Posts Tagged ‘Postal Service Failure’

The last days of the U.S. Postal Service

April 9, 2013

I’ve always been a fan of the U.S. Postal Service.  Imagine being able to deliver a document from any point in the United States to any other point—say, from a village in Alaska to a retirement community in Florida—for a flat rate of 46 cents.   If this service didn’t exist, and a private carrier would offer to do it for $4.60, this would be regarded as a triumph of free enterprise.

But the U.S. Postal Service is dying.  It is not dying a natural death.  It is being euthanized by conservative Republicans in Congress with the silent consent of liberal Democrats.

fed_employees_us_budget_savings_chartRevenues and volume of mail are declining, but this is not the problem. The problem is a law enacted in 2006 which requires the Postal Service pre-fund retiree health benefits 75 years in advance, a requirement that no private company has to meet, and that requires the Postal Service to pay $5.5 billion into the Treasury every year.  The 2006 law also forbids the Postal Service to offer new products that would give it an “unfair or otherwise inappropriate competitive advantage.”

The Postal Service is required to (1) provide a minimum level of public service regardless of economics, (2) refrain from competing with private business and (3) earn a profit.  I would say: Pick any two.  Meeting all three requirements is a logical impossibility.

While the Postal Service is required to operate like a public business, it is forbidden to do the things that private businesses do.   Among the things that Congress has forbidden over the year is to offer bulk discounts to mailers, to advertise that its express mail rates are lower than United Parcel Service or Federal Express overnight rates, to provide public-use copiers in post offices, or to set up a service on-line service to pay bills.

At the same time the Postal Service is required (rightly) to provide a minimum level of service to the public.   Mail delivery is one of the core functions of government defined in the Constitution, and it is a necessity for many Americans.  As David Morris reported for AlterNet.

In rural areas, the local post office may be the only community gathering place remaining, a place to meet one’s neighbors and share truly local needs and news. In a nation where more than one in five votes are cast by mail and in some states mail ballots have to be received by the close of polls, closing post offices can significantly burden some groups.  In Nevada, for example, about half of the 27 Indian tribes rely heavily on the post office to register and to vote, and the closure of a post office will effectively strip them of that right.

Closing post offices and delaying the delivery of mail places a significant burden on the most vulnerable of our citizens.

William C. Snodgrass, owner of a USave Pharmacy in North Platte, Nebraska, talked about the end-of-next-day, first-class delivery to local areas.  His store mails hundreds of prescriptions a week to residents in mostly rural areas of the state that lack local pharmacies.  If first-class delivery were lengthened to three days and Saturday mail service also were suspended, a resident might not get a shipment mailed on Wednesday until the following week.

“A lot of people in these communities are 65 or 70 years old, and transportation is an issue for them,” said Snodgrass. “It’s impossible for many of my customers to drive 100 miles, especially in the winter, to get the medications they need.”

via AlterNet.

Currently the U.S. Postal Service is being managed like Eastman Kodak Co. in its last days—selling off assets, cutting back services, letting its work force shrink by attrition and squeezing more work out of existing employees.   This isn’t a strategy for growth or even survival.  It is an effort to postpone the inevitable.   But the problem is not with the Postal Service’s managers or its hard-working clerks and letter carriers.  The problem is with the constraints put on the Postal Service by Congress.

Why the drive to shut down the Postal Service?   It employs more than 500,000 people, second only to Walmart in the United States.  But unlike Walmart, they are union workers who get decent wages and health insurance.  From the standpoint of a certain type of employer, this is a bad example that should not be allowed, lest it spread.

The other factor is that the Postal Service owns 32,000 post offices, many of them on prime real estate, along with 461 distribution centers and 213,000 vehicles.  If the Postal Service is shut down, private owners will have a chance to acquire these assets at a bargain price.  [Added 4/11/13.  And the $326 billion in the USPS pension fund also will go to—someone.]

Click on the following links for more.

Do We Really Want to Live Without the Post Office?

Why You Should Be Outraged By What Is Being Done to Our Postal Service

Why We Must Rescue the Postal Service From the Brink of Death

If the Postal Service goes under…

February 19, 2013

Unless something changes, it is only a matter of time—maybe a very short time—before the U.S. Postal Service goes out of business.  The USPS has all the hallmarks of a failing business.  It is cutting back on service, letting employment fall by attrition, driving its remaining employees to work harder, and resorting to short-term expedients to keep going.

When and if the Postal Service fails, I predict the following things:

  • Winter-Weather-Ohio_Gree_20110201083920_640_480An uptick in the U.S. unemployment rate.  The U.S. Postal Service employed 528,458 people in 2012, the lowest number since 1978 and down from a peak of  797,795 in 1999.  For comparison, General Motors employed 91,000 before filing for bankruptcy.
  • Rate increases, service reductions or both from Federal Express or United Parcel Service.  Both companies rely on the USPS to fill gaps in their service.
  • A sell-off of the Postal Service’s assets—buildings, vehicles, computers and much else—at bargain rates.  The Postal Service doesn’t keep track of the market value of what it owns.  Its purchase cost for its land and buildings was $27 billion, but much of the its real estate holdings are in prime locations in the center of town, and undoubtedly worth many times the original price.

Postal CarrierMail delivery is one of the functions of government established by the U.S. Constitution.  There is no good reason why it can’t continue.  One problem is the mandate that the Postal Service fund the retirement benefits of employees 75 years in advance—some of whom may not be of working age before the USPS is defunct.  No private business would ever assume such a burden. While this mandate has been temporarily eased, the larger problem is that, although Congress in 1970 mandated that the Postal Service be self-supporting, it did not grant the Post Service’s managers the same authority that corporate managers have to set rates and determine what services to offer.  So it has a mandate to compete, but in handcuffs.

So-called conservative Republicans in Congress have along sought to abolish or privatize the Postal Service because they oppose public service on principle.   I give them credit for at least fighting for their principles, which is more than I can say for the majority of the so-called liberal Democrats, including President Obama, who do not stand up either for their principles or their core supporters.

Click on You Should Be Outraged By What Is Being Done to Our Postal Service for a fuller report by Dave Johnson for Alternet.