of the American Postal Workers Union, Executive Vice President Conners of the National Association of Letter Carriers, and President Brown of the National Rural Letter Carriers Association for the testimony which will be provided here today.

The Postal Service, as we all know, is facing troubled times. Volume is falling, competing services are growing in number, and jobs are threatened. The very nature of the service is in flux. At this time, our goal should be to keep the human element in the Postal Service; it is the reason the U.S. Postal Service is the most efficient in the world.

If we are to retain this status, we must pay attention to the needs and concerns of those who work in those many installations across this Nation. Assuring decent treatment of individuals will create the high caliber service consumers expect.

If the service is now automated, should the ratemaking process be automated, too? This fixed cycle recommendation of the Joint Task Force on Postal Ratemaking deserves consideration, but not hasty action. I am certain today's witnesses will address this issue. Thank you again for calling this hearing, Mr. Chairman. I look forward to the proceedings.

Mr. HAYES. Thank you.

[The prepared statement of Hon. Barbara-Rose Collins follows:]

PREPARED STATEMENT OF HON. BARBARA-Rose Collins, a RepresentativE IN

CONGRESS FROM THE STATE OF MICHIGAN

I thank you, Mr. Chairman, for calling this oversight hearing, and I thank the witnesses, President Biller of the American Postal Workers Union, Executive Vice President Conners of the National Association of letter Carriers, and President Brown of the National Rural Letter Carriers Association for providing testimony here today.

The Postal Service, as we all know, is facing troubled times. Volume is falling, competing services are growing in number, and jobs are threatened. The very nature of the service is in flux.

Our goal should be to keep the human element in the Postal Service. This is the reason the U.S. Postal Service is the most efficient in the world. If we are to retain this status, we must pay attention to the needs and concerns of those who work in those many installations across this Nation. Assuring decent treatment of individuals will create the high caliber service consumers expect.

If the service is now automated, should the ratemaking process be automated, too? This fixed cycle recommendation of the Joint Task Force on Postal Ratemaking deserves consideration, but not hasty action. I am certain today's witnesses will address this issue.

Thank you again for calling this hearing, Mr. Chairman. I look forward to these proceedings.

Mr. HAYES. We have just been joined by Congressman Horton. Do you have an opening statement?

Mr. HORTON. Mr. Chairman, thank you, and it is very laudatory of our chairman, and I think these are very important hearings.

Mr. HAYES. I would like to begin the hearing with Mr. Moe Biller, president of the American Postal Workers Union, and you may, if you so desire, just deal with the highlights of your statement, or whichever way you want to do it. If you want to do it in its entirety, you are at liberty to do so.

STATEMENT OF MOE BILLER, PRESIDENT, AMERICAN POSTAL WORKERS UNION; ACCOMPANIED BY WILLIAM BURRUS, EXECUTIVE VICE PRESIDENT; SUSAN CATLER, COUNSEL; AND JOE POPKIN, CONSULTANT

Mr. BILLER. My name is Moe Biller, president of the American Postal Workers Union. At my right is William Burrus, executive vice president, and on my left is counsel, Susan Catler, and to the left of Susan Catler is consultant Dr. Joel Popkin, formerly Deputy Director of the Bureau of Labor Statistics.

I will try to be brief. Some of it will be discombobulated because I was improperly instructed by a letter from the committee dated May 29, 1992, that this hearing would explore the recommendations of the Joint Postal Service Task Force/Postal Work Commission's Task Force on the ratemaking process. I did prepare testimony in response to that letter. I will not read from it, it focused on the June 1, 1992, report.

Now, I understand that it is intended to be a general oversight hearing and that all the testimony will address other topics. I would ask that the record be kept open so that at least I would be able to give some organized brief on the other items, which I will be touching on this morning.

Mr. HAYES. Without objection, please feel free to do so, and understand that your entire written testimony will be made a part of the record and you may proceed in such a way as you suggested.

Mr. BILLER. Just very briefly on the late task force's report, I just want to say that it indicates to me, and I will go over it very quickly, I am not reading the report, that it appears to me the USPS will lose flexibility.

What they are seeking is a quick fix when you had mismanagement by the Postal Service on the one hand and poor judgment by the Rate Commission on the other hand.

