Last month, USPS unveiled a 10-year plan, spearheaded by Postmaster General Louis DeJoy, to help steer the organization back to financial sustainability. While nearly all agree on the need to “fix” the Postal Service’s finances, the specifics of the plan didn’t please everyone. In fact, a group of industry leaders who “represent the sources of the overwhelming majority of the Postal Service’s FY 2020 volume and revenue” wrote a letter to Postmaster General DeJoy voicing their opposition to major components in the plan.
The Main Arguments Against the USPS 10-Year plan
In their letter, this group of industry leaders rallied against the following main points in the USPS 10-year plan. Their arguments are summarized below each bullet point below:
The group agrees on removing onerous pre-funding legislation, as well as integrating Medicare for USPS employees. However, they disagree with the decisions to not seek both investment of funds from the health benefits and pension funds in higher-yielding investments, and to not request return of more of the billions in overpayments into the Civil Service Retirement System and related pension plans.
Perhaps the group’s biggest grievance is that USPS leaders drafted the plan without adequate consultation with—or input from—the customers who make up the majority of the Postal Service’s revenue.
The group agrees with acknowledging the importance of package services to the Postal Service. However, they disagree with the lack of clarity on how USPS plans to grow package volume with the new USPS Connect programs, as well as “continued missteps in pricing” that have resulted in decreases in volume in the past. Simply put, the group claims that the 10-year plan relies too much on package volume that competitors can easily capture if USPS sets prices too high.
The group argues that the plan didn’t give enough attention to the mail services that USPS provides, focusing too much on package growth instead of the Postal Service’s main moneymaker: mailing products.
The group disagrees with the strategy to impose price increases on mailing products to generate additional revenue, arguing that doing so would inflict “permanent harm” on both mail volume and postal revenue.
The group claims that the 10-year plan fails to address how USPS will reduce the significant cost of employing the agency’s 648,000 workers, the majority of whom continue receiving wages and benefits established decades ago, when USPS enjoyed better financial standing. By the group’s logic, reversing previous policies to save money on labor is contrary to the Postal Service’s financial interests, and will in no way help achieve any of the organization’s planned cost reductions.
The group sees no merit in the plan’s proposal to reduce service commitments. They argue that current service performance across the board is well below acceptable levels, and that raising prices while reducing service is counterintuitive to the Postal Service’s promise of affordable rates and universal service.
The group believes it is counterintuitive to raise prices on mailing services, while decreasing service standards at the same time. Businesses that produce commercial mail are still struggling to overcome the impact from the Coronavirus pandemic, and in the group’s own words, this strategy is akin to “kicking someone while they’re down.”
Postmaster General DeJoy’s Response
A few days after he received the letter, Postmaster General DeJoy sent an official response back to the group of industry leaders. In it, he acknowledged all of their points, but vehemently opposed their arguments, and defended all of the original strategies laid out in the 10-year plan.
No excerpt sums up the rift between the group of industry leaders and Postmaster General DeJoy more than the following quote, taken from his response:
“I disagree with virtually all of the assertions in the letter, as they fundamentally mischaracterize history, our interactions with you, and the Plan.”
On a broad level, the only point that DeJoy and these industry leaders appeared to agree on was the need to steer USPS back to financial stability in order to ensure its future.