My Washington Examiner column today, “Going Postal Over Reform,” examines the counter-narrative pushed by postal employee unions that the Postal Service financial problems are an “artificial crisis.” I don’t find the claims persausive:
Though the post office is meant to be self-sustaining, its workers are still federal employees. If its retirement funds aren’t paid up, the taxpayer is on the hook. With its own crushing budget problems to deal with, Congress didn’t want to let it add more debt. So Congress required the service to pour revenue into its pension and retiree health benefit funds to ensure their future solvency.
Prior to that, the benefits were being done on a pay-as-you-go basis without any prefunding. You might think mailmen would be happy somebody is looking out for their retirement, but the unions don’t see it that way. “[L]awmakers set a highly aggressive level — prefunding [the health benefits] for the next 75 years, paid within a decade. The mandate accounts for 80 percent of all USPS red ink,” Fredric Rolando, president of the National Association of Letter Carriers, wrote in a November op-ed for The Examiner, which blamed the 2006 Postal Accountability and Enhancement Act for the entire problem.
The Postal Service retiree health benefit liabilities are indeed enormous. The federal Office of Personnel Management, or OPM, reported last year it was underfunded by $48 billion. The 2006 law was supposed to remedy that by requiring the service to contribute an additional $33.9 billion to the fund by 2017. The service has instead defaulted on making payments totaling $11.1 billion over the last two years.
The NALC argues that if it weren’t for the prefunding requirement, all would be well. A union official argued strenuously to me that if it weren’t for having to pay $1.4 billion into the fund, the service would have actually had a modest $100 million profit in the first quarter.
But there are a few problems here. First, the union’s oft-repeated “75 years” claim is bogus. So is another claim that the law requires funding of future employees who haven’t been born yet. The 2006 law required liabilities be funded through 2056, a much more reasonable 50-year time frame.
Read the whole thing here.
One thing I didn’t get into much due to space constraints was why the unions are so opposed to ending Saturday delivery. The Chicago Tribune pointed out that ending the day would mean a loss of overtime for postal employees:
The move, which would take effect Aug. 5, aims to reduce the postal workforce by at least 20,000 more employees through reassignment and attrition. It would also significantly reduce overtime payments.
Local union officials estimated that 10,000 postal workers will have their workweek reduced because of the move. On Wednesday afternoon, the Chicago branch of the National Association of Letter Carriers called for Donahoe’s resignation.
A union official disputed that to me, arguing ending delivery would just mean longer hours Friday and Monday.
The attrition of the workforce above is another major issue. The Government Accountability Office pointed out in December just how gray the Postal workforce is: “USPS reports in the (cost savings) plan that half of its current career employees — 283,000 — will be retirement eligible by 2016.” That’s an awful lot of people who will go from dues-paying workers to pensioners. No wonder the unions are worried.
Then there is the fear that ending Saturday service will put the Postal Service on the pathway to privatization, a fear widely-held on the left side of the web. But as a Republican staffer on the House Oversight and Government Reform Committee put it to me, it would be much easier for an entrepreneur to start from scratch. “Who would want to buy the Postal Service?” he said.