The PRC’s Public Representative recommends changes for emergency suspensions

The Postal Regulatory Commission may take another look at the issues surrounding emergency suspensions of post offices.

The Commission’s Public Representative has filed extensive comments for the Commission’s 701 Report to Congress and the President.  This report provides an opportunity for the Commission and industry stakeholders to assess the effectiveness of the Postal Accountability and Enhancement Act and to make recommendations for improving postal law.

The Public Representative’s comments run to 73 pages and cover a wide range of topics, including the Postal Service’s financial situation, the rate system, market tests, and Negotiated Service Agreements.  The comments also contain a section about a subject that has been a recurring theme on Save the Post Office — emergency suspensions.

These suspensions have been the source of controversy and the object of criticism for many years.  Sometimes the reason cited  for the suspension by the Postal Service seems suspect.  Sometimes the suspensions go on for way too long without being resolved.  Plus, when individuals have filed an appeal over a suspension with the Commission, it has invariably been dismissed as outside the Commission’s jurisdiction because the statute governing post office discontuances — 39 USC 404(d) — does not mention suspensions.

The Commission has been aware of the problems with emergency suspensions for a long time.  In 2008, it instituted a public inquiry proceeding (Docket No. PI2010-1) to investigate them.

“That inquiry,” notes the Public Representative in his comments, “disclosed a relatively large number of emergency suspensions, some lasting decades, during which time no effort was made to make a formal closing determination as required by section 404(d).”

The Commission closed the public inquiry docket without taking action, but continued to monitor emergency suspensions.  Rather than diminishing, the number of suspensions continued to mount up.

Just a few weeks ago, U.S. Senator Claire McCaskill called out the Postal Service for its use of “emergency suspension” authority to close down Missouri post offices, potentially circumventing the Postal Service’s standard discontinuance process.  “I am concerned,” wrote McCaskill in a letter to Postmaster General Megan Brennan, that “communities are being adversely affected without the opportunity to meaningfully participate in the decision-making process.”

The Public Representative has made several very useful recommendations for the 701 Report, which would go at least some way toward addressing the festering problems associated with suspensions.  

Not genuine emergencies

As discussed in this previous post, according to data filed by the Postal Service for the 2015 annual compliance report, at the beginning of FY 2015 there were 518 offices under suspension.  By the end of the fiscal year, there were almost 600.  (A list of the suspensions is here.)

As these growing numbers indicate, many suspensions occurred several years ago, and it’s very unlikely that these post offices will ever reopen.  They are in a kind of limbo.  They’re closed, but they haven’t been “closed” under the terms of the discontinuance statute, so the Postal Service never went through a formal discontinuance procedure, and the non-closings aren’t subject to appeal to the PRC.

In addition to all the unresolved suspensions, there’s the problem of manufactured emergencies.  Sometimes circumstances are clearly beyond the control of the Postal Service, but sometimes — as in the case of many lease terminations and staffing problems — it seems that the Postal Service wanted to close the post office and the suspension was just an easy way to do that.

As the Public Representative comments, such situations “did not appear to be genuine ‘emergencies’ that warranted an emergency suspension.”

 

Lease issues

The 600 emergency suspensions in effect at the end of FY 2015 were caused primarily by four circumstances.  Over 200 suspensions involved safety and health issues or damage to the building, and about  100 were due an inability to find qualified personnel to staff the office.

The most common reason for a suspension was a lease termination.   It accounted for 266 of the 600 suspensions.  In FY 2014, some 44 post offices were closed due to lease issues, and 36 more were suspended in FY 2015 for the same cause.

Lease issues are not only the most common reason for a suspension.  They also cause the most controversy.

There are undoubtedly situations where the termination of a lease is beyond the control of the Postal Service.  Sometimes the owner simply has other plans for the property, or perhaps the owner and the Postal Service are too far apart in what they regard as fair terms for the new lease.

But in many cases, the owner of the building and the communities served by the post office end up feeling that the Postal Service wanted to close the post office and it helped create the lease issue.

In any case, lease problems are rarely “emergencies.”  Since the date when a lease will end is known years in advance and there is plenty of time to either negotiate a renewal or find a new location.

De facto closings

Emergency suspensions are supposed to be temporary.  The Postal Service’s is supposed to either solve the problem that led to the suspension or proceed with a formal discontinuance study to close the post office permanently.  But when a suspension goes on for years, it’s really a closure, just by another name.

