Congress Dawdles As Postal Service Nears Collapse

The U.S. Postal Service is the second largest civilian employer in the nation. Its 570,000-plus workers handle an average of 563 million pieces of mail a day — an average of 1,000 pieces per employee. Yet the agency is regularly an object of scorn.
Anti-government tirades can be counted on to cite the USPS as proof that government cannot do anything well, no matter that it operates independently of government, no matter that there is so little basis for complaint. People sneeringly refer to “snail mail”, never mind that this is physical mail that we ask be carried from one place to another, perhaps thousands of miles, and never mind that the USPS does so with remarkable speed — and for the absurdly low charge of only 44 cents for a 1st class letter mailed as far as from Florida to Alaska.

But the postal service’s real woes lie elsewhere. The growth of personal mail by Internet; of banks, brokerages, mutual funds and others badgering us to accept statement delivery by e-mail to save them money; of electronic bill paying promoted by banks; of credit card and home equity loan offerings that once arrived daily in our mailboxes but which disappeared in the recession – all have combined to cut postal volume by 20% from 2006 to 2010 (more profitable 1st class dropped 28%) and leave the postal service with $8 billion in losses for two straight years.

Independent consultants characterize the agency’s up-from-the-ranks top management as strangely optimistic about the future, as if a Congressional fix is all that is needed. In March, management inked an agreement with one of its unions representing 250,000 workers for a 3.5% raise, an extension of its no layoff policy, plus cost-of-living increases.

In marked contrast, the U.S. Government Accountability Office, asked by Congress for a report by end 2011 on the postal system’s outlook, found the situation so dire that it delivered its report 18 months early in April 2010. And yet Congress — most recently so absorbed in the showdown over the debt ceiling as to seem incapable of doing anything else — has failed to act on any of five bills meant to lift the burdens that it has imposed on the service. Meanwhile, the USPS has maxed out a $15 billion loan from the government and says it will run out of cash by year end.

Though nominally independent, the agency is boxed in, denied the ability to manage itself. On one side, the Postal Regulatory Commission decides whether it may raise postage rates to earn more revenue. On the other, Congress’s approval is needed to take measures to cut costs. Or to develop new revenue producing services, such as those in Europe. Then there’s the federal stricture forbids closing post offices for solely economic reasons. The postal agency wants to end Saturday delivery, which they say would save $3 billion a year, but that’s up to Congress, too. Most burdensome is the 2006 congressional bill that forces the agency to contribute $5.5 billion a year to the federal employee retirement fund – 100% advance funding for future retirees that is required of no other government agency.

The USPS says that this is overfunding and wants $75 billion already paid to be returned, which Darrell Issa (R-CA), chairman of the House oversight committee and author of one of the five bills, calls a “multi-billion dollar bailout funded by the taxpayers” — except it is the service’s own money. While Congress idled, the agency in June unilaterally discontinued the payments — $115 million every two weeks — to stave off insolvency.

The service proposes to shutter 3,653 post offices, mostly in rural America. The Wall Street Journal quoted

a former postal worker in the Hatchechubbee, AL, who said that the post office is a place where locals trade news about births and deaths and the occasional loose cow and it helps semi-illiterate customers pay their bills. Not hard to see why small town post offices don’t earn enough to pay for themselves.

That’s just the beginning. The USPS plans, across the next 10 years, to review fully 16,000 of its almost 32,000 post offices with an eye to closure. The service would then press to break its employment agreements to dismiss 120,000 workers and to manage its own retirement plan rather than contribute to the more costly government plan.

In place of closed post offices the agency would turn the sale of stamps and handling of mail over to local grocery stores, gas stations, etc., who are eager for the business. Aghast? Well, Europe did this long ago. Sweden runs only 12% of its post offices, Germany a mere 2%. Shopkeepers handle the mail. Free to engage in other businesses, Germany’s Deutsche Post bought DHL, a worldwide parcel delivery service like Federal Express. The result is that half its business is outside the country. Liberated to develop new ways to make money, unlike America’s postal service, Finland’s postal system offers e-mail service with the bonus of storing your e-mail in the cloud for 7 years. Switzerland will optionally scan your mail and deliver it electronically.

How are those European postal services making out? Why, just fine. They’re all profitable.