United States Postal Service
Posted: March 5, 2010
The United States Postal Service this week unveiled a plan to avert a projected loss of $238 billion over the next 10 years. The proposal calls for the elimination of Saturday mail delivery, closing some postal branches, raising the cost of doing business and re-evaluating how it pays health benefits to retirees.
The federal government keeps insisting that the postal service is an independent business division; when, in fact, the operation borrowed $10 billion of taxpayers' money from the U.S. Treasury last year just to pay its bills. The fact is: The business model for the U.S. Postal Service is outdated. With the advent of the Internet and the ongoing recession, mail volume fell by nearly 26 billion pieces (16 percent) over the last six years and the entity will lose $3.8 billion in 2009 alone.
I have a number of friends who have been postal service employees for years. It's not their fault that their union was able to negotiate a provision whereby their employer would support a pre-funded health care account for future retirees instead of paying retirees health care benefits as needed. It's not the postal workers' fault that the government spent $4.8 million on a study to determine that mail volume will decline from 177 billion pieces in 2009 to 150 billion in 2020. (Anyone could have ball-parked that figure with the proper information at a more reasonable price).
Presently, the postal service has 36,500 retail branches, which is more than McDonald's, Starbucks, Walgreens and Walmart combined. The average branch office serves an average of 600 customers per week whereas the average grocery store has about 20,000 weekly customers. Maybe some post offices should be shifted into areas with high-traffic patterns since the federal government leases most of their post office buildings anyway.
Unfortunately, the only way things will improve for the postal service is through an Act of Congress. Currently, federal law bars the postal service from closing branches for economic reasons. In other words, any changes to the existing system needs Congressional approval. That means a committee will have to be formed to study the issue, solicit public input and then make a recommendation to lawmakers.
Under that scenario, the changes necessary to make the postal service a more viable financial entity will probably not take place for at least another two years. I am not sure if privatizing the postal service is the right answer, but I do know that if the operation were really run like a business, the necessary changes would have taken place years ago.