In his comments for the 701 Report, the Public Representative points to one of the main complaints about the suspensions: “It appeared that the Postal Service had been using emergency suspensions as a means of imposing de facto closing of post offices.”

In so doing, the Postal Service avoids going through the rigorous discontinuance procedures and denies communities an opportunity to have meaningful input into the decision-making process, which is one of the main objectives of 404(d).

A related problem is that both the Postal Service and the Commission view emergency suspensions as outside the scope of 404(d).  When a community appeals a post office closure involving a suspension, the Postal Service files a motion to dismiss, arguing appeals on suspensions are outside the scope of the Commission’s jurisdiction.  The Commission invariably grants the motion, leaving the community with no recourse.

Recommendations

As the Public Representative explains,  404(d)  establishes standards and procedures for closing or consolidating post offices, but it says nothing about closing post offices for emergency suspensions.  The Postal Service’s own policies and regulations provide many details about the circumstances justifying a suspension and the procedures for implementing one, but there’s little anyone can do when the Postal Service does not follow its own policies.

It may thus be time for Congress to include emergency suspensions in the next version of postal reform legislation.  The Public Representative makes three recommendations for creating a new statute that would improve the way the Postal Service uses the emergency suspension provisions.

1. Establish deadlines for initiating discontinuance studies for leases that are terminated or not extended.

This recommendation pertains to cases where the Postal Service can anticipate a lease renewal problem. It would require the Postal Service to initiate a discontinuance study not later than the date upon which either party to the lease exercises its right to terminate (or fails to exercise a right to extend the lease). Usually that date is the end of the lease, so this means the Postal Service would have to initiate a discontinuance study as soon as the lease ends and the post office is suspended, if not before then.

2. Establish deadlines for initiating discontinuance studies for Post Offices whose operations are suspended.

Once a post office is suspended, the Postal Service is supposed to either solve the problem and reopen it (even in a new location), or proceed to close it permanently through a discontinuance study. But some post offices remain suspended for years that way. This requirement would put a deadline on how long a post office could be suspended before a discontinuance study is begun.

3. Establish deadlines for completing discontinuance studies.

For most of the 600 suspended post offices, the Postal Service has not even initiated a discontinuance study, even though the suspension may have taken place years ago, but sometimes the Postal Service initiates the study and doesn’t complete it.  This new requirement would put a time limit on how long a discontinuance study can take.

In those cases where the Postal Service does not fulfill these requirements and the suspension becomes a de facto discontinuance, concludes the Public Representative, the persons served by the affected post office should have a right of appeal to the Commission.

The complete comments of the Public Representative are here.  Previous posts about emergency suspensions (which appear in the slide show at the top) are archived here.

Two post offices slated for closure will remain open

This post originally appeared on Save The Post Office on June 6, 2016

Two post offices facing imminent closure — both of which have pending appeals with the Postal Regulatory Commission — will not be closing after all.  The post office in Winchester, Illinois, and the contract post office in Westbrookville, New York, were both due to close over contract issues, but the issues were resolved last week and both offices will remain open.

The post office in Winchester was set to close for an emergency suspension on May 21 after the Postal Service was unable to come to an agreement with the owner of the building about the terms of the lease renewal. The Postal Service told customers it would try to find a new location, but in the meantime customers would need to use the post office in Jacksonville, 19 miles away.

The City of Winchester filed an appeal with the PRC as well as petitioning the District Court. The City attorney argued that there was nothing “sudden, nor unexpected, nor an emergency” about the lease situation, and the landlord remained open to continuing negotiations and keeping the post office open in the interim.

Last week the Postal Service informed the City’s attorney that it had signed a new lease with the landlord and the office would not be closing. As a result, the City filed a motion to dismiss its appeal with the PRC, and it is also withdrawing from the court case.  (Update: The PRC granted the motionto dismiss.)

It’s not clear if the pending litigation had anything to do with the Postal Service’s decision to resolve the lease issue. It may simply be that the Postal Service and the landlord were finally able to come to terms. Whatever the explanation, residents of Winchester will be happy that their post office is staying put. (More on Winchester in this previous post.)

In Westbrookville, the post office was set to close on March 31, when the woman who ran the contract unit retired.  An appeal was filed with the PRC, but it was doubtful that the Commission would hear it. The Postal Service and the PRC’s Public Representative both argued that the Commission did not have jurisdiction to hear appeals on contract postal units when they are not the “sole source” of postal services in the community, and it seemed likely that the Commission would dismiss the appeal on those grounds.