As a matter of fact, in looking at the figures for revenue data for 1991, while all advertising had gone down, in terms of revenues, the only ones that held their place were direct mail and the yellow pages. I think that fine-tuning may be the wrong answer and that will probably continue the problems of the system.

About 1 week ago, the Chairman of the Board of Governors created quite a stir in terms of discussing layoffs, and later the record had to be corrected, I understand. But, nevertheless, it has created quite a bit of concern and consternation.

In dealing particularly with mail processing, in 1991, in arbitration proceedings, the Postal Service succeeded in weakening the contractual no layoff protection for postal workers, and I suspect their motive was something that they knew and understood but, perhaps, obviously, did not publicize.

Despite the fact that the former Postmaster General kept saying in his frank talk newsletter that at no time would postal workers be laid off, and perhaps the arbitrator believed him, but I don't think any postal worker believes that anymore.

At the same time, the Postmaster has quite obviously made a decision he does not consider mail processing a fundamental duty of the U.S. Postal Service. The American Postal Workers Union was recently insulted by being invited to a meeting at postal headquar

ters to discuss the problems of alternate delivery systems. Nothing was said about alternative processing systems, even though the alternative processing systems are presently being contracted out to suck the lifeblood out of the Postal Service.

As a matter of fact, only yesterday I am told the Deputy Postmaster General went to kind of a party, a grand opening, at York, PA, where a facility of 2,000 mail processors doing data entry for the remote bar coding is being opened. It appears to us, postal management, without the consent of Congress, without legislation, is dismembering the U.S. Postal Service by contracting out remote bar code sorting. That is the first time that core mail processing has been contracted out.

Subsidizing pre-discount, pre-sort discount mails, which is a fact of life I am talking now about manual pre-sort. The Postal Service can do that for about three-tenths of a penny, and I believe presort costs about, has paid out about 4.2 cents for alleged cost avoidance. By now the Postal Service can do that stuff, but an industry has been set up and, obviously, people would rather see postal workers out on the street than do away with some industry which is now obsolete.

In terms of the big investment of the Postal Service and automation, $800 million was given away in international remail postage several years ago. The curtailing of window and lobby services are continuing, contracting out of motor vehicle routes without obtaining the lowest possible bids. And when I present the written testimony, I will be able to embellish much more on that.

I have just touched on the contracting out of bar codes of remote bar code sorting. About 20,000 workers of postal work is being contracted out to low-wage nonunion workers so that the Postal Service can avoid its obligations under the collective bargaining agreement.

They put on a show to say that in 1990 they made a preliminary decision and a year later a final decision, when it has now shown up that in 1989 they put out a policy statement on subcontracting, and it was clear that they were just covering up what they had planned from the beginning, to contract out postal work, core processing mail, particularly.

And even in dealing with it in its report and analysis, the analysis were faulty. It was based on higher paid workers, which they knew would not be the case. It is not only privatization, in our opinion, it is a form of union busting, and it is a disgrace that a Government agency is engaged in it. They are no better than the runaway shops that the labor laws outlawed decades ago.

Postal Service tried to hide behind the fact there is new technology here. But this work can and should be done in-house by postal workers under the union contract.

Dr. Popkin has made an analysis of this for us and you can question him on any part that you like. But, to us, it shows a total lack of professionalism. They talk of credibility of the Postal Service and yet come forward, this document surfaces after 3 years, and everybody makes some kind of a pretense that their heads have been somewhere else other than at the top of their necks.

In some ways their comparative analysis was flawed and rationale, as I said, was developed after the decision was made. First,

they made the decision, then they developed a rationale. It is almost like a kid who has a mathematical problem. Give the kid the answer first, then we will work backwards and figure it out. We will attempt to show how large the U.S. Postal Service assumed the volume of such work would be; large at least through the year 2005. Initially, one of the arguments on contracting out remote bar coding was that was going to fade away. Now, we are in 1992; they are talking about 1997. In the year 2000, 2005, well, I will be 90 something by then, but I am not sure that that is a short period of time or that is temporary. I can deal with much more of this, and will, when I give the revised testimony for the record on this.

