• on Jan 14th, 2013 in Ideas Worth Exploring | 6 comments

    Even with smartphones, high-speed Internet, and other modern technologies, Americans spend an inordinate amount of time running errands. Interacting and conducting business with our government is no exception. It can be time-consuming. Wouldn’t it be great to use the local Post Office as a one-stop center for doing business with government? Or, what if the U.S. Postal Service had a digital platform to access government services or information online? Last week, the OIG released a white paper called "e-Government and the Postal Service — A Conduit to Help Government Meet Citizens’ Needs.” The paper identifies opportunities for the Postal Service to partner with other agencies to better connect with citizens, improve services, cut costs, and reduce duplicative and wasteful services. By providing e-government services, the Postal Service could help the government save money. There has never been a better time to do more with less. Through the Postal Service, individuals could send secure messages to government agencies, convert physical documents to digital records and send them instantly, apply and pay for permits and licenses, and access other crucial services. The Postal Service could also verify a person’s identity for sensitive or complex transactions. In addition, the Postal Service could lease unused Post Office window space to other agencies, so citizens could have a convenient access point for face-to-face services across the government. Business owners could use the Postal Service to look up information on regulations and laws affecting them, learn about federal small business loan opportunities, file information with the IRS and other relevant agencies, and submit all necessary forms and documentation through the Postal Service’s secure messaging and identity authentication services. Or, these things could be done in one visit to the Post Office, rather than separate stops to numerous agencies. Do you think the Postal Service could serve as a one-stop shop for government services?

  • on Jan 9th, 2013 in Finances: Cost & Revenue | 3 comments
    Some have argued that the U.S. Postal Service should be allowed to raise prices in order to increase revenue and ensure that the sales of their products cover their costs. Others have argued that the current costing system may overstate the cost of some products, as it assumes the Postal Service is able to adjust its capacity, such as quickly closing a facility or eliminating a tour, to match the decline in mail volume. So, the second argument goes, if the Postal Service is unable to adjust its capacity, it should temporarily lower the prices of certain products, in order to encourage volume, as it did in the past with its “summer sales.” The latter argument was briefly discussed in the OIG’s recently released paper “A Primer on Postal Costing Issues.” As a follow-up to that paper, we asked Professor Michael D. Bradley of George Washington University, an expert in postal economics, to co-author a paper on the use of short-run costing and pricing. Essentially, short-run costing varies from the current costing system in that it does not assume that the Postal Service can reduce its capacity as fast as volume falls. Using short-run costs to develop prices would allow the Postal Service to temporarily lower prices, at least on some products, to encourage volume that would make use of the excess capacity while the Postal Service creates a plan to reduce the excess capacity. However, the paper warns that short-run costs should only be used to set prices if they can be measured accurately and updated regularly and the Postal Service can be sure that a lower price will lead to a large enough increase in volume, otherwise they will simply lose revenue. Other issues that need to be considered when using short-run costs to set prices include:
    • Using short-run costs can result in prices that may generate additional revenue in the short term but will still not allow the Postal Service to cover its institutional costs.
    • Prices based on short-run costs would be more volatile.
    • Customers may be unsure as to whether prices are permanent or temporary.
    • Accurate measurement is difficult and would require significant effort from experts in postal operations.
    • The Postal Service may lose the incentive to shed the excess capacity.
    What do you think – should the Postal Service lower prices on some products to reflect current excess capacity? Or would lowering prices only lead to further revenue declines?
  • on Jan 7th, 2013 in Labor | 5 comments
    U.S. Postal Service employees are covered by the Federal Employees’ Compensation Act (FECA), which provides workers’ compensation benefits to civilian federal employees who sustain work-related injuries or an occupational disease. The U.S. Department of Labor Office of Workers Compensation Programs (OWCP) administers workers’ compensation and provides direct compensation to providers, claimants, and beneficiaries. The Postal Service later reimburses OWCP in what is known as “charge-back billings.” The Postal Service is the largest FECA participant in the federal government. It paid $1.2 billion in workers’ compensation claims and $67 million in administrative fees in charge-back year 2011. In addition, its estimated total liability for future workers’ compensation costs is about $17.5 billion. The Postmaster General noted in testimony last year that when the Postal Service revalues its liability to reflect current interest rates, it creates significant non-cash fluctuations in its bottom line. For this reason and others, the Postal Service has pushed for comprehensive FECA reform legislation. Providing gainful employment within medically defined work restrictions is in the best interest of both employees and the Postal Service. The Postal Service uses its limited duty program to assign available work for those employees who are temporarily unable to perform their regular functions. Limited duty employees retain the discipline of going to work every day and recuperation may also be accelerated if they are as active as possible. Early return to the regular job is the ultimate objective of the limited duty program. However, with diminishing mail volumes and limited resources for proactive case management, the Postal Service faces significant challenges in providing adequate work. The Health and Resource Management (HRM) staff and other officials play an important role in administering the injury compensation program and reducing related costs by returning injured employees to work as soon as possible and, in part, pursuing third-party liability. The Office of Inspector General (OIG) intends to assess whether the Postal Service’s HRM staff, supervisors, and other officials have all the necessary resources to successfully return employees back to work. And if not, what tools do they need to facilitate the return to work process. What practices are working or should be changed to more effectively administer the Postal Service’s injury compensation program? Share your comments in our blog section and follow the link to take one of the three surveys on this topic, depending on your employment position.

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