Thursday, February 21, 2013

Why Ending Saturday Delivery Is Not Needed

The United States Postal Service (USPS) announced on February 6, 2013 that it would abolish Saturday delivery and argued that because Congress is operating under a temporary spending measure, not an appropriations bill, USPS has authority to change service without congressional approval.

Packages, mail-order prescriptions and Express Mail will still be delivered on Saturdays. The plan will take effect the week of August 5, 2013. Post office that are open on Saturdays will remain open.

This decision was made because USPS executives declare they are in the red due to government mandating of funding employee health care and retirement plan. However, I know firsthand that all the money is not used for employee retirement plans. I personally know 5 USPS employees who retired in the past few months and were expecting to receive their full pension but were told there was no money and they only received $30,000 although they had worked for over 30 years at the post office.  For years the Postal Service has had a surplus of funds in the retirement plan, so if they are not giving the money to employees where is the money going?

Postmaster General Patrick R. Donahoe told a Senate committee on February 13, 2013, “We also would like to see a proper calculation of our Federal Employees’ Retirement System (FERS) surplus, and to use those funds to reduce the debt of the Postal Service.” When did it become acceptable to use retirement funds for something else? This should be criminal.  GE, Enron and other companies found ways to use their retirement plan money for other things rather than drawing on some of its cash reserves - forcing employees into a sub-par 401K system which can reduce the amount of money that employees get during retirement versus have a pension plan. GE was slapped on the hand and Enron went under.

Wind, snow, sleet, rain, frigid weather don’t stop postal mail delivery but somehow Americans have been forced to believe that the post office is in such dire straits they have to eliminate Saturday delivery.  Eliminating Saturday delivery is a knee jerk reaction to administrators who don’t want to be bothered with taking the time to create a strategic plan to reduce costs.  USPS has been experiencing financial problems for years but senior executives have ignored the problem and have not implemented any long-term solutions.  I believe the new postal mail delivery schedule will further increase the economic gap between the rich and the poor.

According to Delivering for America, approximately 80,000 jobs will be lost if one day of delivery is dropped. These jobs would impact Americans in every state and could have a disproportionate impact on veterans, a group historically welcomed into the Postal Service with open arms but still struggling to find employment elsewhere in a weak economy.

Delivery of mail has already been impacted over the past few years.  I used to receive mail by noon each day now I receive mail at 2, 3 or sometimes 5pm each day.  Saturday delivery would personally affect me because sometimes I cannot make it to the post office before it closes at 5:00pm and rely on Saturday delivery for sending bills and correspondence.

Credit card companies are required to set a payment deadline at least 21 days after they mail cardholders' statements. The ending of Saturday delivery may result in customers receiving their statements two to three days later or may have a shorter time period to send payments.

Approximately 4.7 people still send payments by mail.  On average customers need 7-10 days to send payments by the due date. Without Saturday delivery it will take 8-11 days for payments to be delivered by the due date.  If the following Monday is a holiday customers would have 2 days less to send payments and it would take 9-12 days to send payments by the due date.  

According to a 2012 CareerBuilder study, 17% of men and 25% of women missed at least one monthly payment in the past month. This will increase if Americans have to track their mail delivery more watchfully.

Terminating Saturday delivery may cause customers to receive mail later in the day due to the increase volume of mail on Fridays. FedEx and UPS don’t deliver bills, postcards or letters via first class.

Business is conducted 24/7 not just 5 days a week.  Thousands of businesses filed petitions against eliminating Saturday delivery with the Postal Regulatory Commission last year but their concerns were ignored.  Businesses that are not setup to receive electronic payment still send bills by mail.  Termination of Saturday delivery would force businesses to use more expensive private delivery services.  Businesses who receive a lot of mail on Saturdays and trucking businesses that receive customers’ payments by mail will be greatly impacted.

For those working in the financial and legal industry offices are closed on Saturday and clients have to rely on Saturday mail delivery to get paperwork processed on time. For clients with court cases no Saturday delivery would mean the difference between whether their court case gets dismissed or confirmed. 

