How to solve the Post Office’s problems

By Felix Salmon
September 6, 2011
Steven Greenhouse's article on the Post Office's woes all over its front page yesterday.

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I like the fact that the NYT splashed Steven Greenhouse’s article on the Post Office’s woes all over its front page yesterday. There’s not much new here, but it’s a huge and important story and the public is far too ignorant of it.

“The causes of the crisis are well known,” writes Greenhouse, “and immensely difficult to overcome.” This is true. And the big one — the secular shift from snail mail to email — is not something that Congress can do anything about. But just look at how Congress is tying the Post Office’s hands behind its back here — and not just by forcing it to pay $5.5 billion per year into a retiree healthcare fund.

The law also prevents the post office from raising postage fees faster than inflation…

In some countries, post offices double as banks or sell insurance or cellphones. In the United States, the postal service is barred from entering many areas…

The postal service is also asking Congress for permission to end Saturday delivery.

It seems to me that a significant part of the problem here lies with Congress and that a massive bout of deregulation could be just the solution that the Post Office is looking for. Congress is micromanaging the Post Office, telling it how much it can raise postage rates, telling it that it can’t offer financial services (despite its huge business in money orders), telling it that it can’t get into all manner of other businesses either and telling it that it has to deliver mail on Saturdays. Astonishingly, amid all these rules and regulations, the Post Office is losing billions of dollars.

I see a lot of scope for bipartisan agreement here — unshackle the Post Office so that it has a hope of serving the country indefinitely into the future. Republicans like deregulation, right?

The problem, I think, is that for all that Republicans like deregulation, they really hate the idea of a state-owned organization competing with the private sector. Of course, the Post Office does that already — it competes with FedEx and UPS. But the USPS, as a government-subsidized organization with thousands of locations nationwide and a massive reserve of public trust, could be a formidable competitor in all manner of different markets and none of the incumbents in those markets would welcome the competition.

Over the long term, however, I suspect that the only way to save the Post Office will be to allow it to move into financial services. There’s a lot of expertise in the rest of the world when it comes to the questions of how to set up and run a post bank. Meanwhile, banks in the U.S. are mistrusted and disliked and many people would love to be able to just bank at the Post Office instead.

It might be too late now to set up a post bank — but I doubt it. (This is still a country, after all, where most people still use paper checks.) There’s a window of opportunity here. Let’s grab it, before it’s too late.

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Comments
27 comments so far

You may be right in your solution, but not the problem. The Post Office is an ideal way for politicians to show something tangible to their constitutents, whether it’s an inner city substation within walking distance, or a post office to define the tiny downtown of a rural hamlet. Politicians are loathe to have a post office that ostensibly supports itself while also have it available as a vehicle of patronage.

Of course, your solution must of necessity require the 650,000 employees to take significant cuts in pay and especially benefits. In its current form, I doubt that the organization can survive as an independent entity, no matter what business it goes into.

Posted by Curmudgeon | Report as abusive

How to solve the Post Office’s problems? Shut it down and sell the routes. It’s beyond serviceable. In my neighborhood almost all get less than 2 stars.

“The only reason I gave this place two stars instead of one is because there is an automated box there that is typically more friendly and motivated than most of the staff.”

http://www.yelp.com/search?find_desc=pos t+office&ns=1&find_loc=60647
Do you really think anybody wants to have to have more interaction with this organization.

Posted by Bill.D | Report as abusive

The USPS has a problem in that its customer base is largely old people who still mail stuff. The way to solve this is to appeal to an audience of old people who still use paper checks.

Posted by johnhhaskell | Report as abusive

The only thing wrong with the Postal Service is a 2006 law that requires them to fund 75 yrs of pensions in 10 years. This excessive $5.5 Billion Dollar annual burden was placed by a congress purchased by FedEx and UPS. Why would any company need to front-load a pension plan for 75 years if retirement age is 65? Does the average postal worker live to 140 years of age? This is nonsense that was lobbied for by FedEx/UPS, and the american public should demand that this requirement be lifted.

Posted by combabus | Report as abusive

I work for the Post Office. They want to take over my health insurance and retirement account. If they can’t stop the waste and abuse going on in the system, how are they going to protect my retirement funds? I got an idea. Give postal employees the same health insurance and retirement system that congress has! I bet they will fix it then.

