Postmaster Gives Performance the Stamp of Approval

By Joe Davidson
Thursday, October 30, 2008

With the U.S. Postal Service projecting that it delivered 9 billion fewer pieces of mail in fiscal year 2008 and a $2.3 billion deficit for that period, mail carriers might have more to worry about than snarling dogs on their routes.

William Burrus, president of the American Postal Workers Union, has warned, as the Federal Diary reported Tuesday, that things are so bad that "without significant adjustment to its business strategies, the Postal Service will not survive as a government institution and a public service."

Postmaster General John E. Potter strongly disagrees. He wasn't available to comment for Tuesday's column, but he did speak yesterday about the current state of his agency. Here are his comments.

The future of the Postal Service

I think our network has served America well for over 200 years and we'll continue to serve America well into the future. . . . I think the Postal Services is going to be around for at least another 100 years. We provide a vital service to all Americans.. . .

As Americans' need for mail changes or desire for new products occurs, we respond and react accordingly. The troubles the Postal Service has today, the challenges we face, are largely driven by what's going on in the economy. As the economy recovers, I expect our business to grow.

The Postal Service deficit

The Postal Service had positive net incomes until a law was passed in 2006. . . . It requires the Postal Service today to pay approximately 10 percent of every dollar we take in toward retiree health benefits. There are two facets of those retiree health benefits. We pay approximately $2.3 billion as the employer share of health benefits for those who are currently retired. In addition to that, we pay approximately $5.4 billion into a fund for future retirees' health benefits. . . .

Now without that obligation of $7.7 billion, the Postal Service would have a positive net income. . . . That is a burden that was recently placed on us, and it is something that we are right now in conversations with the folks on Capitol Hill, not to walk away from our obligation to retirees and their health benefits, because we want to certainly make sure we cover them, but looking at the pace at which we pay into the retiree health benefit fund. . . .

If our payment schedule was revisited and spread out over a longer term, we again would be in the positive range when it comes to that income.

Worker-work match

We're working very hard to match our use of resources, which is largely labor, to the lower volumes that we have. . . . As an example, last Friday we signed an agreement with the National Association of Letter Carriers that will enable the Postal Service in an expeditious way to adjust routes to better reflect the lower workload that's out there right now.

Does the Postal Service need all of the people it employs?

We are reducing our use of overtime. We are reducing our use of non-career [part-time] employees. We are reducing the work hours that our flexible employees work, and we are restructuring the work to utilize less work hours.

I'm not planning on any [layoffs].

Postage rates

If we raise rates above the rate of inflation, what it's simply going to do is drive more volume away. . . . That exacerbates our problems for our customers, because they are dealing with tough economic times. They have alternatives for every class of mail we have. In advertising, you have opportunities in newspapers, radio, TV, as well as the Internet and Web-based advertising. If you're in the package business, obviously you have the opportunity to use . . . competitors there. First-class mail [declines when] people can present bills online and pay online.

So what we don't want to do is do something that would encourage our customers to move away from mail.. . . Right now, I'm convinced that [by] working with our unions, we can better match our use of resources to the workload we have. Working with Capitol Hill, we may be able to restructure our payments into our retirement health benefit fund, and working with our customers, we're going to look at ways to grow mail volume.

Performance

Our postal service is the best in the world. . . . The United States Postal Service has 45 percent of the world's mail, and we certainly don't have 45 percent of the world's population in America. We have been one of the vital cogs in the economy of the United States, and we are serving America at higher levels than we've ever served in our history. Our on-time performance is second to none.

Contact Joe Davidson atfederaldiary@washpost.com

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