August 6, 2013

The Senate and the House are both considering bills that if passed would radically accelerate the dismantling of the Postal Service.  APWU President Cliff Guffey recently made concessionary remarks that indicated APWU compliance for Congress to take more away from postal workers and further reduce service to the American public.  Therefore, as a union, we will have to work even harder to overcome President Guffey’s damaging remarks in order to defeat these bills. (Note: As this article was about to be published, the four major postal unions wrote a joint letter to Senator Harry Reid objecting to the Senate bill where Democrats have a majority.  President Guffey signed the joint letter, which helps to make up for his previous concessions to Congress.)

At the recent hearing, on July 17, 2013, held by the full committee of the House Committee on Oversight and Government Reform, President Guffey testified that he thought postage discounts to the large mailers were appropriate and in response to questioning from Republican Darrell Issa (CA), the Chairman of the Committee, President Guffey expressed agreement with the large mailers, the Postmaster General, and Issa, that the least desirable option of all the proposed postal reforms is to raise postage rates.  A review of past hearing comments by President Guffey show similar concessions.


President Guffey Thinks Discounts to Large Mailers are Appropriate

During his opening testimony at the July 17th hearing, President Guffey was making the important point that the Postal Service is an effective and relatively inexpensive service compared to other countries.  Guffey then stated,

As a matter of fact, I think we looked at England.  England is .6 of a pound, so it is a dollar a letter and there are no discounts.

I think the discounts in this country are appropriate.  They’re well.  But taken as a whole, with the whole Postal Service, everything is operating properly and there needs to be some adjustments to save this grand institution.

Moreover, this is not the first time that President Guffey has supported discounts to the large mailers in front of Congress.  At the 4/10/13 hearing  before the House Subcommittee on Federal Workforce, US Postal Service and the Census, President Guffey first said that we made cuts and changes so that post offices could stay open past 5:00 pm (which deserves it’s own criticism) and then said,

We must be—we have also lowered the cost of processing inside plants. We have tried very hard to do that so that the big mailers could keep their discounts and bring more mail to the Post Office as necessary, to try to keep the costs down for the Post Office.

The men and women of the American Postal Workers Union are very concerned about the Post Office and they want to help it to be a viable institution, and they overwhelmingly voted to do those type of things.

President Guffey’s testimony is foolish, reckless, and damaging.  Among other things, we certainly did not vote to allow big mailers to keep their discounts.

The APWU has long been on the record as against discounts to the large mailers.  Discounts to large mailers started in 1976 and have greatly contributed to the privatization of the Postal Service.  The discounts are so huge that there are companies making large profits by simply printing the mail in a presorted manner.  The large mailers brag that they have 8 million private sector workers in their industry (paper, printing, presorting, etc.).

Prior to 1976, large mailers presorted the mail as a courtesy and then lobbied for compensation for what was previously known as usual mail preparation.  The Postal Service first objected to the large mailers’ lobbying efforts for discounts.  The Postal Service argued against giving the large mailers free money for something they were already doing.  The large mailers prevailed.  The resulting loss of fair postage rates started the downfall of the Postal Service as a government run, democratic communications provider.

These “presort” discounts undermine democracy and fair business practices.  The discounts provide the owners of large corporations a greater voice in the public arena because it is cheaper for them to communicate via the mail than the average citizen.  The discounts benefit large volume mailers, which make it difficult for smaller companies to compete with the large mailers getting the discounts.

Once the door to discounts for larger volumes was opened, the large mailers have pushed for further changes to benefit themselves.  For example, Time Warner (People Magazine, CNN, etc), who claim to be the largest mailer, successfully lobbied in 1997 to get rates changed so that smaller mailers using sacks to transport their mail had to pay more than large mailers using pallets.  This one change drastically reduced the ability of small organizations, which often had different views to offer than Time Warner, to publish their magazines.

In addition, the discounts for advertisers are a main cause of the lack of revenue at the Postal Service as illustrated in the table below showing that standard mail (advertising) is 50% of the volume of mail, yet brings in only 25% of the revenue:

2012 Mail Volume and Revenue 

Type of Mail % of Volume % of Revenue
Standard Mail (Advertising) 50% 25%
First Class Mail 43% 44%
Periodicals 4% 3%
Shipping and Packages 2% 18%
International 1% 4%
Other   6%

Source: U.S. Postal Service, 2012 Report on Form 10-K

Basically, the American public who largely mail first class and/or do not qualify for the presort discounts has been subsidizing the large mailers.  With the drop in first class mail, the mailers are doing everything they can to continue to have the American public subsidize the cost of advertising.  The APWU position has always been that discounts to the large mailers are unwarranted and unfair for democratic communications.  It is irresponsible that President Guffey would testify to Congress at this critical time that he thinks discounts to the large mailers are appropriate.  Such a concession makes it more likely that other options such as reducing wages and benefits to postal employees and reducing service to the community will be implemented.