Then on June 1, the Postal Service informed the Commission that it had awarded a new long-term contract for continued operations in Westbrookville with a new supplier.

With the post office now remaining open, the appeal may be moot, and it’s likely that the Postal Service will file a new motion to dismiss on those grounds.

But the issues involved with the Commission’s jurisdiction over appeals on contract post offices remain very much alive, and they are currently the subject of a Public Inquiry docket, PI2016-2. Several parties, including yours truly, have filed comments on the inquiry, but the Commission has yet to render an opinion.

(Photo credits: Winchester post office, by J Gallagher, Post Mark Collectors Club (PMCC); Westbrookville, NY post office: Times Herald Record)

Winchendon post office halts longtime charity drive for veterans

WINCHENDON – Bette J. Mire is passionate when it comes to supporting veterans. So when she was told by a postal worker that the Veterans of Foreign Wars Auxiliary she volunteers for could not distribute poppies for veterans at the post office on Central Street as they have for more than 60 years, she took it to heart.

Ms. Mire’s father, Herman C. Vieweg, served in World War II. Her husband, Saul Mire, 79, is a Vietnam veteran who served in the U.S. Army for 34 years. The VFW started poppy distribution, she says, at the end of World War I as a symbol of freedom and to show support of veterans. Each year in Winchendon, the VFW and American Legion auxiliaries take turns distributing the poppies at the post office and a grocery store downtown, she said.

But this year, the Winchendon post office is enforcing regulations - in place for years - that restrict solicitations of any kind on government property, Ms. Mire said. She and others argue that they are not selling the poppies, just distributing them for voluntary donations.

“Some people don’t give anything,” Ms. Mire said. “Another person might walk by and give $20. Some people might just give a dollar.”

According to VFW.org, since 1922, the Buddy Poppy has been the VFW’s official memorial flower, representing the blood shed by American service members and serving as a reminder that “the VFW will not forget their sacrifices.” Disabled, hospitalized and aging veterans make the paper flowers and ship them out for distribution to posts and ladies’ auxiliaries, it says. The VFW pays the disabled veterans for the work, and all proceeds from distribution are used for veterans, their dependents and orphans of veterans.

The Winchendon postmaster did not return calls for comment.

Steve Doherty, head of corporate communications in the Northeast for the U.S. Postal Service, said the practice was never allowed.

Nonpostal or charity sales on the grounds of any post office is prohibited by federal law, he said, including organizations or individuals soliciting, polling, demonstrating or distributing literature on postal property, “regardless of how well-intentioned their organization’s mission may be.”

“We apologize for any confusion this policy may have caused in Winchendon,” Mr. Doherty said in an email.

When asked why the regulation was being enforced this year but not for the previous 60 years, he said, “I wasn’t aware that it was previously allowed, but I can’t speculate on why a former postmaster may have done something.”

Mr. Doherty added that the postal service has always been a strong supporter of veterans, who make up more than 18 percent of the agency’s workforce.

“In addition, over the years we’ve issued more than 100 stamps honoring every branch of the service, women in the military, Medal of Honor recipients and our veterans,” he said. “Our newest series continues a grateful nation’s way of honoring the bravery and achievements of members of the U.S. Armed Forces through its Service Cross Medals. Stamps featuring these decorations for valor from all military branches will be unveiled on Memorial Day at the World Stamp Show in New York.”

Ms. Mire said she is disappointed that the post office took the stance not to allow it this year. Subsequently, the Board of Selectmen did not approve a permit for the VFW auxiliary to distribute the poppies at the post office, she said. Instead, they are doing it at a bank downtown and the grocery store.

“It’s just another kick in the teeth for our veterans,” she said, crying. “We have enough trouble having the public support the veterans, now the government is going against them. That is how I feel. I don’t think people realize what they (the veterans) do for us. It’s disgraceful, I think.”

She said as an auxiliary member, she is not supposed to share any political views or take sides.

“I’m just here for the veterans,” she said. “All we want to do is make sure the veterans are supported - the old and the new. We have to realize they are still coming home.”

Coral M. Grout, a local historian for the American Legion and past president, and also national junior activities chairman, said distributing the poppies in Winchendon at the post office was always a community event. Her father, Charles E. Grout, who served during World War II in the U.S. Air Force and was also director of veteran services for years for Winchendon and eight other communities, used to stand on the steps of the post office and distribute the poppies, she said. Postal workers would bring chairs out for them to sit on at the top of the steps and provide them coffee, she said, and would invite volunteers inside the lobby if it was raining.

