USPS in Disarray
The problems facing the United States Postal Service (USPS) are legion. On May 11, 2011 five USPS supervisors from Michigan and Ohio were charged with taking bribes consisting of cash, cars, drinks, and lap dances. In return, the supervisors directed vehicle maintenance work worth $13 million to a contractor. A manager of a postal vehicle center in Detroit received “thousands of dollars in drinks and lap dances at a local strip club, more than $8,000 in free work done on a relative’s truck, and a $3,000 paver patio installed in the manager’s backyard,” in addition to a weekly visit from a prostitute, paid for by the contractor.
The USPS also faces a multitude of financial problems. As Americans rely more heavily on electronic-based communications, the USPS business model becomes increasingly antiquated. Decreased demand has resulted in dwindling incomes; first class mail, which makes up more than half of USPS revenue, peaked in 2006, and fell 20 percent over the next four years. However, the USPS’ problems do not end here. With more than 600,000 career employees, the USPS ranks second only to Wal-Mart. However, 85 percent of USPS workers have the right to collective bargaining, which has resulted in an average salary of $83,000.
The USPS’ problems also extend to intergovernmental struggles. Congress has been staunchly opposed to closing postal facilities for the same reason they have been reticent to relinquish control over military bases – they are symbols of their influence on Capitol Hill. In 2009, USPS management tried to cut costs when it considered closing 3,000 postal outlets, but this number was reduced to 157 after complaints by members of Congress.
Under the current structure, it is difficult for the USPS to operate efficiently, let alone compete with the private sector. Finland, Great Britain, New Zealand, and Sweden have eliminated their government monopoly on mail service, and Germany and Holland have privatized their postal delivery services. The U.S. would benefit from similar measures. As President Obama stated on August 11, 2009, “If you think about it, UPS and FedEx are doing just fine. It’s the Post Office that’s always having problems.”
The Postal Service has never been run like a private business. If it were, it would have gone under long ago. But that does not mean that the USPS should avoid taking steps to prevent the continued hemorrhaging of red ink. One step that would allow the USPS to partially fix its problems is canceling Saturday delivery. Eliminating Saturday delivery is far from a sufficient long-term solution, but, by producing savings of $3.1 billion per year it would be an important step in reducing the risk of a taxpayer bailout in the future. It would also send the message that the USPS is more than just a jobs program.
The USPS continues to face staggering deficits. On April 22, 2010, Postmaster General John Potter announced the USPS will lose $238 billion over 10 years. The USPS lost $2.2 billion in the first quarter of 2011 after losing $8.5 billion in FY 2010, so it is well on the way to another $8 billion loss. The USPS must take bold steps to reduce its financial losses, and members of Congress should take the lead rather than stand in the way of reform.