Posted by DevilDawg | Report as abusive

Suggest that post office accept electronic goods, cords, chargers etc and ship to recycling. Would be paid by manufacturers. Post office obviously is well set up to collect, ship and account for this, and recycling of electronics is another looming and persistent problem.

Posted by Commentasauris | Report as abusive

All the Postal Service needs is the ability to hike the rates that it charges FedEx and UPS to deliver their packages. FedEx and UPS have low-cost services that deliver the packages to the recipient’s post office and have the Postal Service deliver the package to the recipient. (The services are called FedEx SmartPost and UPS Mail Innovations.) This allows FedEx and UPS to outsource their unprofitable residential delivery operations to the Postal Service. If the Postal Service hikes the rates that it charges FedEx and UPS to deliver their packages, FedEx and UPS will pay the hiked rates, because they don’t want to deliver to residential areas.

Posted by ploeg | Report as abusive

Wow, you can still use paper cheques in America?

Posted by CDN_Rebel | Report as abusive

I have somewhat mixed feelings about the USPS. It has something of an odd position because it is the one business that the government is constitutionally mandated to be in. Yes, we’ve all experienced terrible service at the hands of the post office, especially if we’ve lived in New York. I don’t know about you, but most of the mail I still get is commercial in nature: catalogs, bills, junk mail, etc. I don’t think Fedex or UPS could deliver this stuff as cheaply as the post office does. Not that I would miss most of it if it went away.

But, while email has eroded the personal mail market, email is still not as universally accessible as the post office, which reaches virtually every household in the country. Which is precisely why the founders wrote it in. Of course, those who advocate eliminating the post office desire the privatization of the most profitable bits, and the cutting of the unprofitable bits, and of course do not care if that cuts some people out.

Posted by Moopheus | Report as abusive

Efficiency is going to enrich a few and impoverish the rest of us.

Posted by silliness | Report as abusive

If the Post Office were run like a business, it would patent your address and charge UPS and FedEx a steep royalty on every shipment.

Posted by v98max | Report as abusive

The idea of universal service seems to have been forgotten. Anyone ,anywhere in the country can have a letter in their box for one price. Fedex, UPS. will not do that.
There are some who would break up the Post Office. The cities would be sold quickly for the profit they could generate. But who would service rural America? No profit no service.
Congress has used the Post Office as a cash cow to make it’s balance sheet look better.
It should remove the prefunding issue that is choking the life out of it and allow it to
manage it self to keep serving America six days a week.

Posted by LCP17 | Report as abusive

As long as we accept the points of Moopheus and LCP17, and understand the USPS as a service the government intends to continue to provide, what’s the problem? The cost of the service is a blip on the gov’ts annual budget. The only reason it looks like an issue is because the USPS is not consolidated onto the federal budget.

The prefunding of the pension is just an intragovernmental accounting matter. It doesn’t change the “competitive landscape” with FedEx or UPS because the USPS’ rates aren’t set competitively.

And what’s the benefit to having the post office get into other businesses? Is there some shortage of basic financial service providers? That doesn’t seem to be one of our major problems at the moment.

Posted by FosterBoondog | Report as abusive

The problem is that the Post Office is not a government agency; or rather, it’s a quasi-government agency. Its budget is independent of the Federal government. It is charged with paying its own way, which it is no longer able to do. Because any changes to its operation (including rate hikes) have to be approved by Congress, Congress would like it both ways – for the organization to pay for itself, while also providing jobs and services beyond its ability to pay. Rather reminds one of the Federal budget in general, doesn’t it?

I doubt that Congress would go back to actively funding a postal service, and I also doubt it will be able to trim its services enough to pay for itself. My guess is that Congress will wait until the last minute, then raise its ability to borrow. In other words, yes, kick the can down the road.

Posted by Curmudgeon | Report as abusive

It’s a National disgrace they’ve waited this long to act! A prime example of why big government is the problem, not the answer! They’ll go postal on us!

Posted by DrJJJJ | Report as abusive

What Congress and people need to realize is that MILLIONS of small businesses RELY on the Postal Service for their business. I’m one of them. If the USPS goes under, MILLIONS of small business will simply fold because our profit margin is reliant on the affordable postage. I could not make a profit if I had to depend on Fed EX or UPS. This is HUGE problem for small businesses. Congress needs to WAKE UP and realize that not helping the USPS will truly sink the economy!!!!