She said she was standing in line at the post office earlier this month and overheard the woman at the counter tell Ms. Mire they would have to stand on the sidewalk this year, not on the steps.

“I asked when it changed and she said, ‘That is the regulation,’ ” Ms. Grout said. “I told her that we’ve been doing poppies here for over 60 years. All of a sudden we are not welcome. We’re banished to the sidewalk. We don’t sell – people donate – and it all goes back to the community to our veterans.”

The donations help pay for things such as Christmas and Thanksgiving baskets for needy veterans, she said, and a barbecue at the America Legion or VFW for veterans.

“It is such a community-oriented thing,” she said.

USPS nets $188 million operating surplus in April (excluding PAEA)

The US Postal Service reported a $188 million operating surplus in April, bringing the year to date profit (before the non-cash bookkeeping entries required by the 2006 PAEA law) to $2.1 billion.

Operating revenue increased 2.3% compared with the same period last year (SPLY), while controllable expenses increased by just 0.7%.

Total mail volume was down by 0.7% for the month, led by first class mail, which was down 3.2%. The drop in mail volume and revenue was offset by increases in shipping and package services, so that total volume was just about the same as a year ago, while total revenue was up 2.2%.

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Mail handlers and letter carriers agree to extend contract talks with USPS

WASHINGTON, DC May 21, 2016 (GLOBE NEWSWIRE) — The United States Postal Service and the National Association of Letter Carriers (NALC) have agreed to extend contract negotiations on a new collective bargaining agreement.

Although the contract with the NALC expired at midnight Friday, May 20, the Postal Service and the NALC have mutually decided to extend negotiations beyond the deadline.

The NALC represents approximately 210,000 city letter carriers nationwide.

The Postal Service and the National Postal Mail Handlers Union, AFL-CIO (NPMHU) also have agreed to extend contract negotiations on a new collective bargaining agreement.

Although the contract with the Mail Handlers union also expired at midnight Friday, May 20, the Postal Service and the NPMHU have mutually decided to extend negotiations beyond the deadline.

The NPMHU represents approximately 44,000 employees nationwide.

USPS Touts Ecommerce Initiatives in Plea for Postal Reform

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Postmaster General Megan Brennan called on Congress to enact legislation to help the Postal Service after releasing the agency's second-quarter financial report last week. She called the agency's challenges "serious but solvable."

Brennan testified before the House Oversight and Government Reform Committee on Wednesday, saying the USPS has worked with stakeholders on several provisions that can achieve broad support.

She also noted the increasing importance of ecommerce to the organization:

"Our package volume has grown by more than 1 billion packages in the last three years. In FY 2015, we delivered one-third of all domestic packages in the United States. To spur additional growth in our package business, we are partnering with a number of major U.S. retailers to develop customized delivery solutions to meet their particular business needs.

"Examples of the solutions we have developed include our Sunday, grocery, and same-day delivery initiatives, as well as our "ship-from-store" agreements that expedite the delivery of goods from businesses to consumers and improve convenience. These efforts have significantly enhanced the continued double-digit growth in package volume."

The USPS revealed Tuesday it had grown operating revenue 4.7% in the second quarter to $17.7 billion. The Postal Service breaks out its results, reporting "controllable" income of $576 million for Q2 with a net loss of $2 billion. The controllable figure does not reflect factors such as the legally-mandated expense to prefund retiree health benefits.

The Postal Service attributed the increase in operating revenue to an 11.4 % increase in Shipping and Package volume and pricing strategies.

The Wall Street Journal noted last week that the USPS has been competing with UPS and FedEx for market share in ecommerce; "However, the growth in USPS's shipping volume also has contributed to rising costs, including an increase in hours worked and transportation expenses. During the latest quarter, operating expenses increased 7.4%."

The National Association of Letter Carriers, which represents city delivery letter carriers, called the $576 million quarterly operating profit "positive news for an agency that enjoys widespread public support." It also called on Congress to adopt a "smart, targeted reform package that includes addressing pre-funding, allowing USPS the flexibility to use its invaluable networks for some new products and services, and adopting best private-sector practices in investing the USPS retiree health benefits fund."

You can see the USPS second-quarter financials on the USPS website, where Brennan's testimony before Congress is also available.


About the author: Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.

