**NAPFE STATEMENT TO THE**

**PRESIDENT'S COMMISSION ON THE U.S. POSTAL SERVICE**

The National Alliance of Postal and Federal Employees (NAPFE) is the
nation's oldest independent predominantly African American labor
organization. Founded in 1913, NAPFE has played a significant role in
the labor-management relations of the United States Postal Service
(USPS). NAPFE's mission at its founding and its mission today is to
serve postal and federal employees by working to eliminate
discrimination in the federal sector, assuring safe working conditions
and advocating for the socio-economic policies important to its members
before Congress, the Postal Service, and the federal government.

The President's Commission on the U.S. Postal Service (the Commission)
has the unenviable task of recommending solutions to the many problems
that face the USPS while taking into consideration the positions of the
disparate stakeholders connected to this, the only federal agency that
touches the life of every single American, every day, in a very short
period of time. NAPFE's contribution to this process is to speak not
only on behalf of the interests of its members, but to speak on behalf
of the private customers (rural and urban poor) who rely on the Postal
Service as their only communications vehicle.

From our inception, NAPFE has sought to make the USPS a governmental
agency that responds to the needs of those that society has designated
as the least among us. On October 6, 1913, Black Railway Mail Clerks
from thirteen states organized to protect their jobs in the Post Office
Department (POD). At that time, the POD permitted Blacks to work in the
Railway Mail Service as clerks. The job of clerk in mail cars was
particularly dangerous because the wooden cars often broke apart in
accidents causing severe injuries and at times death. As a result,
Whites were reluctant to take such jobs and Blacks were offered the
positions instead. However, in 1913, two factors put the job of the
Black Railway clerks in jeopardy. First, the railways began a conversion
from wooden to steel railway cars and the job became more attractive to
Whites. Second, President Woodrow Wilson appointed a new Postmaster
General, Albert B. Burleson, who instituted a program to make all the
railway lines "lily white." Their livelihood threatened, and without
access to the Railway Mail Association ("RMA") which denied membership
to Blacks, Black Railway clerks got together to organize and fight for
their jobs. The primary goals of the National Alliance of Postal
Employees (NAPE) was to prevent those working for the POD from losing
their jobs, fight against obstacles to Blacks getting jobs in the POD,
provide a beneficiary department and insurance department to enable
Black railway clerks to make suitable provisions for their families,
launch a national journal dedicated to the interests of Black Railway
Clerks, and establish the means to effectively present their grievances
and petitions to the POD.

NAPE became the first industrial Union in the United States when it
opened its membership to all postal employees and opened membership to
all postal workers, regardless of race, sex, creed or religion; a
position not adopted by the craft unions in the POD at that time. It
became NAPFE in 1965 when it opened its membership to all federal
workers.

From its inception, NAPFE played a significant role in the desegregation
of the POD. In 1940, after a three-decade battle, it successfully caused
the removal of the photograph requirement in civil service exams, which
was often used to screen Blacks out of the application process. In the
1950s, it successfully defended its leaders who were targeted and fired
during the Red Scare and McCarthyism because of their work to end
discrimination in the POD. In the 1960s, it was instrumental in Blacks
gaining frontline positions in Post Offices and other positions that
were previously denied Blacks. It worked with then Senator and later
President John F. Kennedy to institute an Equal Employment Opportunity
program in the Federal Government; a program to which many NAPFE members
were recruited.

Today, with 141 locals in 37 states, NAPFE represents its members,
outside the collective bargaining system, under Title VII of the Civil
Rights Act of 1964, the National Labor Relations Board, the Merit
Systems Protection Board, and the Office of Workman's Compensation
Program.

NAPFE recognizes that the USPS is facing a financial crisis. It is
grappling with the many challenges of globalization, particularly the
role that a government agency with a commercial interest plays in this
new environment. In its Transformation Plan, the USPS has developed the
concept of the Commercial Government Enterprise to define its dual role.
Under this model, it has identified cost savings as one of the major
initiatives it can now take absent legislative action to counteract the
challenges it faces in a new technological and competitive environment.

However, the declining volume of first class mail, electronic diversion,
and increasing competition from domestic and foreign entities are only
part of the USPS's financial story. While there is a general consensus
that the USPS must cut cost and increase efficiency in order to survive
in the new commercial environment, there is much discussion on where the
cost cuts should be made. Labor is but one segment in the cost cutting
equation. Another prominent aspect of the USPS financial story is its
inefficiencies in realizing savings opportunities. In April 2001, the
Postal Service's Inspector General (USPS IG) reported to Congress major
cost inefficiencies in the USPS expenditure for automation. The USPS IG
reported that over a four year period, the USPS lacked proper oversight
over its \$8 billion a year contracting program and found that the USPS
was repeatedly billed for work that was not performed or substandard
work. Additionally, the USPS IG found that an outsourcing program, then
under consideration by the USPS, to repair postal equipment would cost
the agency \$1.1 billion more over a ten-year period than performing the
same function in house. The cost equation cannot just focus on the cost
of labor.

