When the comments of an organization’s top executive to its board of directors are published in a press release after they’ve met, it’s likely that such a statement is less intended to report on the meeting’s proceedings than to provide curated information for public and media consumption. Any candid discussions among the organization’s leadership are kept confidential.
The Postal Service’s Board of Governors convened November 9 and 10 at USPS Headquarters; the first day’s session was closed – i.e., it’s where frank discussions occurred – while the second day’s session was public and Board members offered carefully crafted official comments. Among those was a prepared statement by Postmaster General Louis DeJoy.
Aside from the usual courtesies and dollops of praise, the PMG’s statement strove to most favorably frame both the results of the recently-concluded fiscal year and official expectations for fiscal 2023. The challenge for readers of such artfully constructed prose is to discern the meaning that’s behind the veneer of scrupulously selected phrasing.
Taking credit
DeJoy stated:
“… Over the last two years we have stabilized our operations, evolved our products, improved our service, strengthened our balance sheet, halved our projected losses and motivated our employees to join us in this transformation. …”
It’s true that the executives leading the key functions clearly understand their missions and have data-driven plans to make their operations more “precise” (a DeJoy word). However, the churn continues in field management, and the necessary embrace of HQ processes and procedures by field managers – despite a “line of sight” organizational structure – remains to be proven.
Much of the stabilization in the workforce was the result of converting tens of thousands of non-career lower-cost employees to full-time, fixed schedule, higher-paid career status. DeJoy may believe that this strategy, combined with visits to craft employees and concessions to union contract demands, has “motivated” the workforce, but the real purpose may be less to improve employee productivity than to ingratiate the PMG with union leadership and thank them for helping win passage of postal reform legislation last spring.
Saying that the USPS has “improved” service – by lowering service standards and excluding billions of mailpieces from service measurement – is like a teacher claiming educational success when in fact, the criterion for an “A” was lowered to 82 and underperforming students were excluded.
Regarding his financial observations, DeJoy fails to note that two factors – price increases of over 13.3% in less than a year, and legislative relief from over $57 billion in health care prefunding obligations – are why the numbers look better. Mail volume – especially of competitive products – continues to slip, and ratepayers are being driven away by his zealous pursuit of more revenue at all costs.
Problems
DeJoy continued:
“… We still face significant losses, our carriers still drive 30-year-old vehicles, our plants and post offices still have significant deferred maintenance and are not aligned for the intended mission and our technology and business processes need to be brought into the modern era. … While we are committed to our public service mission, we must move at the speed of private industry, if not faster, to effect this transformation before we again begin to drain our cash position. … We need to configure one from within our existing infrastructure while serving the nation. It is the only successful path forward to avoid future government funding. … With stakeholder cooperation, this will take five years to mostly accomplish. Without stakeholder cooperation, a lot longer. …”
DeJoy is conspicuously impatient, and wants to transform a 247-year-old institution within the decade of his Plan, willfully ignoring – as revealed by his desire to “move at the speed of private industry” – that the Postal Service is a public service, not a business, that is heavily burdened by public, political, and legislative expectations, constraints, and obligations. The USPS is not XPO.
Interestingly, his comment about the risk of again draining “our cash position” suggests a level of recognition that he has limited time to afford what he wants to do. However, this may not necessarily mean he sees the need to rein in ever-growing personnel costs before they fatally outrun the revenue from ever-shrinking mail volume – notwithstanding his aggressive price increases.
He also repeats his disdain for government funding, reflecting his disconnect between ratepayers’ willingness to pay and the costs for public services he endorses. Whether for a sprawling and mostly unprofitable retail network or for less cost-efficient six-day delivery, commercial mailers – who supply the lion’s share of revenue – should not be assumed to be limitless supporters of DeJoy’s philosophical rejection of appropriate public funding for mandated public services.
By “stakeholders,” the PMG likely means the unions, Congress, and commercial ratepayers. As noted, his schmoozing appears to have co-opted the unions, and his political back-ground has been effective on The Hill – and will be if the partisan balance doesn’t go the wrong way for him. However commercial ratepayers, and their representative organizations, continue to annoy him. Having dismissed their objections to declining service and higher prices as “irrelevant” and “noise,” DeJoy continues to advance the oxymoron that, despite being “stakeholders,” they shouldn’t have a stake in anything other than paying postage. Their response to this attitude will continue to be simply leaving the mail.
More losses
The PMG noted:
“… Unfortunately, with all that has been accomplished financially, our 2023 budget will not show the breakeven results we were striving for. As our CFO will later show you, our budget for next year includes close to $3 billion dollars of CSRS costs and $1.5 billion of inflation costs over what we planned. … Financial predict-ability and success will come when we get the administrative correction for CSRS and we begin to bare [sic] the fruits of the changes to our network underway. In the meantime, the leader-ship team and the whole organization will continue to grind out the cost and revenue improvements we can attain – while delivering improving service performance – as identified in our 10- year plan. …”
Though the USPS Office of Inspector General determined years ago that the Postal Service had already overfunded its obligations to the Civil Service Retirement System by tens of
billions of dollars, the other agencies who manage the system and calculate what’s owed have resisted revising the numbers lest doing so disrupt the larger federal budget that assumes CSRS assets. Whether DeJoy has the political leverage to remedy this particular injustice remains to be seen.
Regardless, the PMG’s comment again reflects his ambitious expectation to balance the USPS books in just a few years. It also reflects his unwillingness to recognize that the imbalance isn’t simply because ratepayers didn’t pay enough for the services they used. Significant costs were imposed externally, and the costs of employee compensation and benefits were self-imposed by decades of postal management.
Saying that his “leadership team and the whole organization will continue to grind out the cost and revenue improvements” projects a future of shared effort and sacrifice but such a claim is conspicuously meaningless. If history is any guide, the odds of significant reductions in operating and labor costs are no better now than ever, and the only grinding will be on postal ratepayers to extract more postage. Unfortunately, DeJoy persists in his belief that, regardless of why, by whom, or for what costs occur, ratepayers should be expected to pay for them compliantly. The notion of effective cost control has always been espoused by postal management but, especially regarding labor costs, has yet to be demonstrated, including by DeJoy’s administration.
As expected, the PMG cited his 10-year Plan as the conclusive definition of how the Postal Service’s future will be assured, and that all of his organization’s efforts will be singularly focused on its implementation. As has been observed before, having a plan is important, as is aligning work to its objectives. However, as also has been observed before, a plan’s success relies on the validity of its underlying premises, both initially and continually.
Much has changed since DeJoy and his inner circle produced the Plan yet he remains dogmatically convinced of its immutable relevance. Time will tell if his self-assurance is justified but, if it’s not, it will be ratepayers, not DeJoy, who will suffer the consequences.
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