Guffey Agrees with Large Mailers, PMG Donahoe, and Darrell Issa that Raising Postage Rates are Least Desirable Option

As part of his opening testimony, President Guffey did say that postage prices should be raised and the cap on CPI repealed.  However, immediately following Guffey’s testimony, Issa made his move to take raising postage rates on the large mailers off the table.  With theatrical sincerity, Issa first asked Joel Quadracci, the CEO of Quad Graphics what would a price increase do to his customers?  Quadracci, playing his part as the concerned businessman stated it would be devastating.  Issa then asked PMG Patrick Donahoe what would happen if he raised postage rates 20% and volume went down 20%.  Donahoe indicated it would be devastating.  And then Issa, with his actors in position, turned to Guffey and after a bit the following exchange took place,

Chairman Issa. Okay.   I just want to understand that, and the point that I was making – and hopefully, all three of you are going to agree, is the least desirable part of any reform is the rate increase that inherently drives down volume.  Is that agreed across the board?  That’s the last thing you really want.  If you can find savings without, including health care cost savings.  If you can find savings without reducing those things which drive people to use your service.  That’s the best solution right?

Mr. Guffey: Correct, but that would also include the fact of not slowing the mail down because that will also drive them away.

President Cliff Guffey representing the APWU states in front of Congress and the world that he thinks discounts to the large mailers are appropriate and he agrees with Issa that the least desirable option of postal reform is to raise the rates of the large mailers.  The other proposed options, that were not rated the least desirable, include: taking away people’s mailboxes, going to 5 day delivery, further consolidation, reduction in compensation to workers injured on the job, reduced retirement benefits, a USPS run health plan, and getting rid of the no layoff clause in the next contract.


President Guffey Not Fighting for 6 Day Delivery Service

It is also important to report that President Guffey is not opposing the Postal Service’s plan to go to 5 day delivery.  The large mailers have worked out their differences and are supporting 5 day delivery, meaning that it has a good chance of happening.  The NALC is advocating keeping 6 day delivery service as all people should to maintain postal jobs and maintain the standard of service that the American people have enjoyed and have every right to continue.  However, President Guffey stated at the President’s conference in Pittsburgh this year that there is only so much “pie” and indicated that it would be better for the Postal Service to cut carrier jobs than further take away from the APWU.

Undermining your sister union and ultimately yourself to hope for a bigger piece of the pie is not a long term successful strategy.  The loss of Saturday service will contribute to the dismantling of the Postal Service and will harm our communities.  A significant number of jobs will be lost.  Former APWU members excessed to the Carrier Craft will be the first to be laid off as they no longer have their craft based seniority or their no-layoff provision.  Our sisters and brothers in the other postal unions will be harmed as well as the APWU.   President Guffey is sacrificing service, solidarity, and jobs to gain nothing in return for postal workers.  Even if a short term gain could be made, it would not be the ethical move and would be a loss for us in the long term.  The unions need to work in solidarity as one union to increase our bargaining power.


Love Means Never Having to Say You Won’t Reduce Jobs

Even though President Guffey and other national officers had just given the Postal Service and the large mailers massive contract concessions in late spring of 2011, supposedly in part to keep the no layoff clause, by the summer of the same year, the Postmaster General stated he wanted Congress to get rid of the no layoff provision for postal employees.  At the 9/6/2011 hearing before the Senate Committee on Homeland Security and Governmental Affairs, the issue of the attack on the no layoff provision was raised by Senator Joseph Lieberman of Connecticut, the Chairman of the Committee,

Chairman Lieberman. Thank you very much for that testimony.  Let us go to the questions, and, again, we will do 6-minute  rounds.    Mr. Guffey, you made a point which I wish we had asked the Postmaster General–and I will ask him in writing and have him submit an answer for the record–which is: Why was the agreement signed in May and then the request for this action is being made now which seems certainly to be inconsistent with the agreement? I am curious–since he has made these proposals, particularly about the layoffs–whether you have asked him that question and what his answer is.

Mr. Guffey. We have regular meetings based on what is going on in Congress. All of us recognize that we want to save the Postal Service. It has been a good livelihood for all of our members for years and what have you, and we try to work together as close as we can. We feel a little betrayed. I can understand the pressure the Postmaster General is under. I wish he had stayed with the original actions in supporting Senator Collins’, Senator Carper’s, and Congressman Lynch’s approach to this.

