Stop Staples Taking Over the USPS Offices

[WildCat]

Good ole' private sector gonna step in and make things better if the gubbermint gets outta the way.

Lord, that sounds funnier every time I say it.

Go across the river to the magical land of Illinois to see the wonders of heavy regulation at work. I can't imagine why we have the 2nd highest unemployment rate in the country! Maybe we just need some more regulations and higher entrance barriers to new business.

 

[WildCat]

Is pre-funding health care costs something that businesses in the private sector normally do?

Should Congress mandate that any private business which contracts with the government do that, if it is so important that the USPS be compelled to?

Yes, funding pensions and other retirement benefits is something that the private sector is required to do.

 

[WildCat]

ETA:




...

Anyone?

The answer is "yes", and it was explained to you in previous threads about this very subject.

Do you understand how pensions and other retirement benefits are funded? If they are properly funded retired employees get the benefits even if the company goes bust tomorrow, and if you haven't noticed the USPS is a shell of its former self both in numbers of employees and quantity of mail delivered. This creates issues as far as funding retirement benefits is concerned. It's basically a math problem, and math has no political bias.

 

[WildCat]

Would this include Staples having to pre-fund seventy five years of health care costs for all of its employees?

Does Staples promise its employees a lifetime of health care upon retirement? If the USPS doesn't want to fund it they should eliminate it as a benefit and have the workers contribute to Medicare instead, like Staples does.

 

[Kopji]

Staples is not interested in taking over the Postal Service. They want to provide some customer facing services like the person who stands at the counter at the post office. The main fear seems to be that highly paid union workers could be replaced by lower paid Staples employees, but more typical of private industry.

Nothing about rural service.
Nothing about not getting our coveted junk mail.
Nothing about providing other mail services like routing and delivery.

...decades of contractual promises made to unionized workers, including no-layoff clauses, are increasing the post office’s costs. Labor represents 80 percent of the agency’s expenses, compared with 53 percent at United Parcel Service and 32 percent at FedEx, its two biggest private competitors. Postal workers also receive more generous health benefits than most other federal employees.

About efficiency - I suspect the USPS possesses no magic and they already operate a lot like a private company would. As an example, I offer the local post office operation in Flagstaff: I mail a letter to an address down the street it gets picked up by a local carrier at my mailbox and taken to a central Flagstaff office where it is put on a truck and shipped 150 miles to a North Phoenix sorting facility. After the Phoenix sorting it is put on a truck to Flagstaff, shipped 150 miles to the Flagstaff central office and then parsed to the individual mail carrier. The carrier delivers it to the house down the block, a trip of a little over 300 miles. Flagstaff used to do the sorting locally, but the post office found it was less expensive to ship all the mail back and forth to Phoenix than to pay employees here. So local skilled jobs are already gone.

The USPS sees a Staples-like agreement as an expansion of their business model, not a reduction in service. They want to make themselves more competitive with private industry and this idea makes sense.

The alternative is ever fewer USPS total jobs, lost to centralization and automation.

 

[quadraginta]

Yes, funding pensions and other retirement benefits is something that the private sector is required to do.

Is there any particular reason you chose to answer a question I didn't ask (aside from the obvious reason, that is)?

Or did you mean to say "pre-funding pensions and other retirement benefits, and just forgot part of it?

Of course the "for seventy five years" was sort of implicit, considering the discussion so far, but I'll go ahead and make it explicit now.

And you didn't respond to the other question.

 

[quadraginta]

The answer is "yes", and it was explained to you in previous threads about this very subject.

It was? Jog my failing memory and give me a link.

Do you understand how pensions and other retirement benefits are funded?

Sure. Are you claiming that pre-funding for seventy five years is the normal procedure?

If they are properly funded retired employees get the benefits even if the company goes bust tomorrow, and if you haven't noticed the USPS is a shell of its former self both in numbers of employees and quantity of mail delivered. This creates issues as far as funding retirement benefits is concerned.

Had the USPS defaulted on its pension obligations before Congress loaded the additional financial obligation onto their books?

It's basically a math problem, and math has no political bias.

Maybe a math problem, but not necessarily a problem. At least not until Congress made it one.

 

[quadraginta]

Does Staples promise its employees a lifetime of health care upon retirement?

Staples hasn't been using its employees to serve as representatives of the USPS.

