US Postal System "Near Collapse"

US Postal service is losing billions of pieces of mail to email and on-line bill paying, Groupon, LivingSocial, etc.

The Postal Union has a 'no layoff' clause.

The Postal workers have health care benefits that are not only far better than most in the private economy, but better than most government workers.

They are about to miss a large debt payment.

...

Their business and revenue is contracting, but their labor costs and benefits overhead remains fixed and high.

The Postal Service is another one of those half is half isn't Frankensteins; it is controlled/managed politically by Congress, but it is on its own financially, is not subsidized by the US Treasury.

Or, I should say, mismanaged.

There is a plan proposed to layoff 120,000 workers and close down 3500 locations, and eliminate Saturday delivery of mail. But of course, those layoffs are in direct conflict with the no layoff clause -recently negotiated-.

After all, 'the economy' needs jobs, jobs jobs. Even if they are unneeded jobs.

I have not been properly socialized, so I don't begin to understand the following basic question:

If they are handling far less mail...then why wouldn't they shut down locations and layoff workers?

Add all that up, and of course it is near collapse.

Like a tribe infected with a brain eating disease, why don't we do this to health care, too? Manage it politically -and- half subsidize it with a broken Treasury?

Bethlehem Steel, during the Depression -- on its own, not part of any government program -- had a policy of 'share the work.' Instead of laying workers off, they had a policy of more than one worker sharing the same job. Effectively, it made them part time workers. It kept workers in the game, trained, and current in their jobs--which is why Beth Steel did it. It also gave more of their workers some income. It allowed Bethlehem Steel to largely maintain a trained workforce in steel making and weather the Depression. It wasn't easy for the workers, it was a sacrifice, but it was something. It was also one of the reasons they were primed and ready to ramp up when WWII rolled around. Beth Steel did that 'selfishly' and it was win-win for workers and the company. It no doubt involved 'concessions' by the workforce, but it was the Depression, and workers were just glad to still have jobs, period even if they were half time jobs.

This also setup the excesses of the war contract years-- when the infinite subsidy of the war effort came along, workers demanded to be made whole, and were; Beth Steel management was told by the War Department to give them whatever was needed to maintain production, provided the money to do so, and management painlessly conceded whatever was demanded in the short term. But this level of wages and benefits established a new norm at Bethlehem Steel which ultimately could not be sustained in the 70s and 80s. However it made sense during the Depression.

This model doesn't directly apply to the US Postal Service-- there is no imaginable event on the horizon that is going to resuscitate the need to maintain a large Postal Service workforce as WWII did to Beth Steel. But what it can do is, buy time for postal workers to retrain for new careers, to transition to new industries or business efforts.

It will be interesting -- and sad-- to see how Congress manages this collapse. I suspect at most what we will hear is Maxine Waters or Barney Frank roostering on about 'we should have never privatized the Postal Service' or some such nonsense.

Similar to their curious characterization of those other Frankensteins, the GSEs/Fannie and Freddie.

You know, 'Capitalism did it!' in our mixed (managed by Congress) economies.

Well, capitalism did do it-- UPS, FED EXP, Groupon, ISPs, made technologically obsolete the pony express, and US Postal service for many correspondence. That is true.

And what socialism did in our 'mixed economies' was, create a crisis by placing artificial drag on the economies ability to react to change, with politically arrived at 'no layoff contracts' and similar public trough half is half isn't nonsense.

(Edited by Fred Bartlett on 9/05, 7:08am)

Post 1

Monday, September 5, 2011 - 8:23am

At the same time, decades of contractual promises made to unionized workers, including no-layoff clauses, are increasing the post office�s costs. Labor represents 80 percent of the agency�s expenses, compared with 53 percent at United Parcel Service and 32 percent at FedEx, its two biggest private competitors. Postal workers also receive more generous health benefits than most other federal employees. (source)

Post 2

Monday, September 5, 2011 - 11:54am

We have a golden opportunity, but only for a limited time. While we still own this 'private' enterprise, we need to put it up for sale. I know, it is losing money and who would want it? Well, there are lots and lots of people that love to get their hands on the rights to put stuff in your mail box, even if they don't get to have a monopoly on first class mail (that has to be repealed) - it is just a matter of price. Treat it like an auction, or set up an IPO and let the shares go. (Need to declare a bankruptcy first to clear the decks of the union contracts, old debt, and to layoff a big chunk of the work force). Apply proceeds to deficit and move on.

