Wednesday, January 28, 2009

Through Rain, Snow, Sleet, And Gloom Of Night, But Not Through Recession; U.S. Postal Service Weighs Delivery Cutback To Five Days Per Week

In testimony delivered to Congress on Wednesday January 28th, 2009, the postmaster general asked lawmakers to eliminate the requirement that the U.S. Postal Service deliver mail six days per week in order to reduce massive deficits. Media stories from CNN Money and Yahoo News.

Postmaster General John E. Potter explained to the Senate Homeland Security and Governmental Affairs subcommittee that due to dwindling mail volume and rising costs, the USPS 2008 deficit was $2.8 billion, and extrapolation of existing trends could result in a net loss of $6 billion or more during the 2009 fiscal year. Total mail volume was 202 billion items last year, over 9 billion less than the year before, the largest single volume drop in history. And, despite annual rate increases, 2009 could be the first year since 1946 that the actual amount of money collected by the post office declines. The full testimony by PMG Potter can be read HERE.

If the change happens, that doesn't necessarily mean an end to Saturday mail delivery. Previous post office studies have looked at the possibility of skipping some other day when mail flow is light, such as Tuesday.

USPS has sought to keep its entry-level monopoly service on first-class mail as affordable as possible. Increases in first-class postage, currently 41 cents, have been incremental and as infrequent as possible. Compared to many other commodities and services, first-class mail delivery remains a bargain. USPS has directed greater price hikes towards some of its more premium services, such as Priority and Express Mail. They've also jacked up the price of P.O. Box rentals considerably and consistently. USPS has also initiated a host of niche services, such as Delivery Confirmation, as part of their strategy to stem the tide of red ink. A complete list of USPS products and services can be viewed HERE.

USPS has also sought to stem rising personnel costs. They've reduced their overall labor force by 120,000 employees since 2002. The 2008 holiday period was the first time in my memory that the Postal Service in Alaska did not recruit what is called "Christmas Casuals". Casual employees are temporary employees normally hired by USPS to work during periods of peak mail volume, traditionally from Halloween through New Year's Day. They are strictly at-will employees, receiving no benefits, but are paid a decent hourly wage which, in Alaska, includes Alaska COLA. In addition, USPS has also asked veteran regular employees to consider early retirement, and has selectively avoided replacing veteran employees who leave USPS. Information on USPS employment available HERE.

Yet, according to the Philadelphia Daily News, not everyone with USPS has shared in the sacrifice. The USPS Board of Governors recently gave PMG Potter a performance bonus of $135,041, along with other compensation that more than tripled his $263,575 annual salary. Other top officers also received bonuses. This is one of the reasons why the American Postal Workers Union (APWU) is concerned about the impact upon the quality and quantity of service provided if USPS cuts its hours. Visit to find out how postal employees themselves feel about this issue (includes links to a discussion forum).

In earlier years, USPS sought to deal with rising costs by employing contractors to deliver mail as rural carriers. However, this initiative has not been without its problems. On January 15th, 2009, the Fairbanks Daily News-Miner broke a story about hundreds of mail thefts in the Fairbanks-North Star Borough area. Public comments posted to the story indicated considerable dissatisfaction not only with the security of residential mail boxes, but also with the quality of service offered by the contract rural carriers. The quality of rural mail delivery service seems to be quite uneven and inconsistent; while some rural carriers are indistinguishable from veteran career employees, others just go through the motions. One identified problem is that contractors, who are investigated and drug-tested like regular employees, are allowed to sub-contract to others to cover desired time off.

All this is bound to rekindle the debate over whether USPS should be permitted to continue its monopoly on first-class mail delivery, established by law. According to the PolicyBoy blog, "By law, the U.S. Postal Service has had a monopoly on delivering mail to mailboxes since 1934. Should private couriers like FedEx be able to compete? That could be a big mistake: the government’s highly trained mailmen work with the FBI and other agencies to weed out suspicious packages, prevent identity theft, and alert the public to consumer fraud — a layer of security that could be compromised by opening our mailboxes to hordes of private carriers".

I agree wholeheartedly. Throwing open first-class delivery to "competition" would compromise this essential national service. We can't afford to turn this over to a bunch of squabbling contractors. While I tend to oppose Federal bailouts in principle, I would rather bail out USPS, which at least provides a legitimate service, rather than a bunch of shyster bankers and mortgage parasites who use it to give themselves bonuses and create artificial money out of thin air.

But USPS cannot afford to compromise further on service; there are already too many complaints about substandard rural service. Consequently, it's time for USPS to bite the bullet and propose a real increase in first-class postage. A 50 cent stamp would still be a bargain - skip the piecemeal increases and go for a real increase that will give them the cash influx they need. If you can't afford 50 cents for a stamp, then you don't need to be sending mail.

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