DMAW June Networking Luncheon Recap
by Gayden Prince
State of the Post Office
On June 17th, the DMAW held their June Networking Luncheon at the National Trust for Historic Preservation in Washington, DC. The topic of the presentation was one that may affect Direct Marketers more than any other marketing channel—the United States Postal Service and the obstacles facing an organization that is 6 billion dollars in the red. Ruth Goldway, Chairman of the United States Postal Regulatory Commission (PRC), spoke to a group of 30 or so Direct Marketing professionals covering the history, role and challenges facing the Commission and the Post Office in the coming months.
This summer the Postal Service is required to ask the Commission for an advisory opinion on increasing postal rates (talk in the community is 5%) as well as reducing the service from 6 days to 5 days a week (eliminating Saturday delivery). Along with the Commission review, there will also be a congressional review that will ultimately decide the fate of mail delivery and rates this fall. If given the permission, rates will increase and delivery will drop by January 2011.
I believe it is important in our industry to understand the obstacles facing the Post Office and how the Commission is striving to create transparency and accountability within the USPS. With brevity, here is my version of the state of the USPS and what we may hope to overcome.
The mail volume is down. Mail classes such as flats, first class, and some non-profit mail are not covering their costs. By law, the Post Office can only raise rates in years of inflation and these past two years have been atypical years of deflation. In 2006 a law passed that the Post Office must pre-fund health care for retirees at 80% over the next ten years roughly 5.5 billion dollars a year. Also, since 1970, when the Post Office split as a federal agency, they have been responsible for funding pensions totaling 75 billion dollars. There is currently discussion and debate between the USPS and the federal government as to who is ultimately responsible for the pensions of workers who began as federal employees and then split off with the USPS in 1970. Many would agree that the USPS is failing to keep up with competitors in low rates, high value, and utilizing a sales force to negotiate business partnerships. However, the unusual pre-funding of pensions and the responsibility of pensions for employees that began as federal government employees certainly does not help their bottom line.
Here is where the hope comes in—
The Postmaster has said that they will not raise rates or suspend mail service if the following occurs:
1.) The USPS is able to negotiate terms for the health care fund such as pay into the fund over 40 years rather than 10 years as well as decrease the percentage in which they are accountable.
2.) The fully- funded pension pool supports many employees that were federal employees before the Post Office separated from the government in 1970 and the Post Office believes the government should be accountable for the payment of these pensions rather than the Post Office.
The bottom line is this: the Post Office needs to find some way to generate revenue and increase accountability. While the Intelligent Mail Barcode has introduced some way of measuring service, with 15% in use, it is still not really reliable. As with all things government, Goldway encourages us (as those having key interests in the Post Office) to voice our concern and complaints to the PRC in addition to our representatives in Congress to strive for better results that will benefit us all. Because in the end, as Goldman so eloquently put it don’t we all wish to “memorialize our communication”—communication that continues to bind this country together for personal, political and economic means, present and past.
Gayden Prince is the Production Coordinator at HSP Direct. HSP Direct is a full-service, direct mail fundraising agency. Committed to delivering innovation, creativity, and performance, HSP Direct collaborates with its clients to help them achieve the fundraising results they demand.