I have no idea. I feel, like I said, betrayed. To think that he did not think that this might happen before we signed the agreement, I cannot address that and I will not address that.

Chairman Lieberman. OK.

Mr. Guffey. I do know that since then, though, we have been working together on other things to help reduce the number of employees. We are still working and will continue to work together.

We should all feel more than a little betrayed and not just by the Postmaster General.  Why is President Guffey helping to reduce jobs in the first place?  What type of relationship does Guffey have with the Postmaster General?  When will President Guffey learn that appeasing the Postmaster General and the large mailers does not serve the interests of APWU members?


Raising the Debt Limit

At the 6/15/2011 hearing before the House Subcommittee on Federal Workforce, US Postal Service and the Census, Representative Danny Davis, a Democrat from Illinois asked witnesses Guffey, Joe Hete, and Michael Winn the final question of the hearing.  Joe Hete is president and CEO of Air Transport Service Group, which among other things, happens to manage USPS mail sort centers in Indianapolis, Dallas and Memphis.  Michael Winn retired from R.R. Donnelley & Sons Co. as the senior vice president and at the time of the hearing was President of Greylock Associates, LLC, providing consulting support to mailers.

Mr. Davis. I guess my last question would be, would either one of you be prepared for the Postal Service to raise its debt limit? Do you see that as any kind of possibility that would be beneficial to the operation of the postal system?

Mr. Guffey. I do not.

Mr. Hete. I would agree.

Mr. Winn. I would agree.

Mr. Davis. Thank you, very much, Mr. Chairman. I think we can still make the vote.

Private companies do not have debt limits, but Congress previously placed a total debt limit on the Postal Service of 15 billion.  To give some perspective, the debt ceiling for the Federal government is over 16 trillion dollars and Congress has raised the debt ceiling for the federal government approximately 12 times since 1996.  Meanwhile, Congress has not raised the relative low debt ceiling for the Postal Service since the early 1990s and has tried to default the Postal Service by mandating the prefunding for retiree health care, which no other government agency is mandated to do.

The low debt limit for the Postal Service prevents the agency from riding out the down times and allows Congressman like Issa to charge the Postal Service with defaulting on their obligations and providing an excuse to dismantle the Postal Service.  It is expected that Hete, Winn, and others who want to see the Postal Service fail, would not want to raise the amount of money that the USPS could borrow.  President Guffey should know better.


President Guffey and Health Care Changes

At the most recent congressional hearing, President Guffey stated that he was willing to negotiate changes to health care insurance with Postmaster Donahoe and moreover, indicated that changes to existing law might be appropriate to allow certain changes to happen.  Representative Elijah Cummings asked President Guffey what elements he must see in a postal bill.  After listing a few things, President Guffey then stated,

We would like to make sure that the issues that need to be done in collective bargaining, remain in collective bargaining, but there are some things that maybe need to be changed in the law to allow certain things to happen.  Part of that might be part of the health insurance issues.

President Guffey’s willingness to provide Issa and others the ability to change the law regarding health care insurance is not a wise decision.  It is unclear what specific changes President Guffey has in mind, but the contractual changes he agreed to in the past were a disaster for postal workers although he claims they were a win.  In his recent statements regarding the contract, President Guffey claims credit for keeping our health care benefits as requested.  However, that is simply not true.  At the 2010 National Convention, the Iowa Postal Workers Union put forth a resolution (Resolution 80) that stated,

WHEREAS, APWU eligible members had their health insurance premiums increased by 4% last contract, therefore be it

Resolved, that postal health insurance premiums remain at the same percentage for the next contract as it is when the current contract expires.

The membership was understandably upset by the changes in health insurance premiums having suffered through the recent increases.  The Labor Management Committee recommended concurrence with the resolution and President Guffey was serving as chair and therefore handled the vote when the resolution was passed.  During contract negotiations, President Guffey did not honor the resolution above passed by the membership at the 2010 National Convention and preserve health care premiums.  Instead, he continued the decline that the membership had objected to and spun his story to imply that he had delivered what the membership wanted.

Postmaster Donahoe is pushing changes to our health care insurance.  As history has shown, it is highly unlikely that anything Donahoe says can be trusted or that what he wants is in the best interest of either postal workers or the general public.


Final Words

Given President Guffey and National Officers’ shocking concessions on the contract and the ongoing concessions in the legislative arena, union members can no longer blindly follow and silently accept the path that the National Officers are going down.  Making unnecessary concessions and trying to gain favor with Postmaster Donahoe at the expense of new workers, veterans, retired workers, injured workers, workers in other unions, etc. is not the union way and has already been shown not to work as demonstrated by Postmaster Donahoe’s attempt to remove the no layoff clause immediately after the contract was signed.

