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GUEST COLUMNIST: Postal service price hike is neither justified nor legal

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By The Staff

At  Landmark Community Newspapers, Inc., Shelbyville, KY (which I serve as postal consultant after retiring in 2008 from a 35-year career), when we face tough economic times, we have to make tough decisions. But ultimately, our goal is to grow our business by providing services that consumers want and need at competitive prices.

When our business grows, so do jobs. If we do business right, our customers grow with us. In the end, making the right choices is right for the economy, jobs and our businesses.

Members of the National Newspaper Association, which publish about 2,000 community newspapers across America, do the same. I serve as its long-time Postal Committee chairman. That’s why I want to respond on behalf of them and other mailing industries in Kentucky to the recent opinion piece printed in many state newspapers by Ellen Williams of Kentucky, member of the United States Postal Service Board of Governors. 

The United States Postal Service has decided to place an unnecessary burden on Kentucky’s families, workers and businesses by proposing a major price increase. Fortunately, Gov. Williams can help stop this, and that’s what citizens in Kentucky should be asking her to do, instead of rubber-stamping postal management decisions.

 Just after the July 4th holiday, the Postal Service proposed a rate hike that is equal to ten times the rate of inflation. This announcement comes at a time when families and businesses across Kentucky, and across the country, are already struggling. We understand that the USPS is facing a decline in mail volume and a decline in revenue, but the Postal Service cannot plan its recovery on the backs of consumers. We can’t afford it, and it will only increase the downward spiral in postal revenue.

 In 2006, Congress passed a law that prohibited the Postal Service from raising postage prices greater than the rate of inflation. The law has sound reasoning. The Postal Service is no longer allowed to raise rates to make up lost revenue or to cover its inability to manage costs. The goal of the law was to force USPS to manage its workforce well, control costs and improve its business through innovation and new products.

Senator Susan Collins (R-ME), a key author of the 2006 Postal Accountability and Enhancement Act, agreed that the proposed increase was unwarranted.  In her official comments to the Postal Regulatory Commission, Senator Collins said that the law’s ‘extraordinary or exceptional circumstances’ test  has not been met by the USPS, “the provision was not intended to be used under the current circumstances,” but rather in cases such as natural disasters and terrorist attacks. The Post Office’s “failure to sufficiently update its business model,” she said, was not sufficient for special consideration.

During Postal Regulatory Commission hearings recently the Postal Service admitted that it is not facing an immediate cash crisis, as it had previously claimed.  The alleged crisis was contradicted by their own leadership during the hearings. The Post Office now claims that the rate increase is needed to prevent a longer-term profit slowdown over the next decade.

While USPS has done a fair job of taking costs out of the system by not filling jobs and by consolidating some plants, it will claim to have greatly reduced costs that way. It has. But the price of labor continued to increase when other failing industries have frozen or decreased wages, and so the USPS losses continue to soar.

Rather than tackle the hard issues, USPS took the easier route and let existing contracts push up costs. Rather than renegotiating with its workers, it is looking for a quick fix. Other industries have addressed their problems jointly as management and labor, knowing that sustainable jobs are possible only when the business is sound. 

Instead of following the law, USPS exercised a loophole in the law. A larger rate hike is allowed in extraordinary circumstances. The Postal Service points to the current recession as such a case. But NNA was involved when the 2006 law was written. Congress didn’t put the loophole in to allow the quick fix for uncontrolled costs. It is there to help USPS in the event of another anthrax attack or a similar sudden upheaval. 

 During 2009, the Postal Service costs per unit increased because it did not make the necessary adjustments. As any businessperson knows – if your revenue is down, you should make sure your expenses are down. Americans are making these choices at their kitchen tables and businesses all the time. But the Postal Service apparently is not.

For community newspapers that mail, our costs would increase 8-10%, which would be hard to recover from already hard-hit subscribers. Within Kentucky, there are literally thousands of jobs in the mailing industry, such as United Mail of Louisville and Bluegrass Mailing of Lexington, that are at risk if commercial mailers move to other channels, like the Internet, because USPS forces them out of the mail with high prices.

Once USPS “busts” the legislated rate cap, it will be gone forever, and USPS can return to business as usual with price increases that further lower mail volume, like a dog chasing its tail. Then USPS jobs will be even more at risk than they are now.

The latest rate hike proposal is just another poor business decision by the Postal Service. When sales are low, the last action one should take is to raise the price or diminish service. USPS is asking us to pay more, but we get the same delivery times, or worse. It is asking us to pay more, but we get the same inefficient service. It is asking us to pay more, but we get no promise that USPS has finally heard the cost-control message. In Kentucky, that is not how we want to do business. 

 The economic effects of this rate increase are widespread. As companies are forced to pay more, we will have to do what the Postal Service refuses to do, and that is cut costs and valuable jobs. Companies in Kentucky that rely on USPS will be forced to cut their staff’s pay, hours, and jobs. We’re competitive.

It’s companies, large and small, and citizens in Kentucky that will help drive America out of this recession. We can’t afford to have Postal Service bureaucrats in Washington jeopardize that. And that’s why we’re asking citizens to take action by visiting the Affordable Mail Alliance website www.affordablemailalliance.org.

More importantly, we can’t do this alone – we need the help of our Kentucky member of the Postal Board of Governors. It’s time she stood up for us and stood against massive rate hikes that could put us out of business.

Max Heath, Shelbyville, KY, is a postal consultant, postal chair of the National Newspaper Association since 1983, and member of the joint postal/industry Mailers Technical Advisory Committee since 1989. He is writing on behalf of the Affordable Mail Alliance, a coalition of charities, consumer groups, small business, national retailers, utilities, banks, insurance companies, Fortune 500 companies, and the customers who use the post office every day.

The Spencer Magnet is owned by Landmark Community Newspapers.