The industries that depend on postal mail delivery such as advertising companies, newspaper publishers, bill-payment processors have made digital investments but all of their customers have not.

Most greetings cards are sent via first class mail.  Many greeting cards businesses and publishers such as Hallmark receive a high volume of sales from September through December and the Saturday delivery would affect accounts receivables and add delays on checks sent through the mail.

Consumers order DVDs by mail with companies such as Netflix. Consumers that watches movies the day they arrive and send it back the next day would be affected if the next day falls on a Saturday. As a result customers would get one less DVD to watch each month.

Many magazine publishers such as Conde Nast target Saturday for delivery to maximize their readership and will now have to deliver their subscriptions Monday through Friday.

Individuals who use businesses such as eBay to buy and sell items would be impacted.  Smaller companies cannot afford to make digital investments and have relied on postal mail due to high gas costs and high costs of using private firms such as FedEx and UPS.  The one-day delay in processing a payment could trigger a series of delays that impact operations.  Smaller private companies may be cheaper than USPS but may not be as reliable. 

Kenneth Czarnecki, senior VP at CVS Caremark, which shipped more than 50 million prescriptions by U.S. mail in 2009, said at a recent forum that this plan would add expense rather than eliminate it. "These added costs not only impact patients' pockets but will also place significant fiscal strain on our health-care system," he said.

Some companies may be forced to implement digital technology but you cannot force someone to pay bills online and receive paperless statements if they don’t have access to an internet or don’t live near a library.  Dropping Saturday delivery would cause disproportionate harm to the elderly, those with limited Internet access or no access, rural communities and small businesses.

American concerns about this issue were ignored especially those in urban and rural areas.  Cell phone service and high speed internet access is not available in 50% of rural areas and in many urban areas.  Thirty-five percent of all Americans do not have high speed internet access and are unable to pay bills online or use mobile banking. Some customers in rural areas have to retrieve their mail at postal windows. There are also areas where FedEx and UPS do not deliver and these consumers would be dependent on postal mail for Saturday delivery.

Consumers' outgoing mail would not be retrieved from their home mailboxes on Saturdays, nor would letters placed in a blue USPS box be picked up, says Darleen Reid, a spokeswoman for the USPS. Letters delivered to a post office location will not be processed that day, but will be processed Sunday for Monday delivery.

Five-percent of consumers get their paychecks in the mail and not all companies offer direct deposit.
If a check doesn’t arrive on Saturday, it may cause a financial burden to wait until Monday especially if Monday is a holiday particularly for the elderly and disabled. Some employees do not leave near a post office and must mail their bank deposits, confidential documents and bills.

Ending Saturday delivery will affect taxpayers who don’t have bank accounts and receive refund checks in the mail which will take a few days longer to receive them.  Thirty-percent of the country rents and don’t pay their rent, credit card bills or utility bills on time.  Even though rent checks are usually posted on the first of the month they often don't arrive until the 3rd. With the shutdown of Saturday mail delivery, rent checks may show on the 5th of the month or later if the first falls on a holiday weekend. With most landlord business bills due on the 10th, they will no longer be able to rely on this month's rent checks to pay this month's bills.

Congressman Richard E. Neal stated that “It also does not address the onerous pension requirement that is one of the primary reasons why the Postal Services is losing money.” The postal service will still have a huge deficit of $16 billion with the elimination of Saturday delivery.   Democratic U.S. Senate candidates Edward Markey and Stephen Lynch both oppose proposals by USPS to cut Saturday mail delivery. They say there are other reforms, including revising the method used to fund health insurance for employees, increasing the products the Postal Services offers and consolidating more post offices, which can save money and generate more revenue.

Senate Majority Leader Harry Reid was not happy, saying that "The postmaster general’s actions have damaged his reputation with congressional leaders and further complicates congressional efforts to pass comprehensive postal reform legislation in the future." Maine Republican Sen. Susan Collins was similarly critical of the move, questioning both its adherence to the law and the damage that might be done to postal business by cutting services. 

