For an already financially challenged United States Postal Service, the COVID-19 pandemic is dealing a heavy blow — one that calls for both short-term and long-term holistic leadership. By the USPS’s own reports, in mid-March, the organization began experiencing significant mail volume declines as a result of the pandemic’s impact on businesses that use the mail. While the USPS has reported significant increases in packages volumes since mid-March — a bright spot in terms of revenue — it could be short-lived.
Never has there been a more critical need for innovative and holistic leadership around the future of the Postal Service. I use the term “holistic” because there are forces that must work together in terms of leading the USPS both in the short and long term. Looking at “who’s on first” when it comes to USPS leadership can be a complicated exercise — there is no lack of political, regulatory, and appointed USPS “leaders.” So, who is responsible for leading the USPS into the future? Who can make what kinds of changes to help guide the USPS on the best path forward? Let’s take a brief look…
The Postmaster General. As the highest USPS employee position, the Postmaster General leads the USPS and its workforce in its daily operations as well as setting and implementing strategy; this individual is the executive “face” of the Postal Service. The Postmaster General is selected by the USPS Board of Governors, and at the time this article was written, it was just announced that the USPS Board has selected a new Postmaster General, Louis DeJoy.
The Postmaster General, like the CEO of a private company, has the ability to set policy and strategy for most facets of the USPS’ business, within its legislative and regulatory constraints. The Postmaster General takes direction from the Board of Governors on matters where the Board has authority.
The USPS Board of Governors. The USPS Board of Governors is designed to be comparable to a board of directors of a publicly held corporation. There are nine Governor positions, and each Governor is appointed by the President and confirmed by the Senate for the remainder of the 7-year term they are selected to fill. There can be no more than five of the nine Governors from the same political party. The Postmaster General and Deputy Postmaster General also serve on the Board but do not have all the same voting capabilities.
The Board directs the exercise of the powers of the Postal Service, directs and controls its expenditures, reviews its practices, conducts long-range planning, approves officer compensation and sets policies on all postal matters. The Board also takes up matters such as service standards and capital investments.
At the time this article was written, there were four seated Governors (three Republican and one Democrat), and the other five positions remain vacant (former Governor and Vice Chairman David Williams had just resigned from the Board). The Board still has a quorum (something it operated without for years as vacancies were not filled), and there are currently two Presidential nominations for Governors awaiting Senate confirmation.
Congress. Congress is responsible for crafting and implementing the laws that govern how the USPS operates. The requirement for the USPS to deliver mail six days per week, for example, is a law passed each year in Congress as part of broader legislation. The Postal Accountability Enhancement Act (2006) is the current set of comprehensive laws the USPS must operate under – and represented the first comprehensive postal reform bill passed by Congress since the 1970 Postal Reorganization Act (PRA).
Within Congress, there are two key committees charged with oversight of the USPS: the Homeland Security and Government Affairs Committee (HSGAC) in the Senate, and the House Committee on Oversight and Reform. These committees are where most postal legislation is worked on, then moved to the full House/Senate for vote and consensus, then ultimately to the President to sign into law.
In addition to these two key committees, Congress utilizes the Government Accountability Office (GAO) to conduct research and provide information and recommendations on many areas, including the Postal Service. Several times, the GAO has placed the USPS on its high-risk agency list (where it remains today), and has conducted many studies on aspects of the Postal Service.
The President. Starting at the top, the President has power over the USPS’s destiny in some ways. The President can issue Executive Orders, or veto legislation that can impact the laws governing the Postal Service. The most recent example of a Presidential Executive Order related to the USPS was the 2018 order establishing a Presidential Task Force on the Postal Service, which resulted in a December 2018 report, “United States Postal System: A Sustainable Path Forward.” An example of how the President’s veto powers can impact the USPS is that he reportedly kept the USPS from being included in the CARES stimulus legislation, threatening a veto if the USPS was included.