USPS reports FY 2016 second quarter results: operating profit (before PAEA charges) reaches $1.8B year to date

The US Postal Service reported its second quarter financial results today. For the period from January 1 to March 31, the USPS had a net operating profit (aka “controllable income” of $576 million. That brings the year to date profit (excluding PAEA accounting adjustments) to just over $1.8 billion.

Here is the full summary issued by the USPS:

  • Operating revenue grew 4.7 percent to $17.7 billion
  • Controllable income totaled $576 million; net loss of $2.0 billion reported
  • Postal Service revenue benefited from exigent surcharge, which expired on April 10, 2016
  • Legislative reform and focus on innovation and efficiency remain necessary

WASHINGTON — The U.S. Postal Service reported operating revenue of $17.7 billion for the second quarter of fiscal year 2016 (January 1, 2016 – March 31, 2016), an increase of $788 million or 4.7 percent over the same period last year. The increase was primarily due to an 11.4 percent increase in Shipping and Package volume and pricing strategies.

“While we have been successful in achieving controllable income during the quarter, we are still reporting net losses and contending with long-term financial challenges,” said Postmaster General and Chief Executive Officer Megan J. Brennan. “We continue to focus on improving operating efficiencies, speeding the pace of innovation, and increasing revenues for the Postal Service.”

Controllable income for the quarter was $576 million compared to $313 million for the same period last year. Calculation of controllable income takes into account the impact of operational expenses including compensation, benefits and work hours; but does not reflect factors such as the legally-mandated expense to prefund retiree health benefits (see Non-GAAP Financial Measures table on following page for full description).

Net loss for the quarter was $2.0 billion compared to $1.5 billion for the same period last year. The change in net loss was most significantly impacted by a $547 million unfavorable change in the workers’ compensation expense as a result of interest rate changes – a factor outside of management’s control.

Operating expenses also increased in the second quarter compared to the same period last year, driven by increased work hours and transportation expenses due in large part to the increase in package volume. Labor costs increased by $362 million, and transportation expense increased by approximately $149 million.

“During the second quarter, we expanded work hours and our transportation network, taking more trips and increasing miles flown,” said Chief Financial Officer and Executive Vice President Joseph Corbett. “This largely resulted from strategic business decisions enacted to accommodate package growth and enhance service across the country.”

“I am grateful to our dedicated employees who helped us to achieve controllable income this quarter, but we cannot let this result mask the financial challenges we face,” said Brennan. “Our financial situation is serious, but solvable. We are confident that we can return to financial stability through the enactment of prudent legislative reform and a favorable resolution of the upcoming regulatory review of our rate-setting system.”

Selected Second Quarter 2016 Results of Operations Compared to Same Period Last Year
The following table presents certain selected results of operations for the three months ended March 31, 2016 and 2015:

* The three months ended March 31, 2016 had one additional business day compared to the same period in 2015.

Non-GAAP Financial Measures
Included in this news release is controllable income, which is not calculated and presented in accordance with accounting principles generally accepted in the United States (GAAP). Controllable income is a non-GAAP financial measure defined as net income subtracting operating expenses considered outside of management’s control. These expenses include the mandated prefunding of retirement health benefits, actuarial revaluation of retirement liabilities and non-cash workers’ compensation adjustments.

The following table reconciles GAAP net loss to controllable income and illustrates the income from ongoing business activities without the impact of non-controllable items for the three months ended March 31, 2016 and 2015:

 

1 This is a net amount that includes changes in assumptions as well as the valuation of new claims and revaluation of existing claims.

2 Determined by OPM in 2015 to amortize the $3.5 billion unfunded FERS retirement obligation based on actuarial valuations and assumptions. The payments are to be made in equal installments over the next 30 years. The 2015 expense of $241 million was recorded in full during the fourth quarter of 2015.

Complete financial results are available in the Form 10-Q, available athttp://about.usps.com/who-we-are/financials/welcome.htm.

Financial Briefing
Postmaster General and CEO Megan J. Brennan and Chief Financial Officer and Executive Vice President Joseph Corbett will host a telephone/Web conference call to discuss the financial results in more detail. The call will begin at 9:30 am on May 10, 2016 ET and is open to news media and all other interested parties.

Should We Bring Back The Postal Banking System?

