PREPARED STATEMENT OF HON. CONSTANCE A. MORElla, a Representative FROM THE STATE OF MARYLAND

Mr. Chairman, thank you for permitting me this time to welcome the Board of Governors of the U.S. Postal Service.

I also take this opportunity to congratulate the Board of Governors for their selection of Postmaster General Marvin T. Runyon, Jr, who will be the newest member of the Board.

No sector in our country is untouched by the postal system; any change to postal rates, change of service, nondelivery of mail, Government checks which are delivered late, post office closing or placement of new post offices, et cetera, are issues that we as Members of Congress deal with on a daily basis. Your responsibilities are greater but you hold your positions in order to represent the public interest.

In reviewing your prepared remarks, Governor Pace, I am pleased to note that you will continue to assist the new Postmaster General in his efforts which include, customer focus, quality, employee participation and empowerment and also that you will concentrate on cost containment. Indeed, all these elements are necessary to continue to strive for excellence. I would, however, be remiss if I did not suggest to you that we must, as a Nation and as a Service, make concerted strides to assure that the U.S. Postal Service (USPS) is an equal opportunity employer. And second, that we guarantee a workplace for the employees that conforms with the Occupational Safety and Health Act. There has been a great deal of discussion lately about the carpal tunnel syndrome among postal employees; I hope that you will pass along to the appropriate department within the USPS that research and modification of the workplace is most necessary.

Mr. Chairman, again, I appreciate this opportunity to express a few of my concerns to the Board and I hope that we will have another term of cooperation and dialog.

Mrs. MORELLA. I want to welcome the Governors. Thank you very much, Chairwoman Pace, for your opening comments and I appreciate the work of the entire board. And indeed, I wanted to not repeat what had been said or laudatory comments about the work you have done but rather get into the heart of the issue. I am also interested in whether or not the board looks at equal employment opportunities. And you might want to comment on that if you would.

Second, the need for OSHA provisions to be enforced. In the latter, I am thinking of the number of people who have complained and suffered with the carpal tunnel syndrome. There have been a number of articles written about that. I wonder if you might comment on those two areas.

Ms. PACE. Yes, we do receive very regular reports on the equal opportunity, the minority complement in our labor force. We receive that not only for national performance figures; but also for regional figures. We look at that in depth, the position of women within specific jobs and within specific skills.

We also are very conscious of all of the basic requirements that are put on the service, certain requirements in terms of our labor hiring practices and all. We do take care of that.

On the carpal syndrome, one of our Governors has just come through with surgery on it. We are all instant experts on it now, but it is a problem. I know-I hear about it a lot in terms of repetitive activities that go on, and it seems that some people have claimed that their work has created that condition for them. It is never easy to justify that, but we have looked at it hard, and I think what I have heard is that the letter sorting machine might have been the biggest culprit because of the nature of that kind of work, maybe doing something like this constantly that could hurt you. Those are being phased out.

That is one of the benefits that we get from automation that is not necessarily volume related, but those machines are being phased out, and so we are very conscious of the complaint and we are looking at it very carefully, working with the unions too on that. We have changed some of our procedures, as we have discussed this with the unions, in order to prevent that from happening.

So to answer your question simply, yes, we do give it a lot of attention.

Mrs. MORELLA. Do you have any litigation pending on that very issue?

Ms. PACE. Not that I know of. Our legal counsel says no.

Mrs. MORELLA. Good. I hope you are doing the kinds of things that you set in depth to avoid that kind of threatening litigation which it seems some of the practices could certainly lead to. Does this information come to you for recommendations regularly or do you have to ask for it?

Ms. PACE. Certain information comes to us regularly. For example, the complement of minorities and the equal opportunity kinds of information, statistical information we request and get regularly.

Mrs. MORELLA. Including complaints that may be filed too? Do you know anything about those numbers?

Ms. PACE. Yes. We look them over and carefully discuss them and then what comes to us are really any major issues, you know. The board will only be concerned with major issues in the work force that we have to deal with.

Mrs. MORELLA. Thank you. But I wanted to point out also, it was brought to my attention that one of our local newspapers, this is on the Virginia side, and I don't know whether on my side it is the same thing, mail received after 9 o'clock in the evening will get the next day postmark.