Subsidies are also part of the cost equation. Many have long argued that
subsidies given to major mailers by the USPS are significantly more than
the savings that the USPS realizes. This matter needs strong examination
to determine if the subsidies given to large mailers are aiding or
undermining the financial bottom line of the USPS.

Notwithstanding the issues raised above, the cost of labor bears careful
consideration. The Commission must ask, if not the current labor system,
what would replace it. Who will perform the labor needed to move
America's mail? Will the cost of labor be cheaper if someone else
provides the service? And, how much do we want to undermine wages in the
pursuit of larger profits? That the USPS provides a good job at a good
wage that has lifted many Americans into the middle class is part of the
American dynamic. It is part of the proud legacy of the USPS. The viable
human resource of the USPS should not be discounted. So, when discussing
figures often touting the cost of labor as a major percentage of the
overall cost to the USPS, one must ask the next question, what is the
level of production performed by the current labor force and what would
be the alternative?

The USPS is the vehicle through which the government provides its
citizens with an essential service. Its mission has always been one that
is beyond looking at the bottom line, it is one of equality of service.
The government has decided that Universal Service will be the means by
which it can touch the lives of every citizen, particularly those with
limited communications options. Universal Service allows for equal
access to communication regardless of where you are in the country.
Today the USPS is facing the challenge of implementing their Universal
Service Obligation in the face of declining first class mail volume. A
purely commercial enterprise can afford to focus solely on its
competitiveness. However, this nation's mail service should never be
limited to only those who can afford it. Such a limitation would be
against the tradition of both the USPS and America. The USPS provides
the best of what government does. And, while many are decrying the
decline in the volume of first class mail, it should not be forgotten
that the USPS provides the only means of communication for millions, the
millions who would be unattractive to a purely commercial enterprise.

The USPS and its customers are now facing a new environment in which
mail security plays a significant role. The employees of the USPS have
already been victims of a terrorist attack, the use of the mail system
to transmit anthrax. And, two have paid the ultimate price, the loss of
life. The USPS must now add mail safety to its mandate in a way never
envisioned before. It is now faced with responding to such threats while
continuing its mission of binding the nation together. NAPFE urges the
Commission to consider how the USPS and the Congress can best address
the issue of mail security.

While the financial bottom line is an important consideration to the
survival of the USPS it cannot and must not be the only consideration.
Part of the debate must include the role of government in our lives. The
mandate governing this Commission removes the option of putting the cost
of operating the USPS solely on the taxpayer or on the ratepayer. The
general consensus is that the return to a traditional governmental
agency is not an option. Instead, the USPS, in its Transformation Plan,
has devised the hybrid Commercial Government Enterprise (CGE). However,
without legislative action, there are limits to what the CGE can do. The
USPS is asking for price flexibility. NAPFE supports pricing flexibility
with certain caveats. First, NAPFE supports the repeal of the break-even
mandate. Current legislation asks the USPS to act like a business but
hampers its ability to do so. The Postal Service should have the means
to reinvest profits made during good times so that it has a cushion
during economic downturns. Second, the Postal Service should have the
flexibility to set prices to meet its customer's needs. However, this
should be done only with the highest financial transparency. The General
Accounting Office, time and time again, has expressed concern about the
openness of the USPS financial regime. Price flexibility should open up
this process so that all stakeholders will have a clear idea about how
the postal service's business is conducted.

NAPFE believes that the Postal Service should be given the flexibility
it needs to operate properly as a business, albeit one with the mission
of providing an essential government service. We urge the Commission to
examine whether the USPS is hopelessly handicapped in its business
dealings under current law and how Congress can untie its hands. The
USPS should not have to give away necessary revenues to private
companies, but be allowed to compete fairly with its competitors.

Also, NAPFE supports the USPS efforts to reduce its payments to the
Civil Service Retirement System (CSRS) after there is a clear accounting
of how much money is due to the system. At present, there is some
question of whether all of the USPS obligations are accounted for in the
assessment of overpayment to the CSRS.

In sum, the USPS is an integral part of the American infrastructure. It
has a number of challenges that need attention: financial woes,
electronic divergence, declining mail volume even as delivery points
grow, and difficult labor management relations. However, even as
technology reshapes the communications landscape, the USPS is the
communications link for millions of Americans. The interest of the
individual customer must not be subsumed to the commercial customer.