can calculate the average revenue per piece and the annual rate increases under both scenarios.

Here’s a table pulling these projections and estimates together. It uses the annual revenues as shown for both scenarios in the 10-year plan’s tables, the volume for FY20 as stated in the Revenue, Piece and Weight Report and for FY2030 as indicated by the 10-year plan, and a CPI of 2 percent. The other calculations are derived from these numbers.

The Postal Service appears to expect annual volume declines of about 4.5 percent for Market Dominant products —  significantly more than the 3 percent declines of the past decade, but within reason.

The bottom line shows that under the Base Case over the next ten years revenues will total about 361.6 billion compared to 392.5 billion under the “Delivering for America” Case — a difference of about $31 billion.

A table in the 10-year plan (Figure 29, p. 47) says the revenue impact of implementing the new rate authority will range from $35 billion to $52 billion. It’s not clear how the Postal Service came up with these larger estimates, but they may be based on a lower rate of volume decline over the next ten years. If the declines returned to an average of 3 percent annually (as in the past decade) and the rate increases were the same as in the above table, the additional revenue generated by the plus-CPI increases would be about $47 billion.

In any case, it appears that $30 billion is a conservative estimate for what the Postal Services sees the new rate authority bringing in.  Increasing Market Dominant revenues by this sum at the same time volumes are declining by about 4.6 percent a year would require rate increases averaging around 1.5 percent above a CPI of 2 percent.

Here’s how things might play out for the remainder of FY 2021 and for FY 2022.  Sometime over the next couple of weeks, the Postal Service announces a 3.6 percent rate increase, leaving 0.9 percent of the density-based rate authority (4.5 percent) banked for future use. The proposed increase needs to be approved by the Board of Governors and the PRC, and then there’s a 90 day notification period.

Let’s say the increase goes into effect as of August 1, 2021. During August and September (the last months of FY 2021), it would yield about $220 million in additional revenues. That’s just about the difference between the projections for FY 2021 in the Base Case ($39.4 billion ) and the “Delivering for America” case ($39.6 billion).

Let’s assume this increase remains in effect until January 2022, at which time the Postal Service uses some of its banked rate authority to add another 0.6 percent to the regular CPI increase of 2 percent. For the remainder of FY 2022, the additional rate authority would thus be 4.2 percent. For FY 2022, this would yield about $1.6 billion in additional revenues — the difference between the two scenarios ($38.9 and $40.5 billion).

This is all just speculation, of course.  The Postal Service should be announcing the new rate increase sometime soon, and the guessing game will be over.

This week marks the 51st anniversary of the largest wildcat strike in U.S. labor history: The Great Postal Strike of 1970

This week marks the 51st anniversary of the largest wildcat strike in U.S. labor history: The Great Postal Strike of 1970

March 18th marks the day fifty-one years ago when postal workers walked off the job in New York City in what soon became the largest wildcat strike in U.S. labor history. Last March we posted this article by postal historian Phil Rubio, author of Undelivered: From the Great Postal Strike of 1970 to the Manufactured Crisis of the U.S. Postal Service. The article is as good as ever, so we’re posting it again this year.


Photo by Natalie M. Anderson

For eight days in March 1970, over 200,000 postal workers staged an illegal “wildcat” strike — the largest in United States history — for better wages and working conditions. Picket lines started in New York and spread across the country like wildfire. Strikers defied court injunctions, threats of termination, and their own union leaders.

In the negotiated aftermath, the U.S. Post Office became the U.S. Postal Service, and postal workers received full collective bargaining rights and wage increases, all the while continuing to fight for greater democracy within their unions. Using archives, periodicals, and oral histories, Philip Rubio shows how this strike, born of frustration and rising expectations and emerging as part of a larger 1960s-1970s global rank-and-file labor upsurge, transformed the post office and postal unions.

In this post, Dr. Rubio writes about the importance of commemorating the nationwide postal wildcat strike on the day of its fiftieth anniversary. You can also read his 2015 blog post, which includes a more detailed account of the strike, here.

 

The Great Postal Wildcat Strike Jubilee

“Wildcats” are strikes not authorized by the unions, but this strike was also illegal, as a 1912 law bars federal government workers from striking.  Nevertheless, for eight days over 200,000 workers struck the U.S. Post Office Department across the country in a dozen states and hundreds of post offices.  They struck for a living wage and job dignity.  The strike forced passage of the 1970 Postal Reorganization Act (PRA) that transformed the post office into a self-supporting government/corporate hybrid called the U.S. Postal Service (USPS) in 1971.  President Richard Nixon and Congress ended further strike threats by extending pay raises and full collective bargaining rights to postal workers—the only federal employees who enjoy those rights to this day.  Their strike also initiated a process of greater democratization of the National Association of Letter Carriers (NALC), and the new American Postal Workers Union (APWU, product of five unions merging in 1971).

Unfortunately, our society has largely forgotten the 1970 postal strike.  What historians choose to research and publish matters, and amazingly, this strike has so far gained little attention from labor historians.  It has fallen to strike veterans, the postal unions, and labor activists to keep that memory alive and mark that date in anticipation this year of the strike’s “jubilee” (also known as the fiftieth anniversary).

Remembering how that landmark rank-and-file rebellion happened is no mere exercise in nostalgia.  Not only can it refresh our collective memory and help us revise a fuller picture of that period of American labor history, but it also teaches us the possibilities as well as the limitations of labor action today.

I devoted a chapter to the strike in my previous book for UNC Press in 2010—There’s Always Work at the Post Office: African American Postal Workers and the Fight for Jobs, Justice, and Equality.  Even then, I thought the strike’s history needed a fuller telling.  It is also a story that I felt needed connecting to the 2009 postal financial crisis, which I argue in my new book that Congress and the George W. Bush administration politically manufactured—although its effects have been very real. Read more.

“Save the Post Office” launches new Service Performance Dashboard

"Save the Post Office" launches new Service Performance Dashboard

With all the attention to delivery delays over the past several months and the Postmaster General’s plans to relax delivery standards — as well as calls for more transparency about postal operations — this seems like a good time to launch a Service Performance Dashboard.

The Postal Service itself publishes a useful service performance dashboard, but it shows only quarterly performance scores, and it just goes back a year. The Postal Service has also started a second dashboard that uses its new organizational structure of divisions and regions, but at this point it only shows FY2021 Q1.  For more detailed reports, you need to dig around in the website of the Postal Regulatory Commission, and the reports there usually need to be downloaded in order to see them. Some of the PRC’s reports, like those requested recently from the USPS as part of the annual compliance review (discussed in this post), are almost impossible to find if don’t know where to look.

The “Save the Post Office” Dashboard provides easy access to the recent performance reports shared by the Postal Service not only with the PRC but also with Congress, the courts (as part of litigation involving mail delays), and FOIA requests. The Dashboard has quick links to the reports, many of which are weekly rather than quarterly, and we’ve posted them on Google Drive so you don’t have to download to view them. The Dashboard also includes some charts showing trend lines over the past couple of years. In addition, the Dashboard page has a brief explanation of what “service standards,” “service performance” and “service targets” are all about.

There’s a link to the Service Performance Dashboard on the top menu, and a link is here.