Privatizing by Incentivizing

(This article appears in the September/October 2014 issue of The American Postal Worker magazine.)

We often think of privatization as the transfer of public ownership. However, the Postal Service’s policy of offering postage discounts to large mailers has led to a similar harmful end result – a huge transfer of work and revenue from the public sector to the private sector – without a change in ownership of the USPS.

The postage discounts big mailers get for “presorting” their mail encourages them to bypass the Postal Service. Increasingly, large mailers print their material in route order to be eligible for discounts that generate huge profits. And instead of APWU members sorting and distributing mail, low-wage, private-sector workers in “pre-sort houses” perform those functions.

The Clerk Craft has already lost tens of thousands of jobs as a result, while corporations like RR Donnelly and Pitney Bowes made large profits.

Postage discounts are a relatively new policy. Prior to 1976, the democratic principle of “universal service at a uniform price” meant everyone paid the same amount of postage for first-class mail. Today, however, most of the mail sent by large corporations is heavily discounted, which is part of the reason the Postal Service has a revenue problem and our country has a democracy problem.

Although advertising mail constitutes approximately half of all mail volume, it accounts for only about 26 percent of revenue.

Consolidation – Benefitting the Few

These days, large mailers mostly bypass mail processing plants. They take advantage of huge discounts for dropping their mail near the mail’s delivery point. For that reason, major mailers endorse plant consolidation and privatization of retail – anything to keep their postage costs low.

The Coalition for a 21st Century Postal Service, a lobbying organization for large mailers, wrote in a March 26, 2010, letter to Senators Tom Carper (D-DE), Susan Collins (R-ME), and John McCain (R-AZ):

“The Coalition supports closing underutilized post offices and other dedicated postal facilities, yet making access to postal products and services more ubiquitous by offering them in supermarkets and other outlets more convenient to more Americans. Similarly, we support streamlining processing networks and facilities to match the needs of projected volumes.”

Unfortunately, the top brass at the USPS caters to the big mailers, at the expense of the people. Speaking at the National Postal Forum on April 3, 2006, then-Postmaster General John Potter, said:

“We need the industry’s cooperation as we streamline our networks – whether it’s our transportation networks or our processing networks… From your standpoint, it will mean fewer places to drop your mailings and enable you to maximize worksharing discounts.”

While the large commercial mailers may benefit from consolidation in the short run, the millions of people whose mail travels through the plants will get second-class service for a first-class stamp.

‘Alternative Access’

As we have witnessed with Contract Postal Units (CPUs), Approved Shipper Programs and the recent Staples deal, the Postal Service also has been encouraging individuals and businesses to use private alternatives to traditional public post offices.

The Staples deal is especially troubling because the USPS is giving the company discounts on postal products and services. Staples is a national chain with more than 1,500 stores in the U.S., and is the second largest Internet retailer (behind Amazon).

There is a fundamental problem when a government institution that has historically been concerned with fairness and democracy makes deals with corporations to offer postal services.

Here’s the bottom line: Every postal transaction at a private business is one less postal transaction at the post office. The loss of transactions results in a loss of hours, which results in a loss of living-wage jobs in our communities.

Online Discounts

Another serious threat to retail work is the USPS offer of massive discounts for online postage. In fiscal year 2013, a whopping 23.7 percent of retail revenue came from online postage, compared to 58.8 percent from post offices.

Recent changes in Priority Mail rates increased the price of retail purchases at post offices and decreased the price for online purchases. An online purchase of postage for a 20-pound Priority Mail package can be as much as 42 percent cheaper than if it were purchased at a post office. When postage is purchased online, the USPS still must process and deliver the package. The discounts for postage purchased online appear larger than the cost avoided by the Postal Service.

The large mailers have persuaded the USPS to offer postage discounts that generate profits for them and transfer work away from the APWU. The Staples fight, utilizing a public boycott against a large, well-known company, has great potential as a strategy to prevent the transfer of living-wage, union jobs to low-wage jobs. More efforts along these lines are needed to restore good jobs in our communities.