US Postal Sevice/The last monopoly. Their appointed rounds -- but at what price?
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``That's the big question,'' says Janet D. Steiger, chairman of the Postal Rate Commission (PRC). She adds, however, that ``there are clear indications that this particular Board of Governors is extremely serious about attaining control.'' Labor costsSkip to next paragraph
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What drives up postal costs? The answer is almost unanimous: union labor.
``The overwhelming problem,'' says Coleman W. Hoyt, vice-president of the Reader's Digest Association, is ``the matter of wages. The postal wage-setting machinery is just totally out of control.''
Mr. Hoyt describes the wage-and-benefit package for postal workers as ``out of line'' compared with the average American teacher's wage. Salaries for elementary school teachers, according to the National Education Association, now average about $23,000. According to the most recent USPS figures (as of June 7), the 648,730 postal workers who are covered by union bargaining receive an annual median wage-and-benefit package of $29,169.
John Crutcher, one of the five PRC commissioners, calls wages the ``major issue,'' noting that ``everything else is minor compared to that.'' In speech after speech around the country, he calls attention to USPS cost overruns -- noting, for example, that private mail couriers in Washington, D.C., are paid $6 an hour (compared with a USPS letter carrier making $13 an hour), and that while privately contracted janitors sweep post office floors for $4.44 an hour, USPS janitors do the same job for $10.89 a n hour plus benefits.
The issue Mr. Crutcher touches on is ``comparability.'' Federal law requires USPS wages to be set ``on a standard of comparability to the compensation and benefits paid for comparable levels of work in the private sector.''
``Every study I've seen,'' says A. Lee Fritschler, former chairman of the Postal Rate Commission, ``shows that postal employees are making about 30 percent more than their counterparts in the private sector. They have a quit rate of about 1 percent, which is about the lowest quit rate on record in any industry. This is all a sign that we are subsidizing the Postal Service beyond what the market would accommodate.''
A major study of comparability by Michael L. Wachter, recently commissioned by the USPS, found that ``the Postal Service pays a wage that is higher than the wage paid in every major industrial sector of the American economy, with the exception of mining.''
Dr. Wachter, who is professor of economics, law, and management at the University of Pennsylvania, says he calculates that postal workers enjoy a 20 to 30 percent wage advantage (depending on the method of calculation).
The differential is especially high, he says, when comparing the wages of newly hired USPS workers with the wages they formerly earned. ``We excluded people under the age of 25, so we weren't dealing with teen-agers who [had been] working at McDonald's,'' Wachter says. ``What we found was that the wage increase for postal new hires [over their old wages] was . . . approximately 60 percent.''
``I don't believe we're overpaid by a long shot,'' says Moe Biller, president of the American Postal Workers Union -- although he adds, ``I don't think we're underpaid.'' He cites studies done for the union by Washington economic consultant Joel Popkin, showing that postal wages lagging behind inflation.
Jack L. Rutner, vice-president of Joel Popkin & Co., supplies figures to back up Mr. Biller's point. He says the postal worker median salary (in constant July 1971 dollars) stood at $9,651 in December of 1969, rose to $10,635 in November of 1977, and declined to $9,641 in May of 1984. Since the 1977 peak, he says, ``there's been a constant erosion.''