The Postal Regulatory Commission (PRC). The role of the Postal Regulatory Commission (PRC) is not an organizational leadership role, but a regulatory oversight role. But through its role, the PRC can approve or deny requests from the USPS around changes to its products/services, postage prices, and other areas key to its business. And the PRC, in conducting its statutorily required 10-year review of the USPS’s rate cap system, has taken the position that it is within its powers to make significant revisions to the rate system (an ongoing proceeding currently before the PRC), which could have significant impact on the USPS’s policy, pricing, and regulatory strategies.
The PRC has five Commissioners nominated by the President and confirmed by the Senate. In 2019, three of the Commissioners met the end of their term and were replaced, so there are three relatively new Commissioners on the PRC.
So, Who’s on First?
The appointment of a new Postmaster General along with maintaining a quorum on the USPS Board of Governors provides an opportunity for innovative changes; there is a great deal that the USPS has the authority to do with support from its Board that does not require Congressional or regulatory change. There are cost-cutting measures and revenue building opportunities that can and should be pursued. The new Postmaster General, Louis DeJoy, brings experience in the postal and logistics sector, as well as an entrepreneurial business background, and is politically connected.
To address legislative changes needed to improve the USPS’ long term financial condition (e.g., lifting the retirement health benefits pre-funding requirement, maintain the existing regulatory price cap over monopoly products, etc.), Congress must act. If long-term changes are needed in the USPS’s business model, that also falls to Congress. But it requires a bipartisan effort in Congress with support from the Administration to move any comprehensive postal reform forward. At the time this article was written, the GAO had just published its latest work on the USPS in response to Congressional request. The report, “U.S. POSTAL SERVICE: Congressional Action Is Essential to Enable a Sustainable Business Model,” provides research and information on issues related to the USPS business model and makes recommendations to Congress on key areas it should consider.
In this writer’s opinion, the likelihood that Congress will work on and pass comprehensive legislative postal reform in 2020 – a Presidential election year – is low. Congress may prefer to give the new Postmaster General the opportunity to assess the organization with fresh eyes (and undoubtedly some USPS organizational changes, since Louis DeJoy is only the fifth Postmaster General in history to come from the private sector, and each of those Postmaster Generals made significant changes to the USPS’ organizational structure and executives). Congress also has a host of larger issues it is dealing with for the remainder of 2020 — such as the economy.
What About the Impact on the USPS from the Pandemic?
At the time this article was written, the USPS had communicated to the White House that it was likely to run short of operating cash by the fall of 2020 unless it received stimulus funds (or by April 2021 if it were able to meet the Treasury’s terms to borrow the additional $10 billion loan authority granted the USPS in the CARES stimulus package).
The USPS has seen significant decline in mail volumes as a result of the pandemic and anticipates that trend to continue post-pandemic, particularly assuming that the US will enter a recession similar or worse than the 2008 recession, during and after which the USPS said it experienced a permanent 20% loss of mail volume. The USPS has told Congress it predicts a 25% permanent mail volume loss going forward as a result of the pandemic and another recession.
But even the USPS is quick to point out that there are many unknown factors looking out the next one to two years, including how long the pandemic will last and its impact on mail, whether the boon that the USPS and other carriers are seeing in packages volume will continue and for how long, whether the USPS is provided with Congressional aid, and more.
These are tough times for the more than seven million employees in the larger mailing industry – many of which are dependent on the USPS, but there is still hope that the Postal Service piece of the larger supply chain (and the businesses that depend on a strong USPS) can come through the impacts of the pandemic and out the other side.
I’ve always been accused of perhaps being too optimistic in life (is there such a thing?) but I’ve seen the mailing industry come through some very tough times. It is a tough, resilient, and adaptable industry with a great deal of passion and innovative thinking that can find opportunities in challenges and adapt to the “new normals” that the next few years may bring. It is my hope that a new Postmaster General, supported by an active Board of Governors, can make innovative changes that will help reduce the USPS’s costs and help build new revenue sources as well as supporting existing profitable products and services, to see the mailing industry through the next couple of years, and that Congress will take up consideration of the longer term changes in the USPS’s business model in a thoughtful and measured way once the crisis of the pandemic is behind us.