From the desk of Stephen Cabot: Angela Greiling Keane reported on Bloomberg News that the U. S. Postal Service negotiated a 4 ½ year contract with the American Postal Workers, which has 202,000 members. She quotes Representative Darrell Issa, a California Republican, as stating: “We have deep concerns that some of the provisions of the contract may in fact be the wrong direction, to less flexibility, less ability to trim the workforce and less ability to in the future make the kinds of investments we need to make.”

The new contract will not stem the tide of enormous losses; and it will certainly not lead to a renaissance of profitability for the postal service, which has suffered losses for the last five quarters. Its labor costs are a whopping 80% of its total budget, while labor costs for UPS are 69% of its operating budget, and 43% for the operating budget of FedEx, which is staffed by a combination of employees and independent contractors.

Until the postal service can bring its labor costs in line with private sector employers such as UPS and FedEx, it will continue to run huge billion-dollar deficits. The sorry state of the U. S. Postal Service is just another example of how public-sector unions drive companies into the ground. The goals of the governors of Ohio and Wisconsin should become the goals of a fiscally responsible federal government.

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From the desk of Stephen Cabot: United Parcel Service is waging a full-strength campaign to get the U S Congress to make sure that FedEx will be subject to the same onerous union rules as itself. According to an article in The Wall Street Journal, “House Transportation Chairman James Oberstar (D. Big Labor) last year slipped 230 words into a spending bill that would make it easier for the Teamsters to unionize FedEx. This ambush was included at the urging of UPS, which has been saddled with the Teamsters for decades and wants FedEx to feel its pain.” While UPS operates under the rules of the National Labor Relations Act, which makes the company vulnerable to strikes (e.g. a 15 day strike in1997), FedEx operates under the rules of the Railway Labor Act, which discourages strikes so that there will not be any “interruptions to commerce”

FedEx delivers most of its time-sensitive packages via air, and its customers choose its services because they expected rapid uninterrupted deliveries. UPS, by other means, delivers most of its packages by truck and customers understand that delivery may take a few days.

Having failed to have itself re-classified under the Railway Labor Act, UPS would now like to have FedEx made subject to the National Labor Relations Act, which would open the doors to Teamster organizers. And that’s a potentially large dues paying number of workers for the Union: there are 125,000 FedEx workers.

Imagine, for a moment, if FedEx were to be unionized and then experience slow downs or walk outs by Teamster-organized workers. Its business model would be utterly destroyed. And so UPS is intent on lobbying Congress to make FedEx subject to National Railway Act, thus opening the door to union organizers.

Congress should ignore the lobbying of UPS and adhere to the principles of a free market economy, and UPS should work to decertify its union rather than impose restrictions on its competition. The American economy works best when companies are free to engage in unhindered competition. The answer is not to shackle one’s competition; rather, the answer is to throw off one’s own shackles and engage in a free, open, and vibrant economy.

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