Evidently the postal clerks are upset about this because there are businesses, small businesses particularly who need a certain postmark on their mail and who drop it into the mail at 9:05 and it is postmarked the next day, probably with the idea in mind of those overnight delivery standards that we scrutinize so closely. I wondered if you might want to comment on that.

Ms. PACE. I don't know, but I could certainly find out. I doubt that I don't know. I doubt that that would be the motivating factor. It may be in just the way we do it, certain rules that we have. But I really couldn't comment on that. I don't know. Does anyone else have any

Mr. WINTERS. That would just be terrible. Some businesses have to have documents mailed by a certain day.

Ms. PACE. If there is a legal issue here, yes.

Mrs. MORELLA. I would be glad to call it to your attention, give you the article as a matter of fact for a response to the committee. If it is happening out there, it may be happening in many, many other places throughout the country.

And then looking at the report which I must say I just recently had a chance to scrutinize, in linking it up with the testimony that you gave with regard to what Mr. Myers said about competing successfully in markets such as overnight letters and parcels where we

face direct competition, you want more latitude in the rate making, and then in this executive summary of the task force, it says the task force suggests that for these classes, which would be Express Mail, parcel post, heavy weight Priority Mail, the Postal Rate Commission presented in its rate recommendations bands of rates, constructed from the highest and lowest appropriate markups, leaving flexibility to the Postal Service to determine the actual rates for each subclass, and then it talks about consideration of the system of declining block rates.

Now, I am a neophyte so I just wondered if you might explain that idea. What extra abilities would that give you? Do you thinkwith probably not having a chance to study all of the recommendations, that this is what you need?

MS. PACE. The idea is that you would set a band-rather than a specific price, you would set a band based upon the way you allocate the cost to that particular class of mail, let's say it is Priority Mail, you would just have a band there. And then the Service would be permitted to price within that band on the low end or on the upper end of the band, depending upon our best business judgment as to what would provide the best overall.

Mrs. MORELLA. Like the airlines are doing right now?

Ms. PACE. Yes. What would provide the best overall revenue. Give us a certain amount of flexibility within a band that is controlled by the Postal Rate Commission so to speak, so that we would be conforming with the law that requires the Postal Rate Commission to understand how we are allocating our costs, but at the same time we would have some flexibility within that band that would permit us to be more aggressive in pricing for volume in certain cases.

Mrs. MORELLA. You would be able to do that how quickly? I mean, would it be you could suggest

Ms. PACE. Once the system is in place?

Mrs. MORELLA. Yes. What is your time frame on that?

MS. PACE. Well, I guess once the system is in place, I don't know. I don't know whether it is a question of weeks or months in which we would be able to observe where we could make the most-where we could get the best trade-off between higher volume and lower prices so we get the maximum benefit to our revenues.

The whole name of the game here is to keep our revenues up, and so we would want to make certain that we meet that requirement.

Ms. MORELLA. I think it is increasingly necessary, particularly with-I hate to use the words-fax machines and all of the other express mail competitors.

Ms. PACE. Absolutely.

Mrs. MORELLA. Thank you, very much. Thank you for the work you do. Thanks, Mr. Chairman.

Chairman CLAY. Mr. McCloskey.

Mr. MCCLOSKEY. Thank you very much, Mr. Chairman. And Governors, I appreciate you being here today. Just picking up on what Ms. Morella was getting to, about your comments, Madam Chairman, about ratemaking reform and demand pricing I think are very well taken.

I don't normally read dry reports in a weekend but I really enjoyed this one, maybe more than any I have ever read regarding the Postal Service pricing, the Postal Service's competitive environment this last weekend.

I am very excited about it, quite frankly, but do you see any possibility that the board and the new Postmaster General and staff could come to us soon? I have one or two possible drafts on different things myself in the area of ratemaking, but do you have a schedule or an agenda for a ratemaking reform, or a piece of legislation that we could talk about very soon if we get some consensus on it?

Ms. PACE. Well, our first effort would be to take those areas where we don't need legislation, such as the work of this task force, and get that implemented and see what we could do. Then picking up on the recommendation in the GAO report that we review once again those nine factors that have influenced rate making, we would be able to come back with suggested changes in legislation to correct what they see have been problems in helping us meet our growth potential.