Rep. Elijah Cummings explained on MSNBC: “You’re talking about just this reduction … from six days to five days, will cut anywhere from 25,000 to 30,000 employees.  And with regard to Asian, African-Americans, and Hispanics, they comprise about 40 percent of the Postal Service employees.  So it’s logical to believe if they were to lose that 30,000 jobs, easily 40 percent of them would be African-Americans, Hispanics, and Asian-Americans.” According to The Hill, Cummings proceeded to point out that over 40 percent of the post office’s employees are also women: “So you have a lot of women, many of whom are single women — head of household, and they depend upon that decent wage, decent working conditions and benefits to take care of their families.”

Postal workers negotiated a contract with the postal service and now it will not be honored due to the termination of Saturday delivery.  Eliminating Saturday delivery would make the USPS less attractive for customers who would shift businesses to independent companies that can serve all their needs which would further increase the USPS deficit.  USPS hasn’t realized the quickest way to bankrupt a business is to continuously reduce services to customers.  With the increase advances in technology customers wants more services not less.

In 2006, the President Bush and Congress passed the  Postal Accountability and Enhancement Act requiring the USPS to pre-pay health care benefits within 10 years or by 2016 for current employees and all employees who will  retire during the next 75 years.

In 2012, Last year, the House and Senate produced competing bills to help decrease USPS’ financial losses. The Senate approved legislation that would have delayed 5 day mail delivery for 2 years while testing other cost-saving strategies, but the House never voted on the issue. House Appropriations Chairman Harold Rogers (R-Ky.) said he had no idea what his committee would do about the postal plan.

In 2011, during the 112th Congress, the House introduced 60 bills to rename post offices.  Thirty-eight have passed the House and 26 have become law.  No bills came to the House floor targeted at reforming the USPS. The USPS’ recent decision and lack of action by Congress shows that neither are concerned about the millions of customers and businesses that will be affected by ending Saturday mail delivery.

On 2/6/13 in a tweet from @Topconversative Cat posted on his Twitter account, “Paul Ryan: "The U.S. Postal Service shouldn't stop Saturday service. Saturday is when rich people get their statements from the Caymans."

Some blame the cost of unions as the reason for the financial woes of the USPS.  Working with its unions, USPS has already reduced its workforce by 110,000 employees, improved efficiency, and introduced new products and services. USPS processes over 40% of the world's mail and has a workforce that is made up of 40% women, 40% minorities, and 22% veterans many who are disabled.

Many are pointing the finger but none are coming up with viable solutions. All of the solutions implemented thus far have not worked and have only hurt customers and USPS employees.

The media and the USPS have lead consumers to believe the USPS is on the brink of bankruptcy and will go out of business soon but that is not the case.  The USPS nets profits every year. The financial problem it faces now comes from a 2006 Congressional mandate that requires USPS to pre-pay into a fund that covers health care costs for future retired employees. Under the mandate, the USPS is required to make an annual $5.5 billion payment over 10 years until 2016. USPS states these prepayments are principally responsible for financial losses since 2007. However, since 2007 the USPS produced a $700 million operational profit. The USPS and media led Americans to believe that no one uses the USPS anyone and that it must make some major adjustments to generate a profit but since it already generates a profit this lie doesn’t fly.

The post office is an independent agency whose revenue comes from postage fees and services not tax dollars. USPS can’t be run like a typical business because it is a service organization and should not be required to make a profit.  The USPS is overseen by an 11 member Board of Governors.

Some members of Congress want the USPS to make a profit but some government agencies don’t make a profit such as the FDA, FBI, Centers for Disease Control, State Department, FEMA, and the Park Service and don't want it competing with businesses that have lobbyists and give campaign contributions.   

Republicans have been pushing ploys to privatize USPS since 1996. Congressman Romney stated he would eliminate the postal service. Unlike other government agencies since 1970 USPS is required to break even.  Republicans in Congress forced USPS to remove public use copiers from Post Offices and prevented USPS from setting up a secure online system that would have allowed consumers to make monthly bill payments.

