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Please Mr. Postman: It's Time To Go Away

By D. Dowd Muska

08/16/10

Ken Lay. Dennis Kozlowski. Franklin Raines. Rick Wagoner.

Cliff Clavin.

Like other massive enterprises that cooked their books, failed to understand D. Dowd Muska customers’ changing habits, or compensated their unionized employees at wildly above-market rates, the U.S. Postal Service is headed for a financial Armageddon. The USPS committed all three sins, and as a result, might soon be the next winner of the Too Big To Fail Award. The prize: A massive taxpayer bailout, of course.

A spring report by auditors from the Government Accountability Office, the investigative arm of Congress, laid out the scary specifics in characteristically blunt fashion: “USPS faces daunting financial losses that it projects could total over $238 billion through fiscal year 2020, unless it can substantially reduce its costs, including the size of its operations, networks, and workforce to reflect declining mail volume, and to generate new revenues.”

As a government-sponsored enterprise, the USPS isn’t in the business of cutting costs. Its four unions — the American Postal Workers Union (clerks), National Postal Mail Handlers Union, National Association of Letter Carriers (urban carriers), and National Rural Letter Carriers’ Association — see to that.

It’s a bit of an understatement to call postal unions’ collective-bargaining contracts “generous.” Employees pay a mere 18 percent of their healthcare premiums. Life insurance is gratis. Raises are automatic, not linked to measureable performance improvements. Overtime opportunities abound. Workers’ comp is sweet — 75 percent of salary, rather than the 66 percent given to private-sector employees. Contract provisions limit management’s ability to relocate workers, assign tasks outside an employee’s “craft,” and outsource to cheaper providers.

As if its workforce millstone weren’t heavy enough, the USPS’s business model, the GAO reports, is “not viable.” The service is losing customers at a dizzying rate. Mail volume was 213 billion pieces in fiscal year 2006. It dropped in each of the next three fiscal years, and by 2020, volume is projected to be 150 billion pieces. That’s the same amount of mail sent in 1986.

E-mail is destroying the USPS’s most profitable division: its monopoly, first-class mail. Volume peaked in fiscal year 2007, is now down bigtime, and is not expected to ever recover. (Here’s a headache-inducing exercise: Try to remember the last time you waited by your mailbox for an important letter or bill.) First-class mail’s decline is a huge problem, since it generates loads of revenue — enough to cover seven out of every 10 dollars the USPS spends on overhead.

The first-class mail division has 50 percent excess processing capacity, and the USPS has far too many retail outlets. But the GAO found that the service “has faced formidable resistance to facility closures and consolidations because of concerns about how these actions might affect jobs, service, employees, and communities.”

There you have it: the USPS’s core problem. On paper, it’s a business. In reality, it’s a “public” entity that’s subject to meddling by congress critters whenever a mob of angry, blue-haired constituents complains. Six-day service, which should have been ended long ago, is federal law. And politicians have micromanaged, and the USPS itself has regulated, when and how post offices can be closed.

The answer to the USPS’s looming financial implosion: Get the government out of the mail-delivery business.

Unions will squeal, but privatization is a realistic option. According to the Cato Institute’s Tad DeHaven, “Great Britain, Finland, New Zealand and Sweden … have given up on the government-enforced monopoly on mail delivery and have exposed their former monopoly mail providers to competition. Germany and the Netherlands, meanwhile, have privatized their main postal companies, which have subsequently expanded into foreign markets and diversified their businesses. And the 27 member nations of the European Union have agreed to end their mail monopolies in the near future.”

Even The Washington Post — that’s not a misprint, The Washington Post — argues that “privatization is probably the only long-term solution for the USPS.”

The federal government has clear authority to run a national postal service — it’s one of the legitimate powers enumerated in the U.S. Constitution’s widely ignored Article I, Section 8.

In the 21st century, most of the provisions in the nation’s founding document hold up well. Free speech, freedom of worship, the right to bear arms, checks and balances, due process, and the electoral college are as relevant and useful today as they were in the 18th century.

The same can’t be said for the post office. Something better’s come along. Sorry, Cliffy. We don’t need you — and we can’t afford you — anymore.

D. Dowd Muska is a writer, commentator and lecturer. He lives in Connecticut. Reach him through his website at www.dowdmuska.com.

Comments | To post a comment, you must register. | View our Comment FAQ.

