Sunday, June 26, 2011

Is Privatization Worse for Labor than the Issa/Ross bill?

Congressman Dennis Ross made the following comment in a discussion on his Facebook page suggesting the alternative to the Issa/Ross bill is privatization.  The quote in full:

I have sat down with NALC, Rural Carriers, APWU and many others. I have met with the PMG on countless occasions. What your union wont tell you is, the status quo, will lead to privatization of the USPS in less than 5 years and ...a nullification of every contract. The current path of the USPS is financially unsustainable and for the last time, it has NOTHING to do with prefunding. Those are the facts. 

Congressman Ross is correct that the current path is financially unsustainable.  It is unsustainable if retirement liabilities and payments are adjusted and it is even more unsustainable if they are not.   The problem is the Postal Service is a transportation company and has to have financial goals similar with other transportation companies to be a sustaining enterprise.   The Postal Service cannot meet a standard financial target without addressing the retiree payments and unless it can operate with a standard financial target it will never have the cash necessary to make investments needed to serve its existing and future customers.  

Also, Congressman Ross in his bill confirms that an adjustment is needed by adding debt to the Postal Service's balance sheet that is used to pay its retiree obligations.   Technically, what is happening is the Postal Service is borrowing money from the Treasury Department to pay the Office of Personnel Management which deposits the money in the Treasury Department.   Metaphorically , the Treasury Department is doing little other than shifting money from its left pocket to its right.   By increasing the Postal Service's debt, the Issa/Ross bill "reduces" the Postal Service's problems by changing a cash obligation into additional debt that may or may not be paid in full.

He is also wrong that privatization means nullification of every contract.   Labor contracts that the Postal Service now has will change regardless of whether it is privatized because changes in demand for services has been so great.   Nullification of Postal Service labor contracts will occur only if the Postal Service enters bankruptcy as a private corporation.   (This does not mean that contract provisions will change in negotiations but it does not mean they will be nullified outside of bankruptcy.)

Privatization offers two benefits for Postal Service employees that the Issa/Ross reform does not.   1) Privatization allows for the infusion of private capital as well as cash generation opportunities from the sale of assets that can make Postal Service employees more productive, allowing the Postal Service to pay its employees more than they would have otherwise.   2) Privatization creates the possibility that employees will receive a share in the company in return for changes in labor contracts and compensation levels.  Trading reductions in compensation and changes in workrules for an ownership stake is common when negotiating changes in labor agreements inside and outside of labor agreements.   The opportunity for employees to receive a share of the business in return for changes in contracts does not exist as long as the Postal Service remains a government entity.


Barry said...

Ross, Issa, and their ilk only want to gut the US Postal Service. They don't want to do anything to address the situation. The USPS has over 200 CAREER LAWYERS! The USPS is required to have 2 Law Enforcement Agencies. The OIG Office was created in 1996 to do the same jobs the Post Inspection Service had already been doing. The USPS is required to enforce and police over 200 Federal Laws. The USPS is prevented from owning its own aircraft so it must rely upon and give billions to FEDEX, and airlines.
Bring in an outside Private Management company to look at the USPS Exec, Area, District and Local Levels of Management, assess and recommend changes and/or improvements to both Postal Management and consolidation/closings.
Ross, Issa, and their ilk are afraid to really address the problems cause it might fix the USPS combined with a correction in the "prefunding" along with the economy recovering and their "BIG" Republican Contributors (FEDEX) and (USPS) don't want the USPS impacting their parcel, air mail, and express bottom lines.

Anonymous said...

Privatizing can and will make someone a lot of money, without a union the employees can be fired and wages are not negotiable, only what the employer wants to pay.
Employees however can be part of the company that shares in the profits.
By the way the price of delivery,sorting and transportation will go up and forwarding will be a thing of the past unless the customer pays.
Political mail will have to be in 2 to 3 days sooner to be delivered on time and then it still will not be a guarantee because 1st class will always go first.
Magazines,catalogs, junk mail will also cost a lot more to send out.
Many employees will be part time of 30 hours or less to prevent having to pay benefits.
Too many sick days used you will be fired.
An accident will surly get you fired after you are treated and released by a physician.
Privatize ????

Anonymous said...

We don't get tax dollars so as has been stated we are already quasi-private. The U.S. Constitution requires congressional oversight of anything that is considered postal, whether private or not. I don't see that it would change things by going completely private, except to close postal operations in small towns.

Anonymous said...

How's this saving money, postal employees that are killing the post office, by taking a 10 hours to do an 8 hour route. Clerk that know as long as they are breathing & throwing mail slower than the worms that they are. Employees that cheat the post office by misusing F.M.L.A. when they have no real problem. What about the 30,000 management people that is departing from the P.O. What about field maintenance, & inside people that report to work, but do no work. These people are killing the post office. Thanks for the memories.

Patrick van Lammeren said...

Does privatisation means that everything changes overnight? Of course not, but it will help USPS to be less political driven and be more focused on its core business, i.e. Delivering mail and packages in the most efficient way. You can find plenty of examples of postal privatisiation in Europe which can be copy paste. Funny that this country which is against any government intervention, want to keep USPS as such.