Alliance Report–USPS & Coronavirus 3/18/20

March 18, 2020

The Alliance of Nonprofit Mailers continues to focus on the use of mail by nonprofits in this time of crisis.  We believe that nonprofits should maintain or even increase their mailing programs as coronavirus precludes other avenues for the foreseeable future.   The personal touch of hard-copy delivered to our homes is always much appreciated, but perhaps even more so now.

Postal Service

The United States Postal Service has told us that they are continuing to operate as usual, with six-day delivery of mail and post offices open.  USPS also is giving its employees the recommended advice from the Centers for Disease Control and Prevention, including staying home if you feel sick.  So far, things seem to be going well.  USPS reports only “minor operational impacts.”  They also emphasize: “In addition, the Postal Service is an essential service for purposes of its compliance with state or municipality shelter-in-place orders or other social distancing restrictions.”

We ask Alliance members to let us know if you experience any negative impacts on their postal services, by emailing us at .  We will be receiving an update from USPS tomorrow, and will let our members know of any significant developments.

Service Adjustments are Possible

The USPS spends about three-quarters of the money it receives from customers on employee pay and benefits.  As a very labor-intensive agency, with about half a million career and 150,000 part-time employees, employees needing to stay home could have major impact on postal operations.

Service changes also could occur if private sector mail service providers experience excessive absences.  The Postal Service is very heavily a public-private partnership in which businesses have enabled rate-paying mailers to achieve very significant efficiencies and cost savings.

One option the USPS might have to employ is moving to fewer than six days a week mail delivery.  It would require dealing with significant logistical challenges.  USPS management might want to dust off all the previous planning it did when it tried to move to five-day delivery.

The industries most immediately affected by the pandemic—airlines, restaurants, hotels, conventions, retail stores—are suffering from no customers.  The USPS could be part of a later wave caused by too few employees able to show up for work.

In 2013, the Alliance issued a statement in favor of five-day delivery, if it were needed to achieve necessary cost savings.  We believe the nation could adapt to fewer than six-day delivery, as we are adapting to more difficult changes.

We should emphasize that the Postal Service has given no indication yet that service adjustments might be necessary.

Taxpayer Bailouts

Major financial support from the federal government to deeply troubled industries such as the airlines is now under serious consideration.  Few would disagree that these transfers are needed, as they have been necessary in previous crises for such industries as autos and banks.

It is unfortunate that the negative-sounding term “taxpayer bailout” has been used to describe critically important government support for the private sector.  Interestingly, the nonprofit organization ProPublica runs a “Bailout Tracker” that documents that the government has made significant profit from its bailouts.

Likewise, many observers of the USPS have warned of a taxpayer bailout looming if we don’t do something quickly to reform the Postal Service.  Yet, this is a government agency that was largely funded by the U.S. taxpayer for about 200 years, before the current experiment with operating it like a business started in 1970.

Taxpayers receive significant benefits from our national postal system and want to see it continue its important role.

Return USPS to its Roots: Supported by the People

Dropping direct taxpayer funding for USPS commenced in the early 1980s.  Funding only by ratepayers worked well for about two decades as mail volume doubled from 100 to 200 billion.  Mailer-only funding clearly has not worked in the latest two decades.  This is especially true as the Postal Service has campaigned for and assumed eventual removal of the regulatory price cap that was implemented in 2007.  The price cap was put in as an attempt to fix the malfunctioning ratepayer-funded businesslike model.

With the USPS and the Postal Regulatory Commission set to jettison the price cap, it’s time to also admit that the businesslike model is not the answer.  While it says it cannot operate under price limitations comparable to competitive businesses, USPS continues to say its goal is to maximize “profitable revenue.”

It is time to reemphasize the most important purpose of the USPS: binding the nation together as an essential form of communication and delivery available at affordable rates to all American individuals and organizations.  The U.S. Postal Service is a fully government agency serving our nation as essential infrastructure.   It is not, and should not try to be, a profit-seeking business.  Restoring taxpayer funding for the outstanding public service performed by USPS is the right thing to do.

On its Service Alerts web page, the USPS emphasizes its true role:

The statute that created the Postal Service begins with the following sentence. “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 an Act of Congress, and supported by the people.” 39 U.S.C. §101(a).

Supported by the people.

USPS Meetings in Flux

The Postal Service has changed its March 24-26 Postmaster General’s Mailers Technical Advisory Committee to a virtual experience rather than in-person.  The open session that normally includes the Postmaster General and other senior officials has been cancelled.

The Alliance has three outstanding nonprofit executives representing the interests of all nonprofit mailers on MTAC: Trista Niswander of Our Sunday Visitor, Jerry Mathis of ALSAC/St. Jude Children’s Research Hospital, and Steve Smith of Base60 Consulting, and formerly with the Christian Science Monitor.  Trista and Jerry also serve as members of our Board of Directors, with Jerry as VP, and Steve is Past President of the Alliance Board.