The Koch brothers' Cato Institute has been advocating privatizing USPS. Frederick W. Smith, Chairman & CEO, FedEx Corporation was on the Board of Directors of Cato Institute. FedEx is also a funder of the Cato Institute. Cato Institute funders oppose unions because they enable working people to bargain for a larger share of the pie.  The USPS is the largest remaining union.

Ninety percent of the media outlets are owned by 6 companies: GE, NewsCorp, Disney, Viacom, TimeWarner and CBS and control 70% of cable service.  These companies have a vested interest in remaining profitable and privatizing the USPS would help them do just that.

Due to a 40-year-old accounting error, the Office of Personnel Management has overcharged USPS $80 billion for payments into the Civil Service Retirement System having billions of its sales dollars erroneously diverted into the treasury. It has also overfunded the Federal Employees Retirement System (FERS) by approximately $6.9 billion. That adds up to $86.9 billion that would be enough to finish funding the pre-pay health care benefits and eradicate the USPS deficit.

The USPS performed a survey 1,002 respondents and requested its market research company to redo the survey using distinctive questions and asked the Postal Regulatory Commission to seal the original survey results and keep them hidden from the public.  Neither I nor any of my friends, associates or family members were given an opportunity to express our concerns about the new postal delivery schedule although on the USPS website is states that 80% of Americans support the new schedule.  So USPS is stating that 1,002 respondents who support Saturday delivery can speak for millions of Americans on the issue.

Congress told the USPS to serve all areas of the United States, to break even, prevents them from raising or lowering rates as needed, precludes them from adding new services without prior approval, restrains them from using their competitive advantages to compete with private businesses and compels them to pre-fund 75 years of health benefits. No wonder they are struggling.  Congress carps about the unions and demands USPS sell their buildings, fire employees laid off and privatize. This ensures that all the benefits go to the wealthy instead of consumers and employees.  The wealthy will benefit by customers and companies using more expensive services that will generate profit and tax breaks to already profitable businesses and reduce discretionary income of customers and small businesses.

The USPS attempted to close 3,700 post offices but due to complaints from customers it condensed hours at 13,000 locations, closed some offices were closed or consolidated offices which has already affected delivery services to millions.

Quoting examples from postal systems around the world, the National Association of Letter Carriers (the postal workers' union) argues that the only way to close the gap between the USPS's costs and the revenue it brings in is to raise the price of a postage stamp.

Patrick Donahoe, the U.S. postmaster general since 2010 stated, “To right the agency, he says it’s necessary to pare back the workforce by another 150,000, eliminate Saturday delivery and close postal facilities that are a drag on the agency’s bottom line.”

A measure of good faith would be shown if the postal master general, other postmasters and managers took a 1% pay cut for one year.  Also, if senior postal executive receive bonuses, commissions or other perks these should be eliminated.

Other countries such as Germany, France, Italy and Sweden have successful postal mail systems and a similar model could be adopted in the U.S such as a public banking system that would provide postal banks that could serve the 9 million unbanked and the 21 million who utilize check cashing stores. The public banking would provide basic checking and savings. This would eliminate the predatory prepaid debit cards that are in circulation and save the unbanked money paid in predatory fees.

USPS should think of creative ways to create new products and services which is a basic sales method used by most businesses to generate revenue and grow. USPS can stop renting lavish offices in places like Boston, New York, Chicago and Los Angeles and move those services to offices already owned by USPS. USPS could bring back public use copiers in each post office. USPS can create mobile applications: for customers to track their packages and for businesses to setup and manage their accounts, and renew services such as Post Office boxes.   

Instead of lowering the price of postage for first class mail USPS lowered the price of postage on corporate junk mail and advertising which should be charged higher rates than first class postage.  This only helps the wealthy and profitable big businesses and continues to hurt consumers.

Next year the USPS will have to come up with another solution to reduce the deficit since the elimination of Saturday delivery does nothing to help their financial problems.  In addition, the next step the USPS will likely make is to lay off employees.  The solution to saving the U.S. Postal Service is offering new services and lower rates. Let’s see how this will affect the next election.

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