The United States Postal Service began as a reasonable and effective communications solution, but like everything touched by the government, it has become an employment agency, a collective bargaining program and a massive defunct pension fund. It’s the pensions and benefits that make the Post Office unsustainable, but the same thing can be said about the public school system.
The difference is that the United States Postal Service is not just unsustainable, it’s of dubious relevance to the future. As personal and business communications continue to shift into the digital realm, the United States Postal Service exists as a way to cheaply ship packages, dump print spam in your mailbox and connect the unconnected. Not everyone in America has a computer or wants internet access, but the number of such people is going to continue dropping. And adding more personnel for an organization with no future is an unwise policy.
The United States Postal Service is still necessary, but it’s also a disaster area tied to a bad business model and a million ton weight of pensions. Just about everything has been tried from raising rates to closing branches, but the problem lies in pensions and benefits and those cannot be touched. Instead the United States Postal Service has cut Saturday mail service to save an extra 2 billion dollars to cover pre-retiree health benefits.
The biggest obstacle to postal reform, by far, is the problem of funding Congressionally mandated pre-retiree health benefits. Since 2006, the Post Office has been legally required to pre-fund health benefits for future retirees at a cost of around $5.5 billion a year. For the first time last year, it defaulted on its annual payment.
That’s obviously a temporary solution. There’s only so many days of mail service that you can cut before you cease effective operations.
With its ambiguous status kept at an arm’s length from the government, the USPS continues flailing away with no solutions. Some countries have managed to turn their postal services around, but most of them are smaller than the United States.
The Postal Service performs a valuable service connecting together disparate parts of rural America and perhaps it is those unprofitable but necessary portions of its service that should be considered its core, while shutting down and privatizing most of its services in urban and denser suburban areas where plenty of businesses like Staples or Fed Ex can easily add space to accommodate the basic functions of a post office counter.
Letter delivery cannot be entirely privatized by trying to dump it on Fed Ex or UPS, but dumping junk mail or at least charging for it at a much higher rate, might reduce letter deliveries and mail processing to their core functions, which is not delivering catalogs or solicitation letters.
Shutting down or entirely privatizing the postal service is unrealistic, but freezing hiring and trimming down its functions is only common sense.
The postal service is dying by necessity. Its future may be measured in decades, but barring some sort of national collapse, no one seriously thinks that it will be around in the 22nd century. And that means that we need to look at how to wind down its functions, concentrate them only in those areas that are necessary and plan for a post-post office future.
Either that or we can shove another 34 billion dollars down the hole.