Cost growth is outpacing revenue growth and the requested 6.4 percent rate increase would only narrow the gap, Strasser said. The Postal Service has been plagued by unexpectedly high fuel costs, declining first-class mail volume, and the need for additional routes and mail carriers. In addition, potentially large pay increases may result from arbitration between the Postal Service and three unions over what Board Chairman Einar Dyhrkopp called unreconcilable wage and job-security issues. About 530,000 members of the Postal Service s 830,000-person labor force are in contract arbitration. The situation has worsened since we made the rate request last January, Dyhrkopp said of the agency s finances.
Statutory reform is necessary.
It can t continue to be put off. Frankly, a rate increase should be the last resort, said Sen. Pete Domenici, R-N.M., said in a Dec. 5 letter to Postmaster General William Henderson. If affordability and increasing volume are objectives of the U.S. Postal Service, I would argue that a rate increase at this time will do more harm than good to the bottom line of the Postal Service. Domenici argued the Postal Service should more aggressively manage labor costs and worker-compensation costs. That doesn t sound out of line to me, Robinson, president of Direct Communications Group in Silver Spring, Md., said.