This morning’s email brought a frantic request from a department chair in Boston anxiously awaiting a promotion review that was sent USPS from Connecticut a mere 9 days ago. I responded by sending the materials as pdfs via email (I am assuming the total transmission time could be measured in seconds). I am sure many of us can share similar anecdotes. They often lead us to puzzle as to what justification, if any, exists for the USPS.
There have been a few interesting pieces in the last few days on the plight of the USPS. The case for allowing the USPS to slip quietly into the night seems rather compelling. Drawing from a fine piece by Steven Greenhouse (NYT), the salient facts are as follows:
- In an age of electronic communications and private carriers like UPS and FedEx, the demand for the USPS’ services has fallen: “Mail volume has plummeted with the rise of e-mail, electronic bill-paying and a Web that makes everything from fashion catalogs to news instantly available. The system will handle an estimated 167 billion pieces of mail this fiscal year, down 22 percent from five years ago.”
- The USPS is far less efficient than its competitors: “Labor represents 80 percent of the agency’s expenses, compared with 53 percent at United Parcel Service and 32 percent at FedEx, its two biggest private competitors. Postal workers also receive more generous health benefits than most other federal employees.”
- The USPS has little flexibility to manage its costs: “the agency has had a tough time cutting its costs to match the revenue drop, with a history of labor contracts offering good health and pension benefits, underused post offices, and laws that restrict its ability to make basic business decisions, like reducing the frequency of deliveries.”
- The USPS cannot meet its existing contractual obligations to its workers: “the agency is so low on cash that it will not be able to make a $5.5 billion payment due this month [to fund the future health care costs of retirees] and may have to shut down entirely this winter unless Congress takes emergency action to stabilize its finances.”
Undoubtedly, if we told the story of a private firm that was encountering flagging demand, an uncompetitive cost structure, and an inability to make the necessary adjustments to become competitive, we would welcome its collapse. These are precisely the kids of enterprises that the market is supposed to eliminate. As the story notes, Postmaster General Donahoe is asking Congress to provide greater discretionary authority to address the costs (e.g., through layoffs, closing of offices, placing postal services through stores like Wal-Mart). But if the past is any guide, Congress will prove unwilling to allow the USPS the freedom to act like a private enterprise even if it is forced to compete with private enterprises.
I am trying in vain to think of a cogent argument for maintaining the USPS. Yes, it employees 653,000 people. But the justification must go beyond its payroll (even if we accepted the claim that maintaining government employment was valuable in a
recession recovery, one would still have to make the difficult argument that these 653,000 are somehow more deserving than another sample drawn from the long-term unemployed). At least in my household, if I could convince the letter carrier to deliver directly to the recycling bin, it would save me some time. If there is a physical object I need delivered, I turn first to UPS and FedEx—and they have never let me down. If it can be transformed into an electronic format and sent via email, all the better.
The key question: Is there any reason why we should not allow the USPS to pass into the history books?