Postal Reform Bill Bodes Well For Periodicals Industry

According to at least some publishing industry groups and analysts, the postal reform bill introduced Wednesday in the U.S. Senate would be good for both the Postal Service and periodicals mailers.

The bipartisan bill, sponsored by senators Joe Lieberman, Susan Collins, Tom Carper and Scott Brown, was called “excellent” in a statement from MPA-The Association of Magazine Media, and greeted positively by the Postal Service itself, which in a press release thanked the bill’s sponsors for introducing legislation “to address critical Postal Service issues” while reasserting the need for long-term legislation to enable the organization to control costs.

The bill takes elements from bills previously introduced by Democrat Carper and Republican Collins. Its most important provision is a proposed return to the Postal Service of an estimated $6.9 billion dollar overpayment to the Federal Employees Retirement System. It also opens the Postal Service up to offering new services such as delivery of wine and beer, changes workers compensation and salary arbitration provisions, and—for now anyway—preserves 6-day delivery.

“[I’ve said that] to take the Collins and Carper bills and get the best of both of those would be the best thing for the postal service and the mailing industry, and apparently, with some little tweaks here and there, that is what they did,” postal industry consultant and Publishing Executive blogger Eddie Mayhew told Inbox. “I think it’s great.”

According to Mayhew, the bill would allow the Postal Service to use a portion of the $6.9 billion slated to be returned from the federal retirement fund to provide buyout and retirement incentives, with the goal of shedding 100,000 current employees. This could be done by increasing the retirement eligibility or offering cash incentives of up to $25,000 (the Postal Service has no mandatory retirement age).

More than half of the Postal Service’s work force will become eligible to retire over the next five years, Mayhew said. “This could save as much as $8 billion dollars by removing those employees and not replacing them. That’s close to what they are losing on an annual basis,” he said.

If a plan proposed by postal officials in August is implemented, such cuts would be accompanied by the closing of at least 250 processing and distribution centers around the country.

Several provisions of the bill could have a direct impact on periodicals mailers. Binding arbitration that includes automatic salary increases would be eliminated, which would help keep postal rate increases at or near Consumer Price Index (CPI) rates. Most important to periodicals mailers in the near term, however, is the preservation of six-day delivery.

The bill puts a two-year moratorium on the five-day delivery proposal to allow time for more studies to determine if it is really necessary in light of other cuts, and what the true impact of such a move would be. Mayhew said eliminating Saturday delivery could create complications for the Postal Service, such as a build up of undelivered mail over the weekend.

Periodicals mailers are faced with the threat of what Mayhew calls a “triple whammy.” In addition to the loss of a delivery day and closing of processing centers, a change in service standards planned for next year would delay the entry of periodicals class materials into the mailstream. He said delays caused by these changes would critically impact all periodicals, but especially national daily publications (such as The Wall Street Journal or Billboard), which as a result will shift more to digital or alternate delivery systems.