The large mailers and the Postal Service have historically attempted and have been sometimes successful in luring top representatives from postal unions to take on their position in order to make it easier to accomplish the large mailer goals.  The NALC’s president at the time, Bill Young, helped push the legislation in 2006 that capped prices on postage and required the drastic prefunding of retiree health care, the National Rural Letter Carriers Union has been a member of the Coalition for a 21st Century Postal Service, a large mailer association, and the National Postal Mail Handler Union often argued for jobs based on their low wages (the type of competition that large mailers love).

The APWU has traditionally been the tough and rational union, advocating vigorously for postal workers and the public.  The APWU was often the only union challenging the Postal Service and the large mailers in the rate cases before the PRC.  Now, President Guffey is dramatically deviating from the historic APWU position.

There is great danger that Congress will soon pass legislation that will deeply harm postal workers and the American public.  Both the Senate and the House have postal legislation moving forward that will radically reduce service to the American people by going to five day delivery, reducing other service standards, taking away people’s mailboxes, etc.  Many Democrats, like Senator Tom Carper (DE), the Chairman of the Senate Committee overseeing the Postal Service, helped pass the 2006 legislation and have not stood up for either the interests of postal workers or the American public.  Carper’s latest bill in the Senate is disturbingly similar to Issa’s bill in the House.

In going forward, union members will have to overcome President Guffey’s concessionary comments and reestablish the APWU position of vigorously opposing all attacks on postal workers and cuts in service to our communities and contending that the rates on advertising mail must be raised.  The Postal Service is the most effective, efficient, and affordable postal service in the world.  Most of the financial difficulties are a result of the prefunding mandate for retiree health care that will end in 2016.  There is no need to reduce service or take away more from postal workers.   The consolidations and other reductions in service should be stopped immediately.

As privatization increases, union members should remember to explain that the Postal Service is a very economically efficient system of communication and exchange as it covers all households across the country.  Having multiple private facilities handle postal mail, multiple private vehicles deliver mail, and having millions of citizens travel from their homes to inconvenient and ugly cluster boxes to get their mail is economical inefficient, wasteful, and will contribute to a host of other problems associated with security, privacy, accidents, etc.

Finally, union members need to assert the position felt instinctively on the floor by postal workers, which is that the Postal Service is a service for the public, not an advertising delivery business for large mailers.  The Postal Service was established and subsidized to provide affordable communication so that citizens could become informed citizens armed with knowledge to participate in a healthy democracy.  A central idea was that by receiving information from diverse sources, a citizen could then have the knowledge to make decisions for the greater good.  Based on the founding mission of the Postal Service to provide an affordable communications network for the people of the United States, the Postal Service of today should provide universal and affordable internet access to the American people.

In addition, the Postal Service should end the discounts to large mailers and reclaim the mail from the private sector.  The Postal Service could essentially do the work that companies like Quad Graphics currently perform, but make it much more affordable for the smaller mailers.  Quad Graphics and other mail consolidators perform the printing and mailing for mailers of all sizes and make their profit by charging them above and beyond what it costs for them to do the work.  Joel Quadracci, the CEO of Quad Graphics, sitting right next to Guffey at the July 17th hearing, had 6.9 million in total compensation in 2012 just for himself (Company 10 K Report).

If the Postal Service did this work, the middle man making the profit could be removed and the costs for the smaller customers would be reduced.  As private sector work shifted to the Postal Service, there would be more opportunities for employees providing print and mail service to have improved rights on the job, and better wages and benefits.

Importantly, having the Postal Service perform printing and mailing services would increase democracy as smaller organizations and businesses could better afford to communicate by mail.

Making all methods of communication and exchange affordable for the American people is what a modernized Postal Service should be doing to help support democracy in the United States.  Established in the U.S. constitution to foster democracy, and today the most efficient and affordable postal service in the world, the Postal Service should be expanded into modern communications for the benefit of all the people, not dismantled for the benefit of the rich owners of large corporations.

§ 101. Postal Policy

(a) 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 Act of Congress, and supported by the people. The Postal Service shall have as its basic function the obligation to provide postal services to bind the Nation together through the personal, educational, literary, and business correspondence of the people. It shall provide prompt, reliable, and efficient services to patrons in all areas and shall render postal services to all communities. The costs of establishing and maintaining the Postal Service shall not be apportioned to impair the overall value of such service to the people.