But I think our first effort, Congressman McCloskey, would be to work with the existing task force recommendations.

Mr. MCCLOSKEY. I might say one thing and I hope I am not exaggerating. This GAO report is very well written and it is straightforward, but it is also, as the GAO must be, rather low key and not emotional. But if you really take all the implications of what the GAO is saying, particularly when they have high thread, medium thread and low thread of competition and trends and so forth, I think it is safe to say if we are not on top of this as a group, in effect, things went wrong over the next 10 years, not that it would be another S&L crisis, but unless this is attended to very soon, Mr. Chairman, it will be the end of the Postal Service as we know it. Ms. PACE. I agree with you.

Mr. MCCLOSKEY. That is what I am afraid of right now.

Ms. PACE. I agree with you wholeheartedly and I think one of the best things that could have happened to us is the GAO study because we had been making some of those claims and they sounded very self-serving. To have an outside organization do an independent study, and I agree with you, it is very well written and convincing, is helpful.

Mr. MCCLOSKEY. If you see what is happening in parcel post and the Express Mail, the lack of ability to increase and with the lack of pricing flexibility, and the third class situation now, the volumes are down.

Ms. PACE. That is right.

Mr. MCCLOSKEY. In the area of 6.5 percent and the other competition, the alternative delivering systems, the fax as you say, and that is a base for much of the present operation of the Postal Service which not everyone appreciates, but I would just appreciate it, if possible, if we try to look to that possibly this year, no later than next year.

Ms. PACE. I think what has happened to parcel post is very interesting, that through the ratemaking process, certainly our IPA study confirmed that the ratemaking process really contributed to our loss of volume in parcel post. Then when we practically lost it

all and the monopoly went the other way, a lot of inequities developed and now the business is coming back to us and here is an opportunity for us to really provide service to the American public at a good cost and we want to go through that window. We really want to do it.

Mr. MCCLOSKEY. Changing tracks for a moment, one figure that gets bandied about for post office employee management ratios is one manager for every eight craft employees, which is said to be exceedingly high in relation to all other businesses. Would you comment on that or do you have any ideas on that, Madam Chairman or anyone else on the Board?

Ms. PACE. I imagine that figure was obtained by taking the number of people we classify as supervisors and then dividing it into the number of nonsupervisory personnel and it might come out eight to one or something like that, but, in fact, we are a very site-specific and craft-specific type of organization.

So if you look at the specifics, you may see that one supervisor is taking care of 16 people in one location whereas in a small location, one supervisor may only have two.

So the average comes out to 8, but it is actually some supervisors are managing as many as 20 or even more people depending upon the size.

Mr. MCCLOSKEY. That is one of the areas obviously Mr. Runyon will be looking at, is quality in personnel areas.

Ms. PACE. In order to get the efficiencies we are seeking, absolutely right.

Mr. MCCLOSKEY. This will be my last observation or question, and sometimes we get accused of using anecdotal or ad hoc information, but there is a real lag in overall service right now. In central and southern Indiana and rather than being an anecdotal, much of the information is coming to me from postmasters and managers in the field at various locations, but we are getting reports of 6 days just to get across town in Bloomington, a town of 50,000.

When a lady whose credit union in Indianapolis heard that we were conducting a hearing in Bloomington in June, she wanted to beat her way to Bloomington to say that her mail is taking 8-10 days in Indianapolis and Marion County.

I have a little bit of information as to the causes of this particular type of problem or back up, but I might just offer the idea that the automation innovation and trends have been in effect for years and these service problems continue to exist.

And indeed when I was having coffee this morning in the House dining room, and the top House staffer that I was talking to, I doubt he even knows I am on the Postal Committee, he started talking about how the USPS just can't get it right. On his block, all his neighbor's mail winds up in his box.

I think that we are at a real stress point and it is not coming from just Indiana. My friend here in the District of Columbia area, for the good of everyone, I just hope someone is listening.

Ms. PACE. You are right. I mean, I think all of us get these complaints, and I know I for one don't think people are just picking on the service. I think they have had some unpleasant experience. All