• on Apr 5th, 2010 in Ideas Worth Exploring | 42 comments
    According to a New York Times article, nearly 10 percent of Americans do not have bank accounts. These and other underbanked people may be taken advantage of by lenders, check cashing facilities, and pawnbrokers through excessive interest rates and fees. Fortunately, in this country, there are many options for consumers to choose, including prepaid debit cards. What if the Postal Service explored partnering with prepaid debit card providers to sell prepaid debit cards at post offices, just as they are now sold at other retail outlets? While the Postal Service explored similar products in the past, the current economic climate calls for a reexamination of the product. The Postal Service’s current experience conducting financial transactions in the form of money orders and Dinero Seguro would aid in the introduction of prepaid debit card services. Offering the cards could create a new revenue stream for the Postal Service and earn interest on the cards’ float, the money residing in cardholder accounts. That money may be invested prior to its use by account holders. The Postal Service might also benefit from increased sales of other products due to an increase in store traffic. The Postal Service has two core market advantages that would aid it in successfully offering prepaid debit cards. First, with the second-largest retail network in the country, the Postal Service could sell prepaid debit cards in areas with limited private sector retailers. Second, customers may be more likely to come to a Post Office to purchase prepaid debit card transactions because of their trust in the Postal Service brand. Legal and regulatory constraints, however, currently prohibit the Postal Service from offering prepaid debit cards. Under the Postal Accountability and Enhancement Act of 2006, the Postal Service cannot offer new nonpostal products. Private sector interests may also work to prevent the Postal Service from competing against them by offering this product. Finally consider that given the robust variety of financial institutions already in this country, the Postal Service should evaluate whether offering prepaid banking card services would provide valuable options to customers while making a profit for itself. What do you think? Why did you answer yes or no to the poll question? This topic is hosted by the OIG’s Risk Analysis Research Center (RARC).
  • on Mar 22nd, 2010 in Post Offices & Retail Network | 16 comments
    As the Postal Service examines its business model and contemplates changes meant to increase its efficiency, Congress’s role in postal operations has captured public attention. A prime example is the Postal Service’s recent efforts to trim its retail operations. As a cost cutting initiative, on July 2, 2009, the Postal Service filed with the Postal Regulatory Commission a list of Post Office stations and branches it was considering closing. After the filing, many entities questioned the Postal Service’s authority to close these facilities. An article published on the U.S. News & World Report website states, “Call your local congressman if you don’t want your local Post Office retail station or branch to be closed.” In addition, the American Postal Workers Union (APWU) announced on its website “the APWU continues to lead community-based drives to keep retail units open.” Clearly, identifying the exact number and location of closings supercharges emotions. Add very real issues like social customs and potential job losses and relocations to the mix, and there are even more negative feelings associated with Post Office closures. It is not clear yet the number of retail stations and branches that will be closed, but what started out as list of 3,200 candidates has now declined to fewer than 170. In the action plan the Postmaster General announced in March, he cited a number of issues that will require legislative approval, including the retail network. The question is whether Congress, given constituent and political pressure, can provide the Postal Service the level of autonomy necessary to address this issue. How do you think Congressional oversight affects Postal Service operations? This topic is hosted by the OIG’s Office of Audit Network Optimization team.
  • on Mar 15th, 2010 in Labor | 21 comments
    March 18 marks the 40th anniversary of one of the most momentous events in postal history — the postal strike of 1970. The night before, postal workers in New York voted 1,555 to 1,055 to go out on strike in protest of a House committee vote to limit their wage increase that year to 5.4 percent on the heels of a 41 percent increase in Congress’s own pay. The wildcat strike and picketing were effective in shutting down postal operations in New York and quickly spread to about 30 other cities. Within days about 152,000 workers in 671 locations were on strike. It was illegal for federal workers to strike, or even to advocate a strike, but union officials said they had no control over the action. The strike shut down New York’s financial industry, kept 9,000 youths from receiving draft notices, delayed the mailing of census forms and tax refunds, and generally disrupted the country’s communications. Injunctions and heavy fines were levied on union leaders; but the membership paid no attention. President Nixon called out 24,000 military personnel to distribute the mail, but they were ineffective. While the president asserted there would be no negotiations until the workers returned to work, Secretary of Labor William Usery did engage in negotiations that brought the strike to an end after 2 weeks. By all accounts, the strike was extremely successful for the unions, and it set the course of postal affairs for decades to come. No postal worker was ever disciplined for the walkout. Negotiators agreed to a 6 percent wage increase retroactive to 1969, and an additional 8 percent contingent on enactment of the Postal Reorganization Act. The bill had been languishing in Congress, but by April 16, 1970, agreement was reached. It not only provided the 8 percent pay raise, but also allowed postal workers to reach the top of the pay scale in only 8 years — in contrast to the 21 years previously in effect. After the first contract, pay for the newest worker had surpassed what a 21-year veteran had made 3 years earlier. Although the agreement directed the large increase towards high-cost areas like New York, where the strike began, it was effective across the nation, even in low-cost areas where compensation had been ample. The practice of uniform wages continues today at the Postal Service; even though the federal pay system introduced locality pay in 1990. The binding arbitration feature of the Act could also be traced to the strike. According to a union history, binding arbitration was included in the bill “in lieu of the right to strike,” though of course no federal employee has ever had such a right. This feature of the law has meant that the Postal Service has never been able to exert control over its labor costs. Unions also insisted that the Postal Service would not be called a government corporation, to guard against any implication that workers would lose the security of their federal jobs. The strike also set in motion lasting changes in the postal labor movement. Union heads that had tried to control the strike, and were willing to compromise with government leadership, lost credibility. A city carrier, Vincent Sombrotto, was in the forefront of rank and file members in New York insisting on the strike. After the strike, he led a movement to open up union elections and eventually headed the National Association of Letter Carriers for 24 years. Coincidentally with the formation of the Postal Service, five distinct unions of postal clerks, mail processors, maintenance, and motor vehicle workers merged into a new American Postal Workers Union, which provided a more unified voice for labor in political and collective bargaining negotiations. This topic is hosted by the OIG’s Risk Analysis Research Center (RARC).

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