Posted by mshare | Report as abusive

@mshare, you put your finger on the heart of the problem. Postage is affordable to you, but not to the Post Office. While pension/retired health care accounting is causing a near-term problem, the Post Office is also losing money on an operational basis. The possible solutions are limited – increased borrowing authority (kicking the can down the road), subsidies by government (won’t happen), fewer services, or higher prices. Ultimately one or more likely all of those (except subsidies) will happen.

Posted by Curmudgeon | Report as abusive

There is more than one problem at the post office.
1. There is no reason to allow private corporations UPS and Fedx to have market share. There corporate charters should be revoked. By partnering they take revenue away from the postal service

2. The post office and no other company should offer compensation in any form other than currency. That negates any need to estimate future liabilities. It also requires an employer to adequately compensate an employee to fund his own lifestyle.

3. Most of all the post office is mandated in the United States constitution. The governmental role is an enumerated power of the federal government. It is still and important part of our national infrastructure.

4. It must be run like a business and not like a teet being suckled by a non skilled class of employees. The over paid go postal.

Posted by Wigreve | Report as abusive

The serice I get from my local post office (Lake Forest Park, WA, 98155) is probably the BEST service I get from any organization/business/agency I deal with. When I am away on business assignments (often for 2-3 months at time) my letter carrier holds my mail for the entire time I’m gone even though he is only supposed to for 30 days. The people who work at the local post office are always friendly, helpful, and efficient, much more so than most other people I deal with.

Posted by mfw13 | Report as abusive

Our mail carriers have always been very polite, professional, and friendly. Those staffing the desk in the post office are less so (and lines are typically long), but I really have no complaints.

Mail delivery could be cut to 3 days a week, however, without loss. Most of the time there isn’t anything but junk anyways.

Posted by TFF | Report as abusive

There are probably a lot of post offices in low density areas in Tea Party states that are losing money.

It will be an interesting political battle to see how to not spend federal money keeping those rural and small town outposts open while blaming the post office problems on the big city liberals.

I know that here in Central New York, they could easily combine the three post offices closest to our house into one and it would have virtually no impact on our life.

Posted by ErnieD | Report as abusive

Very nicely placed. I can’t agree about allowing stamp costs to float; but just imagine the locational advantage of all those now unprofitable mom-and-pop post offices, when they can take and receive transactions. In many neighborhoods, 20-30 percent of the population don’t have bank access.

Posted by RonaldCalitri | Report as abusive

From what I understand the USPS get’s no tax payer money anymore to support its operations. So why does it have to get approval from Congress to make any changes?
We all know how long it takes Congress to do anything. Recently the Postmaster general went to Congress to plead his case for cuts. Such as closing Post offices and making other needed changes. But why can’t they just make the changes needed. After all I think everyone knows at least in part that the USPS needs to downsize and do it rapidly. You know every time I see a service that somehow has Government involvement it is always in trouble. Is the USPS not a poster child to how not to let Government control something as important as our Mail system. Its time to let the USPS operate like a business and make changes in order to stay in that business. Congress should not be the one’s to dictate the USPS operation.

Posted by jscott418 | Report as abusive

I started a petition on whitehouse.gov for Obama to address this.

http://wh.gov/4mY

Posted by fatwoman | Report as abusive

We have been trying to meet with the Post Office because we have a solution that would generate over $150 BILLION dollars over ten years in revenue without becoming a bank and without costing them a cent. But they are too busy closing offices to realize that they already have the best equipment and locations to serve a great entrepreneurial idea serving something everyone needs. How many jobs will be lost instead of using them to generate a profit? But they just ignore us and I have started six successful businesses. Those are truly deaf who will not hear.

Posted by payscan | Report as abusive

The post office, operating under many names over the history of the United States, was operated under government-subsidized, government-owned management until October 1, 1982. At that time, the organization became an entity completely seperate from the United States Government, yet controlled by Congress. Since its inception on October 1, 1982 the United States Postal Service hasn’t cost one cent of tax money or federal money or any other money, other than the proceeds gained through the sale of postage and delivery services.

Also in 1982, the Postal Service (through the approval of the Office of Personnel Management) began hiring new employees under the Federal Employees Retirement System (FERS), which drastically reduced pay and retirement benefits for its employees. The FERS retirement system is, essentially, a 401-K program for employees by any other name. Also in 1982, the health insurance benefits which had been offered to Civil Service postal workers were discontinued for new employees of USPS.