JerCgirlchris (August 18, 2010 7:20PM EDT)

Dear Mr. Muske: Let me reach out a hand to you with hope you learn to research your articles before you write them. Come to Louisa, VA one day and we'll give you a crash couse in what it's like to deliver mail and work in an office. I'l even tell you why the Postal Service is in the shape it's in. Being a mouth piece isn't very becoming to anyone. I've read these talking points many times so I guess if this artile were a book report, you would be expelled. Give me a call if you want to take me up on the offer. 540-967-2828

Salem (August 16, 2010 11:44AM EDT)

I'm a career postal clerk, and I don't think I am "compensated . . . at wildly above-market rates"! I make less than $45,000 a year, and I handle shipments of diamonds and postal money orders for large amounts, as well as packages of Grandma's cookies on their way to soldiers overseas. Wildly overcompensated? I don't think so. I have worked every Christmas Eve in memory, and I'm at my post in spite of hurricanes, hailstorms, tornadoes, and blizzards.

By the way, the last time I went to my mailbox to retrieve an important letter or bill was today. I receive important mail every day of the week. Many, many people still do, and it's the duty of the US Postal Service to provide a means for them to receive their mail safely, cheaply, and efficiently. Why don't you check to see what it costs to mail a first-class letter in other industrialized countries? I think you'll be surprised.

Let's get our focus on creating good jobs with decent wages and benefits for all workers rather than criticizing those who earn decent pay. Our forebears in the USPS fought for a fair day's pay for a fair day's work, and we pay union dues each paycheck so we can continue to benefit from fair treatment.

do research before writing (August 16, 2010 9:...

mr dowd. you have no idea , the postal service is fine as long as they work out the pre funding that the congress put on the postal service in 2006 that was put there when they were making all kinds of money , ps email and other hand held devices were running strong in 2006 when the postal service delivered more mail than it had ever delivered

Drewk86a (August 16, 2010 6:25AM EDT)

Mr Muska, Had you done any research before you wrote trhis piece or did you simply reguritate the "company line" that the USPS has been feeding the media. First, the USPS is not a "governement-sponsored" entity. That implies that the USPS receives money from Congress to pay its operating expenses. That is not true. The USPS operate solely on revenue generated from postage sales. The only money Congress provides is a token payment to cover Military mail, Congressional mail, and mail for the blind, all of which are postage free.

Second, you say the USPS is next in line for a "massive taxpayer bailout"? Where do you get that from? The only "bailout" the USPS is seeking from Congress is relief from the $5+ billion payments the USPS is required to make each year to fund future retirees health care. A payment, I might add, that no other agency or corporation is required to make. This is not taxpayer money, it is USPS revenue which is handed over to Congress each year.

Third - Regarding the union contracts: Overtime is not guaranteed. The USPS decides when to offer overtime based on oeprational needs. The contracts have no control on overtime. Worker's Comp benefits are ascribed by the Department of Labor, not the contracts. USPS employees get the same OWCP benefits as other employees. The 75/66% ratio you describe is paid based on whether an employee has dependants. Employees with no dependants get 66% OWCP benefits. Employees with dependants get 75%. Again, this is determined, not by contracts, but by DOL regulations.

Fourth - First class mail volume is down. You say that first-class cpacity is exceeded by 50%. What does that even mean. There are no "First class only" processing plants in the USPS. Plants sort first class, periodicals, news, and stadard mail all in the same facility. To say that only 50% of potential capacity is being used for first class mail? So what? how much of the remaining 50% is used to process other classes of mail. The fact that "overtime abounds", as you say, indicates that plants do not have enough staffing to handle the volume. If there truly were excess capacity, there would be no need for overtime.

Fifth - Yes other countries have privatized their postal systems. Yes, they are still operating, despite being privatized. Did you bother to check what people in those countries PAY for postage? 80 cents, 90 cents how about over $1 per letter. The USPS offers the best services in the world at the lowest prices. You think privatization would keep costs down? Has it worked for the telephone industry, the cable industry, etc...

Your smear piece is just that. A blatant attempt to sway public opinion against postal workers. You lay all of the problems for the post offices woes at the feet of employees while ignoring the actual causes. Next time try to do a little research before you write. Maybe you won't embarass yourself as much!

mickeys66 (August 16, 2010 2:05AM EDT)

You sir are an idiot. Get the facts straight before writing your column. The 238 billion was a fictional number admitted to by Jack Potter himself. If you don't know who he is, that's the postmaster general. The overburdening of prefunding retirees healthcare and the massive growth in management over the past ten years is what's killing the post office. And by the way, the average carrier salary in the PO is $54,000/year. Could you get by on that? Don't criticize until you walk a mile in my shoes literally.

amnman (August 15, 2010 11:03PM EDT)

Funny how some of the quotes in this article are the same thing some of the Republicans are saying. Please... The Cato Institute? Can't you find some other organization that isn't biased?

As for Great Britain, Finland, New Zealand and Sweden.... yea they prizatized... at the expense of the public in those countries... GB's first class postal rates are more than twice the price the USPS charges. Others are much higher!

As for the union's raises... failed to mention they are tied to the CPI-W index. Last 18 months they have had 0...."ZERO"... raises. Were'd you get your information?

So if you write an article again... make sure you get your facts from more reliable sources.

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