2013 December 12 Thursday
Big Canada Post Office Restructuring
Canada is ahead of America in moving to make needed cutbacks in its postal service. The shift to online bill pay and email have drastically cut demand for first class postal delivery. The Canadian postal service is going to implement community mailboxes in place of home delivery for 5 million households. The community mailboxes, also known as cluster mailboxes cut delivery costs more than in half. The US Postal Service wants to use more of the cluster mailboxes too. But
In the United States the US Postal Service is running massive deficits that will require a $50 billion taxpayer bail-out if it is not allowed to do radical restructuring. It needs to escape union contracts that block some of the restructuring.
Government mismanagement of post offices serves as a useful reminder of why governments should play as few roles as possible.
By Randall Parker at 2013 December 12 09:06 PM
The USPS is the world's best postal service, and it routinely posted a profit until it was forced to prefund its healtcare obligations out to absurd lengths (past 2060 now). The money isn't even entirely used for these obligations; just as with Social Security, Congress gladly appropriates these funds for general revenues in order to lower the federal deficit.
The radical restructurings you repeatedly suggest are not needed. The USPS will survive just fine by ending Saturday delivery, reducing its prefunding of healthcare obligations, and trimming its workforce (hint: 30% of employees are "diverse").
I don't know how much time you've spent in other countries, but the mail really stinks in most other countries. Home delivery is less frequent, home pickups unheard of, post offices less common, and rates much higher. This poor postal service has been a feature in Sweden for instance since the 1990s, before e-mail and online bill pay really gutted demand for what we call first-class mail (although no one has paid bills by mail since the early 1980s in Northern Europe). My 88 year old grandmother has to walk a mile just to mail a simple letter.
I notice that the Post Office like to talk about those "health obligations" but rarely bring up hourly salaries, which seem much higher than in the non-unionized private sector. If wages were pushed down closer to Walmart levels while avoiding the pure profit maximization, they could then have more work-hours spent (and paid for) delivering on Saturdays, delivering to homes etc for the same amount of money.
Now, I don't personally consider more such "make work" an inherently good thing from operational standpoint, but at least it would allow for more paid work for more people, i.e. a decent blue collar jobs program. A fine replacement for the current feather-bedding and loyalty-buying program for minorities and other chosen few fortunate to be well-paid members of the postal union.
You guys do understand that postal services are one of the essential duties of the US government. In America, mail delivery is a right. It is part of the US code.
An authorization to engage in an activity is not a right or an obligation. What the constitution says (from the USPS site btw):
In June 1788, the ninth state ratified the Constitution, which gave Congress the power “To establish Post Offices and post Roads” in Article I, Section 8. A year later, the Act of September 22, 1789 (1 Stat. 70), continued the Post Office and made the Postmaster General subject to the direction of the President. Four days later, President Washington appointed Samuel Osgood as the first Postmaster General under the Constitution. A population of almost four million was served by 75 Post Offices and about 2,400 miles of post roads.
The constitution does not require any level of postal service. It can be quite a small service with very high rates.
The postal union is pretending that the health prefunding for USPS is somehow unique and especially extreme. But it is being run (supposedly) like a business, not like a government agency. Businesses are supposed to prefund retirement costs. Also, the USPS lost billions more money in 2012 than its prefunding level for health care. In 2012 USPS lost $15.9 billion of which retiree health care amounted to $11.1 billion. The idea of prefunding is financially sound. Each year a worker works for the USPS the USPS retirement obligation for that person rises. Why shouldn't stamp costs for delivering mail this year provide the revenue this year for that eventual retirement?
Consider the alternative. Suppose the worker is going to retire 20 years from now. How can the 2033 USPS pay for that retiree's health care costs out of 2033 revenues? Those revenues will be smaller as the postal delivery will surely shrink a lot between now and then. Hardly any information will be delivered by physical mail in 2033, let alone 2043 when most of the retirees of 2033 will still be alive.