It’s late summer and things are getting hot and steamy in Washington, D.C. When we last wrote about postal reform legislation, Rep. Darrell Issa (R-CA), Chairman of the House Oversight and Government Reform Committee, had just released a “discussion draft” of proposed legislation. Since then, both Rep. Issa and committee ranking member Elijah Cummings (D-MD) introduced separate reform bills. The committee passed Rep. Issa’s bill, but added several provisions, such as requiring a Chief Innovation Officer, adopted from Rep. Cummings bill.
While it’s a long way to final legislation, we are encouraged that the debate about how to strengthen the Postal Service’s business model has begun. Like other postal stakeholders, we have been talking with our congressional representatives to ensure they understand the importance of a financially healthy Postal Service. More than eight million public- and private-sector jobs in the mailing industry depend on it. We’ve also been sharing our thoughts on what the core elements of reform legislation should include.
If you haven’t had a chance to read it, we recommend taking a look at the testimony of Joel Quadracci, Chairman, President & CEO of Quad/Graphics, Inc. presented to the House Oversight and Government Reform Committee on July 14. This testimony does an excellent job of summarizing the impact financial uncertainty in the Postal Service has on the printing and mailing industry. Quadracci’s testimony also articulates the core elements our industry will be looking for as legislation makes its way through the House and Senate. Those core elements include:
1. Providing the Postal Service with clear authority to streamline its network
Mail volume has declined 25% since its peak in 2006. The Postal Service must align and size its network for current and future mail volume. The USPS has already begun a program of network realignment with little operational disruption due to ongoing communication with mailers.
2. Shifting to an affordable payment plan for retiree health benefits
Adopting a more affordable amortization schedule can ensure full pre-funding with much lower annual payments.
3. Allowing the Postal Service access to potential pension system overpayments
When there are surpluses in pension accounts, the Postal Service ought to have access to these excess funds for debt reduction, capital investment or restructuring costs.
4. Providing the Postal Service with needed flexibility to manage healthcare costs
Postal Service management has researched a proposal to more directly manage healthcare costs for the organization. We believe allowing the USPS to go into the marketplace and negotiate for better service at lower cost (based on the unique demographics of postal employees) can be a win-win.
5. Retaining the Consumer Price Index (CPI) cap on postage rate increases
Aligning postage rates with the CPI has provided incentive for the Postal Service to improve the cost-efficiency of its services. Without this incentive, its financial position would be worse than it currently is. The single largest expense in direct mail campaigns is almost always postage. An increase in postage above the rate of inflation would only drive additional volume out of our postal system, damaging the $1.3 trillion mailing industry and the 8.4 million jobs it provides.
6. Allowing the Postal Service to align its delivery schedule with current mail volume
Although reduction in service should never be the first choice to address financial concerns, given the continuing decline in mail volume, we see the 5-day mail/6-day package delivery proposal put forth earlier this year as a necessary move to cut costs and excess capacity.
7. Ensuring arbitrators take into consideration the fiscal position and marketplace challenges facing the Postal Service
Mail users are ultimately impacted by price and service changes driven by management-labor disputes. Having the arbitrators of these disputes take these factors into consideration ensures that mailers’ interests will be represented at the bargaining table.
8. Reforming workers’ compensation rules
Retirement-eligible workers should be transitioned to appropriate retirement programs in lieu of workers compensation.
We believe in print because it works. Direct mail is the backbone of any cross-channel marketing campaign, but our customers have choices. They will only choose mail as a primary communication medium if its cost remains predictable and affordable and they feel confident that the Postal Service is on solid financial footing.
We are looking to our congressional representatives to get the job done and provide the Postal Service the tools it needs to continue providing delivery and communication services well into the future.
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