Hell, even if it were just sold for parts, it would bring in a nice chunk of change! (Then move on to Freddie and Fannie :-)

(Edited by Steve Wolfer on 9/05, 1:09pm)

Post 3

Monday, September 5, 2011 - 3:19pm

I had to consult an entry on the postal clause to understand that Congress could actually do what Steve Wolfer suggested without an amendment:

"The Clause has been construed to give Congress the enumerated power to designate mail routes and construct or designate post offices, with the implied authority to carry, deliver, and regulate the mails of the United States as a whole. An early controversy was whether Congress had the power to actually build post roads and post offices, or merely designate which lands and roads were to be used for this purpose, and to what extent that power could be delegated to the Postmaster General. The U.S. Supreme Court construed the power narrowly during the early part of the 19th century, holding that the power consisted mostly of designation of roads and sites, but gradually gave way later on, allowing appropriation of land for postal purposes."

So I suppose the Congress can simply "competitively contract" those responsibilities rather than undertake them as civil servant activities.

Post 4

Monday, September 5, 2011 - 4:16pm

The constitution is very simple and clear: Congress is empowered... "To establish Post Offices and post Roads".

The good news in that is that is not required. It does not say congress shall or must establish, but rather that it can.

There have been laws passed by congress and I'm not familiar with those, but what they've made they can unmake. There is no reason not to get government totally out of the mail delivery business. The same is true for mortgages - Fannie and Freddie should have all of its assets sold off and let private organizations step in fulfill the market demands now being served by these GSEs.

Post 5

Monday, September 5, 2011 - 6:05pm

An interesting point is that the Articles of Confederation explicitly gave the central government a postal monopoly, as the Constution did not:

The United States in Congress assembled shall also have the sole and exclusive right and power of regulating the alloy and value of coin struck by their own authority, or by that of the respective States -- fixing the standards of weights and measures throughout the United States -- regulating the trade and managing all affairs with the Indians, not members of any of the States, provided that the legislative right of any State within its own limits be not infringed or violated -- establishing or regulating post offices from one State to another, throughout all the United States, and exacting such postage on the papers passing through the same as may be requisite to defray the expenses of the said office -- appointing all officers of the land forces, in the service of the United States, excepting regimental officers -- appointing all the officers of the naval forces, and commissioning all officers whatever in the service of the United States -- making rules for the government and regulation of the said land and naval forces, and directing their operations.

(Article IX, emphasis added)

Post 6

Tuesday, September 6, 2011 - 4:44am

It survived the telegraph.
It survived the telephone.
It survived the fax.
It weathered the internet for 20 years.

It won't survive union benefits and gold plated retirement programs and left wing redistributive Nirvana.

The large debt payment facing the Postal service is a 5.5 billion trust fund payment to retiree health care benefit program. The are cash strapped, have reached their politically managed debt limit, are bleeding money to all these programs and protected jobs in a declining market, and of course...

one of the proposed political solutions to this collapse is a bail out by the US Treasury.

This unsightly tribal mess just keeps getting worse. Those born in this country in modern times are finding out that the core purpose of their lives is to work to bail out failing industries and maintain unneeded jobs in the economies, in a giant puddingheaded tribal race to the bottom.

We there yet?
(Edited by Fred Bartlett on 9/06, 4:46am)

Post 7

Tuesday, September 6, 2011 - 4:54am

In comparison...in 1966, the entire Medicare program was 3 billion dollars.

Since then, our population has barely doubled.

CPI/Inflation accounts for maybe a factor of 7.5.

By law, the postal service is forbidden from raising the price of postage by more than the rate of inflation...which is why a 6c stamp from the 60's is now only 44c.

Unfortunately there was no such law about raising the payroll or benefits costs, and reality ensued; this socialism stuff is brilliant.

If Congress had passed a similar law in the 60s saying that the increases in cost to the economies of the federal budget could not exceed the product of (inflation rate x population growth), then Obama's current budget would be 1500B, not pushing 3800B.

Post 8

Saturday, November 19, 2011 - 2:40pm

I have an idea for how to improve the post services. I believe that US Postal Service should introduce Virtual Post service with cutting edge technology to extend the current operation. Let me explain how it works in details:

1. US Postal Service sets up and owns an email exchange system. It only receives and sends emails within the system only normally. It is very fast and secure as emails don��t need to go out of the system. But email can be forwarded to wherever the owner has set up.

2. The email client can be an Internet based or a Windows application where enables people to view their mail everywhere.

