The Lexington Institute, the far right lobbying group that periodically trots out Sam Ryan to snarl about the postal service now presents a piece by a former USPS economist claiming to explain just how the service can bring its costs under control.

I don’t usually link to the Lexington Institute’s articles on postalnews.com because they tend to be simplistic diatribes, adding nothing to the conversation. Take for example, Sam’s piece on the last rate increase, 700 words of criticism of the USPS’s failings- not one of which is ”escrow”. (If you claim to be a ‘think tank’, don’t you have to ‘think’ about these things?)

The article by Charles Guy, listed as “former Director, Office of Economics, Strategic Planning”, credits the USPS with improving productivity in recent years, but warns that those gains have slowed, and that productivity actually dipped in the first quarter of this year.

Fair enough- but Guy stumbles when he tries to explain how the productivity gains were achieved- “…Recent productivity increases were based largely on labor attrition…” Well, no, they weren’t. You don’t make productivity improvements by simply not replacing people who leave. There’s this little matter of the work those people did- you know, the mail?

In reality, the bulk of the productivity increases came from increased automation. What attrition did was allow the USPS to capture the savings provided by automation and other intitiatives. It does no good to eliminate manual sorting if the people doing the sorting are still there. 

Conversely, it does no good to eliminate people if you still have to have someone else do the work they were doing- that’s why overtime in the USPS rose so quickly in recent years- attrition is a blunt instrument. Lots of people who retire are doing things that still have to be done- if you don’t replace them because you’re bent on maximizing attrition, you end up doing their work with overtime. So while overall work hours have decreased, overtime has gone up.

Mr. Guy goes on to explain how First Class volumes are down, that continued increases in labor costs will mean higher prices, driving down the volumes still further. OK- I think we’ve been aware of that for the last decade or so- nothing new or insightful there.

So what is the solution? Here’s where we get the really deep analysis- Guy says the USPS “must consider new ways of reining in costs”. And what might those be?

“One obvious strategy is to try to achieve – either by settlement with labor unions or through arbitration – a reduction in the rate of wage increases and a removal of no-layoff provisions.” Excellent! I bet it’s never occurred to the USPS contract negotiators to do that! That oughta sail through arbitration!

The only other suggestion Mr. Guy makes is that “the USPS ought to look upon increasing oversight of its operations as an opportunity… Enhanced financial oversight… could help the USPS with the all-important task of cost control.”

Which is probably best translated as “I don’t actually have any idea how the USPS could save money, but I bet somebody does.” And presumably somebody appointed by the current resident of the White House, who would be amenable to the Lexington Institute’s goal of privatizing the USPS.

Unfortunately, it looks like we’ll be treated to even more of the Lexington Institute’s ‘help’ in the future. The postal service seems to have caught their fancy, probably because it’s such an easy target. If you check out their listing of “issue briefs”, there’s a definite upswing in items on postal reform, even as topics like “Homeland Security” fade. (The Institute, like the Bush Administration, apparently gave up on that in 2003.)

Something to look forward to.

Lexington Institute :: Postal Reform

This entry was posted on Saturday, March 25th, 2006 at 10:44 am and is filed under Politics, postal finances, postal reform. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.