US Postal Sevice/The last monopoly. Their appointed rounds -- but at what price?
(Page 3 of 4)
``The Postal Service pays a white male a wage that is no different from anybody else in private industry,'' Dr. Rutner asserts. And, he adds, it pays the white male wage to all its employees, driving average wage costs above those in the private sector.Skip to next paragraph
Subscribe Today to the Monitor
``The Postal Service doesn't discriminate,'' he notes, adding that it also has an older and better-educated population than many of the private-sector mail-handling companies and that it puts a premium on stability and low turnover.
Nevertheless, postal governor Voss concedes, ``our labor costs are a problem -- and I think that we have painted an inappropriately bright picture of our situation.'' Negotiations
In the view of many observers, the latest round of labor negotiations (settled last December by arbitration) did little to resolve the situation. Management had asked for a three-year wage freeze, a rollback in cost-of-living allowances, and a ``two tier'' system that would substantially reduce pay levels for newly hired workers.
But the final contract, although it approved the two-tier plan, gave the unions three annual pay raises and partial cost-of-living adjustments. The result: During the three-year span of the present contract, the USPS will spend $3 billion more than it would have if wages and benefits had been frozen at 1984 levels. Says one post-watcher at the US General Accounting Office: ``The unions got all they wanted out of the agreement.''
``I think [the union leaders] are a little bit embarrassed about where they've gotten,'' says Mr. Hoyt of the Reader's Digest. ``If there were a postal work stoppage, the people in the United States would just be up in arms.''
Will postal labor costs continue to rise? Many observers say the problem may to be built into the system. Comparing the Postal Service with some of the public-sector industries in Britain and on the Continent, they note that employees have no real incentive to hold costs down: The company has a monopoly position, it apparently cannot go out of business, and the government stands behind it in case it stumbles.
Are unions solely to blame? No, say many observers, who also point to weak managers operating within a poorly conceived structure that provides them with no real incentives for containing costs.
In a report published in 1977 by the American Enterprise Institute, Prof. Douglas K. Adie of Wheaton College in Wheaton, Ill., put his finger on the issue. In postal management, he wrote, ``managers make decisions in a way to reduce their psychic rather than dollar costs. One important psychic cost is friction of employee relations in dealing with the postal unions. Employee unrest can result in breakdowns or slowdowns that would harm the postal managers' status and prestige. It is therefore `cheaper' f or management to be generous with wages than to stand firmly for efficiency.''
But John R. McKean, chairman of the USPS Board of Governors, puts a good face on the contract agreement. ``We do not regard the last labor negotiations to have been a disaster in any way at all,'' he says. He is particularly pleased that the two-tier system was accepted, and that the arbitrator accepted the principle of wage comparability. Both issues, Mr. McKean says, will help contain costs in the long run.
In the short run, however, most observers look for higher costs to drive up postal rates -- since each 1-cent increase in the first-class postage brings in about $1 billion in revenues.
Although last February's rate increase was intended to last three years, PRC chairman Steiger says that the Postal Service will probably ``have to file for a new rating, possibly as early as March .'' Insiders look for a 25-cent stamp to appear by the summer of 1987 -- and perhaps even in time for Christmas of 1986.