• on Aug 31st, 2009 in Labor | 54 comments
    The Postal Reorganization Act of 1970 included the goal of matching postal employees’ compensation with that of private sector workers. The recently enacted Postal Accountability and Enhancement Act (PAEA) did not alter that goal. However, such a comparison is virtually impossible since private sector compensation varies considerably by locale, whereas postal compensation does not. It is also difficult to decide what constitutes a comparable job, and how benefits should be considered. Given the Postal Service’s financial situation and calls for down-sizing, the issues surrounding this policy take on special meaning. Over the course of the next two weeks, we’d like to ask you about this policy in general, its applicability in the diverse labor market across the country, and what changes might be in order to facilitate the financial situation and the level of service afforded the public.

    So, first of all, as a general matter and notwithstanding current contracts, does it make sense to attempt to match private sector compensation? Does the goal in the 1970 legislation still make sense today?

    How should Postal Service pay be set? If private-sector comparability is used, what types of jobs are comparable to postal work?

    This blog is hosted by the OIG's Risk Analysis Research Center (RARC).

  • on Aug 24th, 2009 in Strategy & Public Policy | 12 comments
    Think ahead to 10 years from now. What will the world look like in 2020? How will consumer behavior change? What should logistics companies do now to prepare for the future?

    Deutsche Post attempted to answer these questions in its global Delphi study published in June (click here to view the study). The Delphi method is a technique to develop predictions about the future. The Deutsche Post study involved two stages. In the first stage, a group of specialists working in a wide range of theoretical and practical fields put forward various theses about possible future developments. These were discussed and debated until the experts converged on a set of 81 theses.

    In the second stage, a different wider panel of 900 industry experts reviewed the 81 theses and rated how much they agreed with them. There were regional differences in the responses, but several trends stood out such as the rising importance of Asia, the growing interest in green issues, and the continued growth in Internet technologies.

    The poll below lists some of the most relevant predictions from the Deutsche Post survey that may affect the Postal Service.

    Do you agree with these predictions? Do you think the Postal Service is ready to meet the challenges of the next decade? If not, how should the Postal Service respond?

    This blog is hosted by the OIG's Risk Analysis Research Center (RARC).

  • on Aug 17th, 2009 in Pricing & Rates | 24 comments
    Since the earliest days of the Post Office there has been a public policy goal of promoting the dissemination of information throughout the country. This goal was also part of all 14 of the rate cases conducted under the Postal Reorganization Act. By law, rates had to consider “the educational, cultural, scientific, and informational value to the recipient of mail matter.” This provision generally tempered the increases for Periodicals, or at least kept the “institutional cost burden” for Periodicals to a minimum. In fact, in the final rate case in 2006 before the new price cap system of the Postal Accountability and Enhancement Act took effect, the “markup” on Periodicals was only 0.2 percent. Periodicals prices were set so that revenue was only 0.2 percent above attributable costs. The average for all mail was 79.3 percent.

    The two price adjustments since that final rate case have been capped by inflation. Under the old rate case process, the increases would have likely been greater so that the prices covered the Postal Service’s costs for handling Periodicals. In fiscal year (FY) 2008, Periodicals revenue did not cover costs. In fact, the cost coverage (the ratio of revenue to attributable costs) was only 84 percent. (In rate cases, the recommended prices had to be at least 100 percent of costs.) The new law includes the price cap as an incentive for cost containment, but also says products should cover their costs.

    So what do you think? Should the Postal Service try to increase Periodicals prices beyond the cap? What role do Periodicals play in the mailstream? What takes precedence: the cap or a requirement that products cover cost? Should the price for a flat that happens to be a magazine be significantly lower than the exact same flat that happens to be a catalog?

    This blog is hosted by the OIG's Risk Analysis Research Center (RARC).

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