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By Mary Kate Leahy via Law Street Media

If you are tempted to take out a payday loan you might want to take Sarah Silverman’s advice and try literally anything else. The trouble is, there are rarely other options and here in the United States there are 40 million Americans who are “unbanked,” without access to the formal financial system. Shockingly, these Americans spend the same amount just to use their own money as they do to purchasing food–10 percent of their income.

Payday loans may be an evil but unless and until they are replaced with a better alternative they continue to be a necessary one. Eliminating payday lenders would prevent borrowers from taking on that particular pernicious type of debt but does not solve the underlying concern that many unbanked Americans do not have access to credit.

One of the proposed solutions to provide access to banking services for the unbanked is to use the United States Postal Service. Progressive politicians are advocating this method as an efficient way to reach low-income citizens in their neighborhoods. But some are uncomfortable with a government agency, one which is facing some financial difficulties of its own, taking on a problem that should be dealt with by market forces.

So is the existence of the “unbanked” really a problem? If so should we be using the post office to combat it?

A Solution for the Unbanked?

For a primer on the issue of how many Americans are currently unbanked and would benefit from an alternative to payday loans, check out this TedTalk by Mehrsa Baradaran.

As Baradaran explains, postal banks are actually something we already had and used to great success. From 1910 to 1966, the U.S. Postal Savings system provided a place for Americans to deposit funds in order to save money and have a way of paying their bills other than with cash. That is one of the chief problems facing the unbanked–the inability to have easy access to their own money and the high percentage of their money spent on just using their own funds. Paying a fee to access your own money or even just check your account balance is a significant financial burden and a service that the banked get access to for free.

With the advent of community banks, which offered a more attractive interest rate to depositors, the postal banking system seemed unnecessary and was eventually abolished in 1966. But the community banks–which were also proposed as a solution to the problem of the unbanked–removed themselves from low-income neighborhoods and contracted the number of people they provided services for. Nature abhors a vacuum and payday lenders went into that space, which is why people in low-income neighborhoods are often forced to rely on these types of lenders as substitutions for the banking services that the banked take for granted.

For the unbanked, there is simply not a banking location that they can go to. And one of the beauties of using the postal system for banking is that convenient locations already exist. Fifty-nine percent of post offices are in zip codes where there is either zero or only one bank. Other industrialized nations already have postal banking. In the U.K., the postal service does not actually provide financial services but allows third-party providers (like the Bank of Ireland) to conduct business there. France has actually converted its postal service into a financial institution.

The postal banking systems have been imperfect. In Japan, the postal banking system drew heavy criticism for its inefficiency. Yet 80 percent of Japanese citizens over the age of 15 had a postal bank account. China and India are also seeking ways to increase micro-lending and financial services to their nations’ poor through the use of postal banking services.

Potential Concerns

The concerns regarding postal banking fall into two main camps. First, there is the question of whether a postal banking system would help and whether the U.S. Postal Service could operate it efficiently and fairly. The second concern is less a practical question of ability and more an assessment of whether we want to use the postal service to promote a specific financial ideology.

The U.S. Postal Service seems to think it would be able to provide this service. The American Postal Workers’ Union makes the argument that postal workers are already in the very places that community banks have abandoned and they currently provide some financial services, like money orders. They would be able to provide small loans as well–like a payday lender but without extremely high interest rates.

The video below outlines the case made by the American Postal Workers’ Union for postal banks.

But the argument goes beyond the mere logistics of whether post offices can provide these services. The core concern is whether they should. Whether we want a government institution to be providing a service that is traditionally left to the private sector. After all, should the government really be involved in trying to undercut the payday lending industry based on a largely moral argument about “fairness”?

True Competition

The private sector might argue that payday lending is actually fair. It provides a needed service–credit–at a rate that people are willing to pay. With so many of these financial institutions out there it is hard to argue that the industry is not competitive and given that these rates are still being accepted by many borrowers that must be what the credit is worth.

But that argument may misconstrue what true competition, one that will actually produce a fair price for something in a healthy market, consists of. Critics of payday lending would argue that true competition involves choices between meaningfully different options, not the illusion of choice between virtually identical competitors. A person living in an area where there are 10 payday lenders and no banks is not truly living in a competitive market. The individual lenders may vary their terms slightly but from the perspective of the borrower, they are still going to have to choose a payday lender. QuickCash versus KwikKash does not, at the end of the day, matter very much to the borrower or to the pernicious effects of the system.

The implementation of postal banking would provide meaningful choices to borrowers and create a true alternative to the payday lending industry. Then, when faced with that actual competition, they will be forced to either adapt or die. If a 400 percent interest rate really is a reasonable price to pay for the service they are offering then payday lending will survive the introduction of postal banking.