If the USPS doesn't want to fund it they should eliminate it as a benefit and have the workers contribute to Medicare instead, like Staples does.

Why do you keep re-phrasing the issue? Did you mean to say "doesn't want to pre-fund it for seventy five years", and just left out the other part by accident?

 

[quadraginta]

By "the federal government has its hand in the till" you mean they're requiring them to fund the pensions they promised their employees, correct?

Do you think the pensions should just be allowed to fail?

It is quite obvious that the conservative right does not shed tears over the abandonment of pensions. Anyone who reads the news knows this.

Why has the well-being of future USPS retirees become such a concern?

What evidence existed that there was a need for such extreme and unusual precautions explicitly for them, and why only the USPS?

 

[Gawdzilla Sama]

It would be much better if Walmart fired those people then the taxpayers can pick up their entire tab.

"What on earth does this have to do with the topic of this thread?"

 

[Gawdzilla Sama]

Go across the river to the magical land of Illinois to see the wonders of heavy regulation at work. I can't imagine why we have the 2nd highest unemployment rate in the country! Maybe we just need some more regulations and higher entrance barriers to new business.

So, did the private sector step in and fix it? No, they didn't.

 

[WildCat]

Is there any particular reason you chose to answer a question I didn't ask (aside from the obvious reason, that is)?

Or did you mean to say "pre-funding pensions and other retirement benefits, and just forgot part of it?

Of course the "for seventy five years" was sort of implicit, considering the discussion so far, but I'll go ahead and make it explicit now.

And you didn't respond to the other question.

It was? Jog my failing memory and give me a link.




Sure. Are you claiming that pre-funding for seventy five years is the normal procedure?




Had the USPS defaulted on its pension obligations before Congress loaded the additional financial obligation onto their books?




Maybe a math problem, but not necessarily a problem. At least not until Congress made it one.

Staples hasn't been using its employees to serve as representatives of the USPS.




Why do you keep re-phrasing the issue? Did you mean to say "doesn't want to pre-fund it for seventy five years", and just left out the other part by accident?

The answer to all your questions is to look at how pensions are funded. It is not a pay-as-you-go system, it is supposed to be fully funded the entire time. That means that a dollar in benefits 75 years from now is taken from that new worker's paycheck today so when he lives to be 95 years old his benefits will continue.

You call this "pre-paying 75 years of benefits", but to anyone with any pension accounting knowledge it's simply fully funding the pensions or other retirement benefits. It's always been required of the private sector, this is hardly something unique to the USPS.

It is quite obvious that the conservative right does not shed tears over the abandonment of pensions. Anyone who reads the news knows this.

Why has the well-being of future USPS retirees become such a concern?

What evidence existed that there was a need for such extreme and unusual precautions explicitly for them, and why only the USPS?

It's neither liberal or conservative, it's basic math and human behavior. The reason defined benefit programs are going the way of the dinosaurs and today exist almost exclusively among government workers is they have never worked in practice.

There are a variety of reasons for this. Here's a few of the biggest factors.
1. Humans cannot predict the future, and pensions require that future rates of return on investments to be known to a certain degree of accuracy. Sylvia Browne sucked at predicting the future, it turns out pension managers do too. As far as medical expenses go, that's even more difficult to predict. Who knows what a brain tumor will cost in 2045?

2. Which leads us to the next problem - all that uncertainty leads for lots of room to cheat. And the urge to cheat is tremendous - every dollar not put into pensions is a dollar that can be put into salaries, R&D, marketing, equipment purchases, etc etc etc today. So the tendency is to overestimate future returns in order to fund goodies today.

3. The last major problem is that the people figuring out current payments for future defined benefits are likely middle aged or late middle aged. If they are in error and underestimate investment returns by just a fraction of a percent it means the fund for future benefits goes bust, but by the time that happens those people deciding the contributions and calculating the returns will be long gone, retired from the company and most likely dead of old age.

This is why pensions and other defined future benefit systems have such a high failure rate. It would be better for all concerned to switch to defined contribution plans, as has happened in most of the private sector. There is far less uncertainty there.

Are you getting the picture now? For years the USPS was underfunding their pensions and other retirement benefits, this mandate from Congress is a last-ditch effort to save them from insolvency. If you're unhappy with the burden this places on the USPS and their employees don't blame Congress for the way the math adds up. You should instead be lobbying for the USPS to switch to a defined contribution retirement program and Medicare.

