Washington Might Actually Be Listening to You

Posted by John Healy, CEO of Dydacomp

John Healy, Dydacomp CEOBelow is a copy of an email I just received from the Direct Marketing Association announcing that the Postal Regulatory Commission (PRC) this morning unanimously denied the US Postal Service’s (USPS) request to enact “exigent” price increases in 2011.  That means the USPS can still raise their rates but only up to the increase in the Consumer Price Index.  By way of background, let me get you up to speed:

* The PRC is made up of Congressional appointees that act as a Board for the USPS as it relates to mailing rates and changes

* The USPS loses billions of dollars each year due to the fact that:

  • Getting concessions from the unions on work rules that would reduce costs is extremely difficult
  • When the USPS hires a veteran they absorb the veteran’s retirement benefits regardless of the branch of the armed services they retired from and the federal government is released from that obligation
    • Veterans get preferential treatment because of their service to our country (and rightly so) in the civil servant hiring process
    • Time served in any branch of the armed services goes towards your time as a USPS employee

    *Congress passed a law two years ago that the USPS could not raise rates in any single year higher than the Consumer Price Index.  The USPS was granted, however, the ability to plead an “exigent case” meaning that in extreme cases they could present their point of view to the PRC to get an exception to raise rates higher than the CPI.  The first test of this was this year.

    Even though I am on the Board of the DMA, I have no insider knowledge on this issue other than what is stated below.  However, my guess would be that the PRC denied the USPS requests to force the unions to work with them to reduce the operating loss and for Congress to help with the unfunded veteran pension liability that creates much of the multi-billion dollar operating loss each year.  Stay tuned, but if you are still in the mail either for marketing or shipping purposes, this is at least a win for today.  Here is the email from the DMA:

    DMA Praises PRC Rejection of Postal Rate Hikes as Job Saving Action

    The Postal Regulatory Commission (PRC) this morning unanimously denied the US Postal Service’s (USPS) request to enact “exigent” price increases in 2011. The PRC said the USPS failed to justify an average 5.6% rate increase.

    DMA praised the PRC’s decision, having led efforts on behalf its members to encourage the PRC to reject the USPS request for an unlawful and exorbitant rate increase.

    The requested rate hike would have increased postal rates by nearly ten times the rate of inflation, requiring customers to pay an additional $3 billion annually for postage despite the current rate of inflation remaining close to zero. The PRC decision requires the Postal Service to continue following the current law, which limits any postage increase to the rate of inflation.

    “Today’s decision is a great victory for businesses and consumers.  The US Mail will remain a viable and affordable communications channel.  The knowledge that postage rates will not rise faster than inflation is also an important element for the business community already operating in an extremely challenging business environment,” said Lawrence M. Kimmel, DMA’s CEO.  “This, however, is only a first step.  USPS customers must continue to work together – and with Congress – to help the Postal Service maintain competitiveness in the marketplace.”

    USPS must now make critical decisions to cut costs and right-size its network and workforce.  As it conducts negotiations with many of its employees, the Postal Service must not lose sight of the fact that its financial well-being – and that of its customers – depend on immediate and significant cost reductions.

    “DMA will work closely with Congress to correct the overfunding of postal pensions so that companies are not taxed to subsidize other government programs,” concluded Kimmel.  “We are fighting for reforms that will ensure a viable postal system able to meet the needs of consumers and the business community for generations to come.”

    To learn more, please read:

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