The USPS National Postal Forum was scheduled for April 26-29 at the Orlando World Center Marriott and has been cancelled.

Voting by Mail

Voting by mail has been in the news.  It makes a lot of sense any time, but especially now.  The USPS has been promoting it for some time.  It seems to be exactly the kind of “basic and fundamental service provided to the people by the Government of the United States” at the heart of the U.S. Postal Service.

The National Conference of State Legislatures reports that 21 states have provisions to conduct at least some elections by mail, and four states—Oregon (2000), Washington (2011), Colorado (2013) and Hawaii (2019) —hold all elections entirely by mail.

It makes sense that the federal government urge all states to at least enable voting by mail in time for our November genral elections.  This is exactly an example of how our Postal Service can bind the nation together by ensuring everyone has an opportunity to vote.

Déjà Vu in Setting USPS Costs

Our regular readers will recall that we reported on the arbitration award for the largest USPS union, the American Postal Workers Union, in 2016.  Even though the arbitrator acknowledged undisputed evidence provided by the Postal Service that its employees are much better compensated than comparable private sector jobs, he awarded the APWU a very generous package of guaranteed raises and cost of living allowances as well as about three-quarters funding of their health insurance premiums.

Why?  Because USPS management had recently agreed to a generous package with a smaller union, the National Rural Letter Carriers Association.  He based the APWU award on the NRLCA agreement that management had voluntarily entered into, and essentially ignored the economic reality.

As 76 percent of USPS costs are compensation and benefits, and mailers are now threatened with massive rate surcharges, this excerpt from the 2016 APWU award is worth a read:

2016 APWU Award

In weighing the parties’ arguments on wage and benefit comparability, certain factors stand out. Initially, I am persuaded, as the Postal Service asserts, that the package of economic benefits received by bargaining unit employees – retirement benefits, retiree health care, paid leave, low employee health care contributions, and a no-layoff provision – are superior to those typically available to private sector employees. Another factor which stands out are the quit rate data, which show that career Postal Service employees voluntarily leave their jobs at a rate far lower than do private sector employees. Despite APWU arguments to the contrary, I consider this as powerful evidence that APWU-represented employees consider their jobs with the Postal Service to be superior to the alternatives available to them elsewhere. To be sure, wages and benefits are not the only considerations that enter into an employee’s decision whether to stay with the Postal Service or go elsewhere, but it would be naïve to believe that these are not major considerations. Hence, I conclude that the almost total unwillingness of APWU-represented employees to leave their jobs voluntarily is powerful evidence that they view their compensation and benefits as superior to what they would receive elsewhere, based on their skill and experience. Whether this be labeled a postal “premium” or rather evidence that the Postal Service is succeeding in retaining a skilled and dedicated workforce by virtue of a wage and benefit package that employees believe cannot be improved elsewhere, it does not suggest that the Postal Service is lagging the private sector in wages and benefits.

A final factor to be considered in determining what, in light of the conflicting evidence and arguments, should be our award on wages and benefits, is the recent collective bargaining agreement between the Postal Service and the National Rural Letter Carriers’ Association (“NRLCA”), which was ratified by 83% of the NRLCA voting membership. That agreement, which is effective from May 2015 through May 2018, provides for general increases of 1.2%, 1.3%, and 1.3%, lagged six months; a COLA with a 2014 base; health benefits contribution reductions of 1% per year for three years; and preservation of the two-tier career wage structure.

While this Arbitration Panel is not bound to adopt the USPS-NRLCA wage and benefits agreement, and while I recognize that the USPS-NRLCA Agreement applies to a smaller, more homogenous unit of employees doing different work from APWU-represented employees, I nonetheless assign considerable weight to the USPS-NRLCA Agreement in determining the content of a wage and benefit package for the employees here involved. Interest arbitrators often look favorably at recent voluntary agreements, especially with the same employer, as evidence of what the parties would have agreed to if their negotiations had been successful. I follow that line of reasoning in assigning substantial weight to the NRLCA Agreement, negotiated under the same comparability standard applicable to these proceedings, as evidence of what would be appropriate for the APWU bargaining unit despite its differences from rural carriers.

In sum, having considered all the evidence and arguments, particularly the USPS-NRLCA Agreement, I have determined to award similar compensation and benefit provisions to the APWU-represented employees involved in this case as were negotiated in the USPS-NRLCA Agreement.

Guess what?  The same arbitrator just awarded a new generous contract to the APWU based largely on a previous new agreement between USPS management and the NRLCA.  In fact, postal management pushed hard for the arbitrator to base his APWU award on the previous rural agreement.   They viewed the concessions they negotiated with NRLCA for more non-career employees and rebasing of the COLA as more than worth the raises they agreed to.