I understand that some in the public believe working for USPS brings with it enormous pay and health benefits with a massive, federal retirement. None of this is true. (This is not a criticism, please read on).

I began employment with USPS in the summer of 2001, and I can tell you that the pay and benefits are less than the pay and benefits I received for factory work while I was in college. (Again, not a criticism… please read on).

I make these points NOT to complain… I can honestly say that being a letter carrier is the most physically demanding, mind-racking work I have ever done in my life; AND I LOVE IT.

I say all this to point out that USPS, as far back as 1982, was planning diligently and working hard to be the most efficient, fastest, least-expensive postal entity in the world, truly “delivering” first class service. That legacy continues today. The United States Postal Service DOES operate as a business complete with financial reports, fiscal year budgets, retail business models and a significant customer focus. Believe me, if there are no sales of postage, there is no bailout or “gimme” program. The fuel which operates my CRV delivery vehicle is paid for with money from postage, as is everything else within USPS.

However, none of these efforts will matter at the end of the day if Congress does not allow USPS to function –completely– as a business. Universal service at competitive rates, six days a week, is possible. Believe me. But as long as Congress is holding the reigns as they now do, the Postal Service is on track to self-destruct under the weight of its own mandates.

It’s a lot like telling your dog to run faster, while you hold him in place with a leash. If our society wants this dog to run, Congress simply must make changes. They must stop using USPS as a cash cow (mail and package delivery is a huge business, folks) only to drain the coffers on September 30th of each year.

End the health care pre-funding mandate. Remove the mandate that USPS cannot make a profit. Allow the Service to enter into non-postal operations (such as banking and meter-reading services). -And watch that doggy run, and run, and run.

Posted by readyatthehelm | Report as abusive

Dear Consumer Advocate:
I am writing this letter to you because the email option on the USPS website is woefully inadequate to express my concerns and was unable to even locate the branch post office I had the difficulties with. My old branch, Elk Grove in CA, has long lines but they do have ALL of their service lines open to alleviate this situation. The new branch, Rancho Cordova on Olsen Drive also in CA, closes service windows and lets the customer line grow and grow and grow. But THIS is not my main complaint.

It began back in July when I sold my home and moved into a rental home in Mather, CA (95655). Prior to moving we filed a change of address at the Elk Grove branch. As we were moving in I met the mail carrier for the rental in Mather, on July 31. We met at the ‘gang’ mailbox and asked which slot was for 4209 Aubergine Way. He opened the box and said we could either buy a new lock from the post office or exchange a lock that we purchased elsewhere. We did not have a lock at the time, so he locked and closed the slot. He said we may not see him again since many different carriers shared this route and delivered on a varied schedule. This is route #5 in Mather, CA.

No luck in catching a carrier even though I left a note. On August 6, I went to the Ranch Cordova branch on Olsen. Long line, longer wait. I spoke with three attendants and one supervisor and explained my predicament. All four offered me a slip to ‘fill-out’ and required a $50 fee to get me a lock and key. I refused and explained what the carrier had told me. I either wanted a key or for them to have the carrier open the box so I could install my replacement. I was told NO by the supervisor. The legal owner either had the keys or would have to appear, ‘in-person’, to get a ‘free’ replacement set. I left with no keys, no mail….

In speaking with the owner later that evening, my wife was told that he had NO keys (he purchased the home as a foreclosure) but would find the deed. The next day I encountered a different postman at our mailbox, but he would not allow me to exchange locks. But he did give me lots of mail either addressed to me our forwarded to me (incidentally, I was told the post office had no such mail; a lie???). His name was John and he told me to take the envelope with the USPS forwarding address to the post office and I should have no problem in getting the keys. Fat chance….

I spoke with the same supervisor as the previous day. I gave him the envelope with the forwarding address and asked for the keys. He said the carrier was again wrong and offered me that ‘yellow’ slip again. This time I said NO!!! Bring on the supervisor’s supervisor. He told me I didn’t own the property and was not going to get the keys. I went ballistic. No profanity, but I was loud. I left after he threatened to call the police on me….

I have never in my long life been treated like this. Poor customer service is a major reason the USPS is going bankrupt. Even yearly postage increases and, it seems, false advertising will not save this sinking ship. May the USPS RIP!!!

Sincerely,

Albert Hagemyer

Posted by podbytheusps | Report as abusive
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