With the United States Postal Service’s (USPS) $8 billion deficit this year forcing Congressional action, Representatives Issa (R-Calif.) and Ross (R-Fla.) have proposed the Postal Reform Act, H.R. 2309, which balances the books and ensures taxpayers do not foot the bill for USPS mismanagement. Click here to view the PDF.
Rightsizing the workforce
Compared to the private sector, over 80 percent of the Post Office’s costs are labor related, while FedEx and UPS spend 20-40 percent less. The Postal Reform Act looks to bring down labor costs by rightsizing the entity’s workforce and bringing postal employee compensation in line with other federal workers. Over the coming years, the Postal Reform Act will reduce USPS’s workforce by nudging government workers eligible to retire with full benefits to do so. Additionally, the Postal Reform Act would eliminate the no-layoff clause currently included in the postal employees’ collective bargaining contract. Postal Employees would be subject to the same Reduction-in-Force authority as the rest of the federal workforce.
The Postal Reform Act requires postal employees to contribute the same percentage of their income as other federal employees to their retirement. Currently, postal workers only pay 21 percent of health care costs and none of their life insurance premiums, federal workers pay 28 percent of healthcare costs and are responsible for 100 percent of their life insurance costs.
Post Office Consolidations
The Postal Reform Act consolidates unnecessary facilities by allowing a BRAC style commission to close post offices and mail facilities that habitually run a deficit.
One of the greatest inhibitors to USPS reform is the rigid laws and regulations governing the entity. The Postal Reform Act allows USPS to eliminate Saturday delivery, if it chooses. Opening up a new source of revenue, HR 2309 would allow USPS to sell advertising space on vehicles and facilities. Given the USPS’s fleet, post offices, and sorting facilities, this provision has the potential to bring in substantial revenue.
Just as important as what the bill accomplishes, HR 2309 is noteworthy for what it does not try to do—expand USPS’s services. In the past when the USPS has faced shortfalls, the entity has attempted to offer consumers more products—international shipping, ties, and other eventual boondoggles. These forays into other services have consistently ended poorly. Firstly, the USPS is not equipped to deliver these products at market price, so they inevitably lose USPS money. Secondly, any revenue the USPS gains comes at the detriment of a private company offering the same service. Leveraging the government’s support of USPS to encroach on private businesses is bad policy and should be explicitly prohibited.