2013 October 12 Saturday
US Postal Service Defaults On Retiree Health Care Fund Payment
The US Postal Service lost $16 billion in 2012. It just defaulted on a $5 billion payment to its retiree health care fund. It is basically bankrupt but gets to keep operating because it is a creation of the US government. The USPS symbolizes what is wrong with the USA: a government and a populace who want to live beyond their means. The debts of the USPS keep accumulating.
Without that flexibility to run its own affairs, innovate and raise revenue, Donahoe has said, the agency could require a taxpayer bailout of nearly $50 billion by 2017.
Congress is forcing the USPS to employ too many people. Why? One reason is the Congressional Black Caucus. The USPS is a big employer of blacks and gives them better paying jobs than most can get in the private sector. Another reason: Congressional reps who want to keep rural post offices open in their districts. Another reason: just plain
The continuing revolution in computing and communications technologies is gutting demand for first class mail delivery. I use stamps maybe 4 or 5 times a year. I occasionally go thru my (mostly unopened) mail and identify financial or other institutions to create an online account for just so that I can turn off their monthly and quarterly mailings.
Help cut down the size of the USPS, make the US economy more efficient, and save yourself time and effort. In a couple of previous posts I've collected together ways turn off junk mail solicitations. Go click thru and follow along to various sites and turn off the junk.
By Randall Parker at 2013 October 12 05:54 PM
One sensible money-saving idea I haven't seen being proposed is to make some residential deliveries Mon-Weds-Fri, and others Tue-Thu-Sat. Business accounts could be Mon-Fri or Mon-Sat, perhaps for an extra charge.
That would allow cutting the delivery work force about in half. Of course, per the original post, many "stakeholders" see that as a bug rather than as a money-saving feature.
Imagine the howls of protest by union and grievance-group leaderships. Most of whose mail-use habits have changed in the way that Randall describes, of course.
As with the steel, automobile, and airline industries (and Leftists in general), postal workers would rather destroy the institution they work for than admit that they are wrong or take a small hit in the wallet.
The USPS could probably be quite competitive if they were allowed to cut costs as needed. They already have the infrastructure in place - YOUR mailbox, paid for by YOU, but which they claim to own for THEIR exclusive use. Unlike UPS or FedEx, they can leave your Amazon purchase in your mailbox (if it fits) rather than at your doorstep. Many new subdivisions don't even come with traditional mailboxes, but instead have a single set of boxes for the whole neighborhood, and with lockboxes for the larger items.
Great point about who pays for the mailbox. Those central mailboxes for subdivision could be installed in older subdivisions as well. So there's great potential for big cost cutting.
Take a look at your mail this week and find source of mail you can shut off. I'd really like to shut it all off and have a dashboard that is an extension of Mint that tracks all my bills and issues with organizations.
Re: the costs, CNN posted this 3 months ago: http://money.cnn.com/2013/07/23/news/economy/postal-home-delivery/index.html
$353 per stop
$224 per stop for curbside mailboxes
$160 per stop for cluster mailboxes
When you're talking about 10s of millions of addresses, a minimum $64 per stop savings is enormous. If you converted every address to cluster box delivery you're probably saving $2-4 billion/year after the initial investment. If each box serves 50 homes and the boxes cost $3,000 to install they'd earn back their investment in the first year.
I had a friend in high school whose dad worked out of the home, and he received quite a lot of UPS and FedEx. The (very large) mailbox on their porch had a sign stating 'This box valid for FedEx, UPS, and US Mail,' or something to that effect. It worked for him. Technically I think his mailman could've refused to deliver to it, but I don't think he ever did. The sign was on it for years.
The USPS is lean and mean. It has cut over 200,000 jobs over the last decade. It receives no tax dollars. It delivers to ove 150 million addresses six days a week for the lowest price in the industialized world. In 2013 it turned a profit of over $300 millon. It has two FULLY funded pension plans. It pays its retiree health benefits. Its only problem is an unnecessary and ornerous Congressional mandate to prefund FUTURE retiree health benefits at a rate of $5.5 BILLION a year, enough to fund 75 years of retiree health benefits-for people not even born yet. There $50 billion of stamp payer money in there already. NO other agency is required to do this. The simple easy answer is to stop this requirement. Period. (See 2006 postal accountability and enhancement act)
BTW theUSPS delivers an enormous number of FedEx and UPS packages for them. They still turn a profit after paying the USPS. Tell you something about how efficient the USPS is?
Cindy, you make a valid point. A huge part of USPS's problems are due to Congressional meddling. Let's cut the USPS free and let it sink or swim on its own. The USPS should be allowed to act like a private business- cut jobs, end Saturday deliveries, close superfluous post offices, etc. A lot of the mail I receive isn't very important anyway. And, oh yes, end the USPS's enforced monopoly on mail delivery.
I may be the only one the US but I've never had any trouble with the post office. The lines are no longer than UPS and Fed Ex and their price seems reasonable to me. UPS and Fed Ex are much higher unless you have an account with them. I do believe we need a postal service to serve all the people in the US even if we have to subsidize it some for less easy to reach, low volume areas. We did without a national banking system for a lot longer than a postal service. If I had to choose between bankers and the postal service I think we'd save money getting rid of the bankers.
Those are some really big savings. Thanks for posting that. Wow. Throw in closing some rural post offices and end Saturday delivery and really big savings could be had.
Private companies are expected to pre-fund most of their retirement benefits. But in 2012 the USPS lost over 3 times as much of its health care retirement contribution anyway.
The USPS needs to shrink further. It needs to consolidate mailboxes. It needs to end Saturday service. It needs to close lots of post offices. The demand for 1st class mail will continue to go down as more stuff goes online. If it gets its cost down far enough maybe it could survive delivering parcels.