When you discuss postal banking there are two main ways that it can be structured–a postal bank that provides access to credit and one that does not. In the past, postal banks did not provide the type of micro-loans that would compete with payday loans. While a modern version of the postal bank could include small loans it doesn’t necessarily need to. Postal banks can provide other valuable services; most importantly post offices can serve as a place to save and access your money. If postal banking was re-instituted without lending, it would likely go a long way in solving the problem of access for the unbanked and underbanked.

Currently, people who live in a community where there is no bank have three main options to cash their paycheck. Payday loan providers that usually charge a 10 percent fee, check cashing services (some are part of larger retailers like Walmart) that typically charge lower a flat fee, and prepaid card accounts that allow you to deposit your money into the account but then charge a monthly fee for you to use the card. Those of us with bank accounts can get all of these services for free.

The Government’s Role

Postal banking would, of course, involve the government taking on a role that is now filled by the private sector. One fear is that this will stop the development of private sector alternatives to payday lending and stifle innovation in the provision of financial services. We may hate payday lending, but many feel that if it is going to be replaced that should be done by the private sector–through innovation in technology or some other form of financial institution. The government’s role should be contained to regulating industries, not replacing them.

But the postal bank did not, when it existed, kill other banks. In fact, the opposite happened. The rate of interest for the postal banks was capped at 2.5 percent to weaken its ability to compete with other banks. When community banks offered better rates, not surprisingly, depositors moved there–choosing a private sector institution that they felt better suited their needs. Postal banking also would not eliminate advances in technology and electronic banking. Those advances are driven by thinking of better ways to provide services to already banked people.  Applications that transfer money instantly between bank accounts for a minimal fee on your smartphone only benefit people who have smartphones and bank accounts. To the unbanked, these advances are meaningless–21st-century innovations in banking don’t assist people who are still stuck in the 20th. Creating a postal banking system would help the millions of unbanked Americans enter into the formal financial system, but it may not have much effect on companies seeking to further cater to those who are already included.

Conclusion

Postal banking may seem to some like a governmental overreach into an arena where the forces of the market should be in charge. Undercutting a private sector industry in favor of a government run charity-bank makes some people uncomfortable. Some may ask where we should draw the line between public good and social engineering. But postal banking already worked once in our nation’s history. And while it is not a complete solution to the problem of the unbanked and underbanked it could be used as part of that solution.

McCaskill: Is USPS undercharging FedEx and UPS?

WASHINGTON – U.S. Senator Claire McCaskill today questioned the U.S. Postal Service’s pricing for its “last mile” of delivery in rural areas, and why she believes it may be losing money by under-charging competitors such as UPS and Fedex to carry mail to those areas.

“I have been on a harangue about giving deals to our competitors,” said McCaskill, a former Missouri State Auditor and senior member of the Senate Homeland Security and Governmental Affairs Committee, which has jurisdiction over the Postal Service. “…We are giving a really good deal to our competitors. I’ve never seen another business entity who says, because we are so starving for volume, we’re going to take the most expensive part of our architecture, which is the last mile, and we’re going to give our competitors a deal on that last mile. And I have yet to have anyone give me the analysis that shows me that they have, in fact, at the Postal Service, considered what price they’re giving to UPS and FedEx for that last mile of delivery as it relates to our costs.”

In January, McCaskill demanded answers from the Postal Service on how it will protect mail delivery for rural Missourians and efficiently manage the cost-sharing benefits with competitors to carry mail the “last mile,” especially in rural areas, saying: “I think it’s really important we get a handle on [rural delivery times]. Those of us who are really pushing to protect rural delivery…think it’s important we know what we’re working with from a data-driven basis.”

In 2014, McCaskill asked the Government Accountability Office to look at these agreements, and the agency confirmed some of her concerns when they discovered the Postal Service wasn’t accounting for key cost-drivers such as package size and weight when making agreements, and wasn’t collecting some of the revenue it was owed from the deals.

McCaskill, a longtime advocate for postal service in rural communities, is widely credited with having waged a successful campaign over several years to save rural post offices and maintain delivery times when faced with closures and the slowing of standards.