 

[WildCat]

"What on earth does this have to do with the topic of this thread?"

I responded to a point you brought up. You should be asking yourself that question.

So, did the private sector step in and fix it? No, they didn't.

This is a government problem, they are the ones tasked with creating policies that encourage job growth while at the same time creating regulations that will keep everyone safe and secure.

But too often entrenched businesses will turn to government to protect them from competition, and this ultimately results in higher unemployment and higher prices for consumers. Chicago, for example, has a food truck ordinance that is primarily written to prevent food trucks from operating because brick and mortar restaurants don't want the competition. The Cubs are having a difficult time renovating and expanding Wrigley Field, because powerful and politically connected rooftop owners have the local alderman in their back pocket and have prevented the Cubs from doing any construction that blocks their customers from viewing the field. Hospitals in Illinois can only open after a lengthy and expensive review by a (often corrupt) hospital board that has as a main criteria that no new hospital can compete with an existing hospital. Chicago didn't allow copper pipes in homes until the 1990s, not because of any health or safety concerns but because the powerful plumber's union opposed it because it could be installed with far g=fewer man-hours than threaded galvanized pipe. Those are just a few examples of burdensome regulation that hurts the economy.

The rules are byzantine, archaic, and not at all transparent. This is bad for any new business that would otherwise attempt to open in Illinois.

 

[Brainster]

Staples hasn't been using its employees to serve as representatives of the USPS.




Why do you keep re-phrasing the issue? Did you mean to say "doesn't want to pre-fund it for seventy five years", and just left out the other part by accident?

I'm not entirely sure this is a BS talking point invented by liberal bloggers to make the prefunding requirement seem ridiculously unfair; just 99% sure. For example consider this recent GAO report (PDF):

USPS's benefit liabilities are actuarial estimates of the present value of a portion of the future benefits projected to be paid under each program based on formulas in current law. Specifically, for both the pension and retiree health programs, the liability includes two pieces:
(1) the present value of all projected future benefits for current retirees and their beneficiaries, plus (2) the present value of a portion of the projected future benefits for current employees and their beneficiaries, based on employees’ service to date (with each additional year of service adding to
the liability, such that approximately the full liability is accrued when employees reach retirement).

Contrary to statements made by some employee groups and other stakeholders, these liabilities do not include any amounts for future USPS employees not yet hired or born.

The key term in there is "present value". If you are not involved in finance for a living, present value can be difficult to understand at first. Suppose I know I have to pay you $1 in a few hours. Then the present value of that liability is simply $1. However, if I have to pay you that $1 in 20 years, the present value of that liability is quite a bit lower, because I can put a fraction of that money into some sort of investment that will earn me a return that will result in my having a dollar to pay you in 20 years. At 5%, for example, I would only have to set aside about 38 cents in order to have a dollar in 20 years. Thus, at 5% interest for 20 years, the present value of my $1 obligation is 38 cents.

The postal service had been on a pay as you go system for their future health benefits obligation for many years (as contrasted with their pension system, which was required to be funded to the present value level). This seemed like a pretty safe system at the time, with mail volumes consistently increasing. But along came email and electronic bill-paying and mail volumes began to decrease steadily. In fact, the USPS's peak volume came in 2001, and the USPS itself projects volume to continue to decline.

For example, here is the USPS's own projection of first class mail (the Post Office's most profitable service) volume for the next several years:

Pieces:

Fiscal year: 2013: 64 billion;
Fiscal year: 2014: 59.9 billion;
Fiscal year: 2015: 56.1 billion;
Fiscal year: 2016: 52.7 billion;
Fiscal year: 2017: 49.1 billion;
Fiscal year: 2018: 46 billion;
Fiscal year: 2019: 42.2 billion;
Fiscal year: 2020: 39 billion.

Source: USPS.

So by their own estimates they anticipate that their most profitable line will decline in volume by almost 40% in just seven years. Do you begin to see the problem with pay as you go? Health benefit costs will only increase over time; increasing costs and decreasing revenues means declining profits, and when you consider that the Post Office hasn't turned a profit in years, we're actually talking about increasing losses. That is not a company I would want to trust my health care costs to, but of course the union wants to go along because they assume in the end the federal government will bail out the plan. Which may be why those evil Republicans want the USPS to get its house in order.