3. The email service should be free for personal users but there are charges for businesses and advertisements.

4. Each residential address has a group email box and the email address will be linked to the residential home address. For example my family's group email box will be 12.newstreet.suburb.city.us@ email.uspost.us. Each person living in the residential address will have their own email address with passwords. The personal email address will be linked to the group email address. For example my email address will be john.blog.12.newstreet.suburb.city.us@email.uspost.us. All users in that group email box will view all incoming email headers only, which can be grouped by various orders. eMails cannot be opened by others if they don��t belong to them. The email is encrypted with the public key and private key.

5. The email box is monitoring by US Postal. If any emails remain in unopened or have not be forwarded for a period time, US Postal will contact that owner via SMS, Mobile phone and fixed Land line telephone etc. After that, if the owner still cannot be found. The sender will be notified. If people moves house, it will much easier to redirect emails to the new residential email box.
Everyone needs to apply for the email box. They also need to provide approved identity for security protection. They may get discount on their bills from companies, which may prefer to send an electronic invoice or statement to their customers such as gas or electricity bills, land tax or council charges etc. By doing these, those companies can ensure their customers to receive the mail, which will be securer than the currently mail system and reduce cost as well.
This is a comprehensive email system with other important tools and features around it, such as SMS notification, securer over those free email systems, junk mails firewall, mail management tools, document Tools and document storage etc.

Cheers

Post 9

Saturday, November 19, 2011 - 2:59pm

Daniel,

That seems like a good idea, and I would suggest that the first step would be to sell off the US Postal Services into private hands. Then they would be so much more open to new ideas that positively effect the bottom line, and would be so much more capable of effecting change.

Post 10

Saturday, November 19, 2011 - 5:51pm

Who is John Galt?

Sunday, November 20, 2011 - 4:40am

Fred:

This is the part that makes no sense to me ...

By law, the postal service is forbidden from raising the price of postage by more than the rate of inflation...which is why a 6c stamp from the 60's is now only 44c.

I can't remember the last time I used the USPS as a Sender. Probably Christmas cards a year ago. But to stick something in an envelope and have it carried across the country ... in 2 or 3 days ... by someone else ... for only 44 cents ... seems to me like one hell of a bargain.

Maybe I'm an outlier in thinking about it this way ... and I certainly don't say the above in defense of the Postal Service ... but, seriously, how can you NOT be swimming in debt when you (are forced to) undervalue the service you provide to this extent?

Is this just me again finally catching up to the obvious?

Post 12

Sunday, November 20, 2011 - 8:08am

I agree with steve, sell it off to a private company, in countries were they have privatized their postal service their efficiency goes up 30% and costs of operations usually drop 15-20% within the first 2 years of operation.

Of course if you become too good and produce REAL value for your customers the government will then accuse you of breaking anti trust laws for having the audacity of doing what they were more efficiently..

Post 13

Sunday, November 20, 2011 - 8:45am

Ken, it gets more efficient if you carry many letters at the same time.

Here is my idea:
1. Do not allow USPS any taxpayer money.
2. Do allow other carriers such as UPS and Fed-Ex to send letter sized packages at prices as low as USPS (currently illegal). Revoke other laws that give USPS a monopoly.

... USPS will be through. And I will happily receive less physical junk mail.

Post 14

Monday, November 21, 2011 - 12:33pm

Ken:

It is clearly an indictment of the concept of 'fixing costs.'

OTOH...why has it been so effortless for this nation to provide postal service for over 200 years...and yet in the modern era, a pending impossibility? I can't even get mail delivery to my office, for the last 20 years. I must drop off and pick up at the post office.

The competition from technology is not new. The postal service weathered the telegraph and telephone and even fax machine with little problem. And suddenly, with the benefit of modern technologies, the US Postal System is 'Near Collapse.'

The reason, I think, has more to do with the modern unbounded nature of benefits and total lack of limits on 'what we want from others.' It is the USPS pension and benefits structure that is driving it under, its concessions to its own workforce, who in theory are not wards of the state. But, that is what is being floated as the latest 'solution' to this problem -- yet more subsidy by the US Treasury.

There is no longer a bounds on what is reasonable to want from others. We are fully in A. Philip Randolph world now.

"At the Banquet Table of Nature there are no reserved seats. You get what you can take; you keep what you can hold."

... applied to national politics for what should have always simply been the necessary plumbing of state.

The atate plumbers, long unchecked, are and have been running hog wild.

Post 15

Monday, November 21, 2011 - 2:29pm