McCaskill recently backed the Rural Postal Act, a bill that aims to improve postal service, delivery times, and standards in rural communities that have been disproportionately affected by cuts to the Postal Service. The bill—sponsored by Senator Heidi Heitkamp of North Dakota and also cosponsored by Jon Tester of Montana—would restore overnight delivery, return a faster First-Class mail standard, make six-day delivery permanent, and enact strict criteria the Postal Service would have to meet before closing a post office to ensure that rural communities are still able to easily access the mail system.

Last year McCaskill requested an examination of the interaction between the lack of adequate access to broadband technology in rural areas and the reliability of Postal Service delivery. Without efficient and effective mail service as a result of recent Postal Service consolidations, rural Missourians are put at an economic and communications disadvantage, the effects of which haven’t yet been properly studied. McCaskill also recently signed on to a request for the federal government’s top watchdog to review the Postal Service’s calculation of delivery times and standards, and she helped win a one-year moratorium on postal closings until the impact of those closings is fully understood.

The Disappearing Post Offices of the Rural South

When she needs a break from photography or from teaching art at Lincoln Memorial University, Rachel Boillot hangs out with an older crowd.

“I spend Saturday nights with 95-year-old women,” she said.

Part of that has to do with another job Boillot has: She’s the assistant producer at arecord label that represents old-time folk musicians. It’s also a photography project, “Silent Ballad,” about traditional musicians from the Tennessee Cumberland Mountains. She finds it refreshing to be a part of such an interesting circle of people.

“They have great stories to tell,” she said. “I’m learning so much and being shaped by tough people who grew up during the depression in Appalachia and they’ve let me into their homes and shared their most intimate stories with me. It has been a powerful experience.”

It’s fair to say Boillot is interested in traditions, regardless of their genre, and she has an affinity for history even as she watches it become outdated. During her four years of undergraduate study at Tufts University’s Museum School, Boillot said she spent countless hours training to be a darkroom printer; as she was working on her senior thesis, the printer was discontinued. When she headed to Duke University in 2012 to begin her MFA, Boillot, a film shooter, read an article about a number of post offices that were closing.

“I was kind of shocked,” she said. “I never thought about it growing up; they’re ubiquitous in our landscape and I never thought about them not existing.”

She was interested in the closings but hadn’t thought about creating a photography project about them; once she arrived at Duke, the parallel between the post offices and her love of film photography came into focus.

“I'm acutely aware of the transition from analog to digital,” she said. “I’m aware of these changes in my own practice but also how they’re shaping us as a society. Technology changes quickly and it defines the way we think and communicate and how we make art; that was my initial interest and part of why I stayed committed to this.”

Once in North Carolina, she started what would become the series “Post Script” by meeting up and tagging along with a letter carrier as she worked her route.  

Over the next two years, during spring and summer breaks, Boillot mapped out trips throughout the South that included the most threatened zip codes, sometimes using community organizers as guides, other times trying to find the locations on her own.

Boillot says her photographic influences often come from literature and music. For the series “Post Script” Eudora Welty became a muse, specifically her correspondence with William Maxwell and also her story Why I live at the P.O.

“I fell in love with her voice,” Boillot said. “Her characters sort of became shoes I could wear as I was exploring the new regions. … Why I live at the P.O. is perhaps the best creative work ever to unfold in the rural post office.”

As Boillot explored the 11 traditional Southern states, she discovered that although some people were saddened—or inconvenienced—by a post office closing, other people didn’t really care and were happy to “get the building back.” Her series became not only about the post offices themselves, but also about the geography and people who make up the area.

“For me, the post office became my introduction to the rural South, which is a region I fell in love with,” she said.

Boillot was strict with herself, shooting for one year and then spending the next working on a solo show, her graduate thesis and a self-published book of the work. After graduation, Boillot moved to her current home in Cumberland Gap, Tennessee, where they have “a post office, two coffee shops, two restaurants, and that’s it folks.”

Although she is currently working on finishing her new work on folk traditions, she said images of post offices continue to sneak into the work. Although her subjects and method of shooting is rapidly becoming part of history, Boillot feels her work is similar to the ways in which Welty’s words resonated with her.

“Reading her letters I realized photographs are letters, objects captured and distilled in one form that travel across time and space and are open to interpretation in someone else’s hands that take on a distinct meaning each time someone engages with them. Each time you take a picture, it’s like you’re sending off a message in a bottle.”

Boillot’s work will be shown at SUNY Old Westbury in Long Island from April 4 through May 5 and at the Half King Gallery in New York starting July 19.

Originally Posted on Slate by David Rosenberg

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