The USPS is in desperate financial straits. It expects a $7 billion shortfall this fiscal year, and, if it does nothing to change its business model, it will see a cumulative deficit of $238 billion over the next decade, according to a postal service projection. It’s been losing money every year since 2007.
That’s why Postmaster General John Potter has outlined several substantial changes to the way the nation’s largest civilian federal agency does business. In the past, Congress has balked at some of these proposals, such as five-day-a-week delivery. But the agency that handles nearly half of the world’s mail needs a freer hand to right itself – not just from lawmakers, but from its union workforce.
The basic problem for the postal service is that mail volume is plummeting in the Internet age. That’s unworkable for an agency that’s based on volume growth and that has a mandate of universal delivery. Whether it’s Nome, Alaska, or New York City, the postal service must carry out its mission – and to an ever-growing population.
The USPS has tried to adjust to the times. Ten years ago, it took 70 employees to sort 35,000 letters; today it takes two people, Mr. Potter wrote in The Washington Post last week. Since 2002, it’s cut $43 billion by consolidating operations, renegotiating supplier contracts, and reducing the workforce through attrition.
Stamp prices have increased over the last decade (33 percent), but the increase is in line with inflation, Potter maintains. Plus, he writes, private carriers raised prices by as much as 60 percent. (Compared with Europeans, Americans still enjoy a considerable bargain of 44 cents for a first-class stamp.)
But efficiencies and price increases have not kept pace with the steep drop in volume, made worse by the recession. That’s why the postman in chief also wants to restructure retirement health benefits payments for employees, break out of price constraints, offer new products, and move to more customer-friendly venues (grocery stores, for instance, and a greater Web presence).
Potter is not alone in his suggestions. The Government Accountability Office last year backed him up, stating that “no single change” will be enough to rescue the post office – which, by law, is required to cover its costs.
Congress should back Potter, too; the unions even more so. The cost of labor sticks out like an oversized letter. Compensation and benefits make up about 80 percent of USPS costs. Unionized postal workers are supposed to earn wages comparable to those of their private-sector competitors, but one study shows they get a 28 percent premium. Negotiations are coming and unions will have to show more flexibility if they want the post office to survive.
Interestingly, US postal officials reject the idea of privatizing the postal service. An argument can be made for privatization. For much of its history, universal delivery of newspapers and correspondence served to fulfill the mission of the post office to “bind the nation together.”
But do Americans really need binding through catalogs and credit-card pitches? This advertising is subsidized by the USPS monopoly on first-class mail. Shouldn’t that monopoly now be broken, and advertisers made to pay their own way and other businesses compete for first-class delivery?
Ah, but then what private company would deliver a birthday card to Nome, Alaska, at an affordable price to the sender? Who would make sure a retiree in coastal Maine gets his Social Security check? Indeed, while 66 percent of Americans say they can do without mail on Saturdays, 88 percent oppose closing the post office nearest them.
Even in this Internet age, it appears that the country is not yet ready to give up universal service. Maybe it will be in another decade. In the meantime, Potter’s suggestions deserve support.