The in the new award, APWU, however, seems to have won similar benefits without the concessions:

2020 APWU Award

Shortly before the hearings in this matter began, the Postal Service reached a new collective bargaining agreement with the National Rural Letter Carriers’ Association. That agreement, which was ratified by 86% of the voting rural carrier membership, is for a three-year term, from May 2018 through May 2021. It includes general wage increases of 1.3%, 1.1%,and 1.0%; a COLA rebased to April 2018; a 1% reduction in the Postal Service’s contribution toward health benefit premiums bringing it to 72%; an MOU to facilitate adoption of engineered standards for the evaluated route compensation system; no mail counts during the term of the agreement; and an additional 0.8% general wage increase in the third year of the agreement.

What significance should this agreement have in our decision? We faced virtually the same issue in 2016 when, as now, the Postal Service and NRLCA reached an agreement shortly before APWU’s interest arbitration proceedings began. I concluded in 2016 that “considerable weight” should be given to the 2016 NRLCA Agreement in determining the 2015wage and benefit package for APWU-represented employees. I acknowledged at that time that the rural carriers are a smaller, more homogenous unit of employees doing different work from the APWU bargaining unit, but also noted that interest arbitrators “often look favorably at recent voluntary agreements, especially with the same employer, as evidence of what the parties would have agreed to if their negotiations had been successful. “In light of these considerations, as well as other evidence and argument, I determined in 2016 to award similar compensation and benefits provisions to the APWU-represented employees as had been negotiated in the USPS-NRLCA Agreement.

On the core economic issues, I have determined, as I did in 2016, to award a contract duration, general wage increases, and health insurance contributions to APWU-represented employees similar to those agreed to in the NRLCA Agreement.

This determination should not be understood as rejecting the statutory comparability standard in favor of a slavish adherence to the terms of a contract negotiated between the Postal Service and a different union for a different bargaining unit. The comparability standard is applicable to all postal interest arbitrations and has been fully considered here in awarding similar wage and benefit increases to APWU as were contained in the NRLCA Agreement.

As for the evidence and argument put forth by the parties with respect to the Postal Service’s financial condition and the effect that should have on the Award, I shall be brief. This issue was discussed and resolved in this Panel’s 2016 Award and need not be discussed again. For the reasons stated in the2016 Award, I do not view the Postal Service’s financial condition as calling for a modification or rejection of the statutory comparability standard.

Although contract duration and the health insurance contribution are relatively straightforward, a challenge remains concerning the appropriate general wage increase for the third year of the APWU Agreement. The NRLCA third year increase is structured in two parts –a 1% general wage increase and an additional 0.8% increase that the Postal Service asserts was “paid for” by concessions made by NRLCA in its negotiations. Based on the NRLCA Agreement as well as other benefits and economic factors present in the APWU bargaining unit compensation, I conclude that a 1% general wage increase is appropriate in the third year of the APWU Agreement, and shall award such an increase.

I understand that some economic concessions made by NRLCA allowed it to improve its general increase by an additional 0.8%, but I lack the information necessary to determine what concessions would be appropriate to justify an additional 0.8% general wage increase to APWU in the third year of its agreement. The cost of bargaining concessions to the Union, and their value to the Postal Service, are often hotly contested matters, in which both financial and perceptual disagreements render agreement difficult, and third-party decision-making even more difficult. Accordingly, I am unwilling to award the additional 0.8% general increase in the third year of the contract.

However, in lieu of the 0.8% general wage increase received by NRLCA, and without attempting to assign economic value to the Union or cost to the Postal Service of this resolution, I will resolve certain disputed economic issues in the Union’s favor: (1) I shall not award a COLA rebasing (beyond updating the year of the existing base month) or reformulation; and (2) I shall not award any increase in the number of PSEs, also sought by the Postal Service. The result is an economic package which is consistent with the basic general wage parameters in the NRLCA Agreement, without the imposition of arbitral trade-offs that are better made in negotiations.

Private sector customers and business partners of the Postal Service face the realities of no automatic pay increases, reduced health benefits, no cost of living allowances, and layoffs.  The labor negotiation and arbitration process for USPS is clearly out of sync with the real world.  A malfunctioning labor process should not drive the Postal Regulatory Commission and postal management to impose massive surcharges on customers who cannot afford them.

Search for Next Postmaster General Continues

Even though we were promised a new Postmaster General in time for Megan Brennan’s planned retirement date of January 31, she continues to serve and no replacement is in the offing.  There have been rumors of more than one offer extended in the private sector, only to be turned down.

Bill McAllister of Linn’s Stamp News reports that a reader obtained the job posting through a freedom of information request.  It describes the huge challenge and does acknowledge that a transformation of the postal system is needed: “The inexorable decline in what was historically its core products leaves the institution in need of major revamp if it is to remain relevant in the period ahead.”

Linn’s reports:

The search firm’s job description he received lists the following “essential requirements and experiences” for the next postmaster general: experience transforming a large organization, best-in-class operational management skills, financial acumen, industry experience, commercial excellence, and broad stakeholder engagement and management.