The Postal Service On The Precipice, Ctd


by Chris Bodenner

A reader continues the popular thread:

Contrary to your reader, the USPS has actually been quite innovative in providing ways to avoid waiting in long lines. Need to ship a package? Just weigh it at home, go to their website, and print out a shipping label. They'll even pick it up from your home at no charge. Don't have a scale? Go to the post office and use their automated stations where you can weigh your package and get printed postage right there. Need a shipping envelope? Just go to their website and they'll mail it to you. You can even go to most grocery stores to buy stamps and, quite frequently, ship packages vis USPS. Frankly the post office compete quite effectively in this market against UPS and FedEx.


Regarding the reader who wrote about postal employees "when you look at their average annual compensation ($64k/year), they are clearly not overpaid" … please.

Factor in their pension plans, which while I admit not knowing the precise details, know full well that defined benefit plans are dinosaurs and are becoming totally confined to the public sector, and you have a job with salary and benefits that few would describe as "clearly not overpaid". I don’t think that teachers in the US earn that same average wage. I’m not disparaging their jobs, but letter carriers aren’t exactly splitting atoms out there, and you don’t need a college degree to deliver mail.

And the cheapest rate you can find in other countries is 98 cents? Here in Canada the rate is 59 cents, and except for Saturday delivery (who cares?) is equally as fast and efficient, and we have a much sparser population density in a much larger country which makes delivering mail much more expensive. Is this really that hard of a problem to solve? Raise prices. Or is that a "tax increase" in the current political culture?


The primary reason USPS is facing catastrophic losses is because of a 2006 law that requires it to do something no other government agency or business is required to do: prepay future retirees benefits (and they can't raise rates to cover this cost), which means the agency which is required by law to "break even" is now forced to operate at an ever-increasing annual loss. Turns out USPS has actually overpaid into the federal retirement fund and the Obama administration is willing to grant them some relief in the 2012 budget, but (of course) the Tea Party wants to decimate it. Rep. Darrell Issa as an alternative has introduced legislation to create a commission to take over USPS to deal with its budget.

And as for the ridiculous notion that we could just get rid of the USPS and FedEx and UPS would pick up the slack, that suggestion could only have come from someone with no knowledge of US geography, population density, or the complexity of postal infrastructure. Just two years ago, when USPS tried to end service to the "the only backcountry air mail route remaining in the lower 48 states" that was already subcontracted to an aircraft company, the residents revolted and put a halt to that plan, since it's not like UPS or FedEx were salivating to take over that route.

Now you could propose we get rid of the uniform charges so that those in more dense and easily serviceable areas stop subsidizing those in costlier service areas. Great idea. The problem is it will NEVER happen when those costlier customers are overrepresented in the US Senate. And that will remain true if and when USPS is all or partially privatized – those responsible for that decision will make sure their constituents remain subsidized in some fashion. They wouldn't survive politically if they didn't.


It might interest some to compare this to how Sweden handled it in the '90s. I lived there at the time, and it was a major shift in how the postal service operated and was perceived, but overall it was a successful transition. A case study about it can be found in page 2-3 of this PDF document.

The Swedish postal service faced virtually identical problems that the USPS now faces. The government met the challenge by abandoned the monopoly on mail delivery and made the Swedish postal service a for-profit operation. They closed down a huge number of post offices and replaced them with franchises in gas stations, grocery stores, etc (according to the above PDF document, there are now 1,600 cashiers, compared to 16,000 in the early '90s). They shed about half the work force and opened up the market to competition.

It was not a particularly well-received transition, but it was by all accounts successful. I see absolutely no reason why the USPS could not do a similar transition. The idea that we should just close it down is both unrealistic and unnecessary – why throw out the baby with the bath water?

Another recommends a long Guardian piece about the privatization of mail in Europe.

(Photo: Tourists mail letters from a post office north of the Arctic Circle, Fort Yukon, Alaska. By W. Robert Moore/National Geographic/Getty Images)