They are ignoring the fact, also, that they have a new category of temporary employees, transitional employees, to fill temporary jobs. To the extent these jobs are temporary, which we dispute, they can still be filled by bargaining union employees, displaced by automation until permanent work can be found. By using transitional employees, our work could be done more efficiently.

As I said, the company that opened up in York, PA, also has a facility opening up in California, and what they have done is just given the work out. As a matter of fact, the Postal Service has paid for the equipment, bought the equipment. All they have got is a contractor-and I am not going to disparage contractors in this regard-but they have just got contractors who can deal with them in low wages.

We support automation. The American Postal Workers has never opposed it, doesn't oppose it even now, because you may as well go back to the old telephones or wipe out telephones or dial systems. It is here and here to stay, but we can do the work. As an incentive, of course, they pay now cost avoidance for pre-bar coded automated mail. That is fine, but, at the same time, they have invested somewhere between $5.5 billion and $8 billion, and the equipment is underutilized.

They cannot-that is why they don't get a return on investment. Just read the GAO report and you will find out what is wrong. More than that, it appears that Norma Pace, Chairperson of the Board of Governors, whatever criticism was made and I read you just for a minute from page 3 of her testimony, and she recognized it when she said, third, we will continue to search for ways to reduce capital outlays without compromising service or crippling essential projects.

So she recognizes what is happening. They have gone on what they consider a fast track, but, at the same time, they are not getting anything back because they have mishandled that.

I would point out the Postal Rate Commission, in our opinion, and that was the opinion of the Postmaster General, too, and we don't always disagree, once in 2 years we can agree on something, that the 29 cent postage stamp was absolute nonsense. Probably cost them more to handle it. So what they did, instead of giving the 30 cents where it belonged, and give a tremendous increase to the third-class mail, they have killed that volume. They have killed the volume on the other side.

And the present system that they are attempting to come up with is just a continuation of the old system to do more so. I hope

there will be no lawyers here who will be offended, but this will make quite a bit of business full time for lawyers in going through this all of the time.

Incidently, when I say the machinery and equipment is being underutilized, you have to understand productivity. We in the American Postal Workers Union are interested in productivity. We are interested in cooperation. We are not interested in being co-opted and we refuse, as a free trade union in the United States of America, to be co-opted.

As I will point out, when it comes to the need for cooperation and the new Postmaster General, we are prepared to do that, but we are not prepared to be set up. Now, they are attempting to cut our health benefits. That is in arbitration, I will not discuss it, but they are doing nothing other than that the large anti-union corporations have been doing over the last several years in our Nation, and those are things that have created chaos in labor-management relations, not just in the Postal Service but in the private sector. Motor vehicle routes subcontracting is an old abuse. I just want to spend a few minutes on it because of what they do. The system has been used by the Postal Service which permits manipulations by the contractor. Does not help the Postal Service, and it minimizes transportation costs. Union jobs are being lost to contractors who are manipulating the system to put large profits in their pockets at the expense of postal workers and the Postal Service.

Just to illustrate the point, in 1986, the union submitted data to the Postal Service which showed that union workers, working under the national agreement, could do the work on particular contracts for less than the contractor was charging. Instead of giving the work to the postal employees, and, in fact, the data were there, the Postal Service revised the route, changed the data, changed the rules in the middle. The union costs were still lower, but they declared that the margin was not great enough so the Postal Service refused to shift the work back from the contractor to the Postal workers.

Four years later, in 1990, that same contractor had doubled its charge for the contract. It is clear that the 1986 bid was a low-ball bid to beat the union and then the real charge was laid on. And who pays for that? The workers, the ratepayers, and the American people, and that was a disgrace.

Postal Service continues to be a dangerously stressful place to work. We have not been unsupportive of efforts the Postal Service has declared to eradicate violence. We have not met together with other organizations, for our own reasons, but we have met with postal officials. They still continue their authoritarian paramilitary attitude in contracting out work while threatening layoffs. That is a disgrace.

At the same time, they are opening up these contract places with remote bar coding. Postal workers can do that work. There is a big fanfare about laying off workers. Suddenly, they have to do a zero point in budget within 1 year when they have been playing around for a number of years. This is worse than a business-as-usual attitude during a very stressful time of rapid automation and change, which, of course, is traumatic for the individual workers.