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February 25, 2012

Postal Implosion Gathers Force

The Postal Service death spiral continues. Delivery time is slowing, service is worsening, and postal rates keep going up. The WSJ reports that the USPS is planning cuts to more than 260 mail processing centers nationwide, which will eventually result in the loss of roughly 35,000 jobs. Oh, and it will need to charge five cents more to mail a letter.  (When I was a kid, it costs three cents to mail a first class letter, and same city delivery was often faster than it is today.)

This is what failure looks like: getting less and less done while sucking in more and more money. Yet Congress can’t help itself; led by Bernie Sanders it is trying to make a bad situation still worse:

Sen. Bernie Sanders (I., Vt.), who is pushing for legislative changes that would stop or delay mass closings of mail-processing centers, described the proposed closings as counterproductive. He and 26 other senators recently signed a letter to congressional sponsors of postal legislation seeking to prevent cuts to first-class-mail delivery.

Irrational, hang the cost mandates by legislators desperate to please rural constituents and labor unions make it harder to do what must be done. Overhaul of the USPS is being delayed, but it can’t be avoided. Internal estimates predict the postal service will be hemorrhaging $18.2 billion a year by 2015.  Efficient private carriers and technology like email and Skype have undermined certain USPS services faster than the aging behemoth has been able to adapt (something we’ve covered before).

The postal service is an example of where the blue model goes when it has jumped the shark. Old technology, expensive and unproductive labor, crushing pension and health care burdens for retirees plus insane congressional mandates that make sound management impossible: not even a monopoly on mail delivery can rescue an organization weighed down with these burdens.

Congress should spend more time passing laws to protect the public against the depraved greed of insider trading legislators and worry less about micromanaging institutions it doesn’t understand and can’t run.

And the country should be thinking about how we sell off the USPS to private investors while there is still something to sell.

Posted in Blue Social Model, Quick Takes
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  • Kenny

    The USPS “will eventually result in the loss of roughly 35,000 jobs.”

    That’s all?

    35,000 is only a drop in the bucket of what should and could be done.

  • Anthony

    WRM, how do chief stakeholders in USPS come to terms with delivery/service model in need of recasting (given varied interest)?

  • Anthony

    The cultural idea (public employment for surplus labor) undergirding the varied interests WRM may have run its course but a replacement (for postal implosion) entails economic dislocations that avoid policy discussion.

  • Otiose

    I read recently that the average compensation at the Post Office was $80,000/year and that says nothing about the generous benefits – health and retirement etc.

    Would it be rude to point out that if the average salary were cut in half and all other benefits trimmed proportionately with private compensation levels and packages that there would be no need to raise postage and/or cut service.

  • Andrew Allison

    Nobody in their right mind would buy the USPS given its cost structure and unfunded liabilities. It would have to go through bankruptcy first.
    The plan proposed by the so-called “management” of USPS, namely to increase first-class cost by 14% and delivery time by a day or two will simply convince anybody who is still putting stamps on envelopes to stop doing so. Probably best to just starve the beast to death. In the meantime, how about doing the obvious: in this day and age nobody needs daily delivery of snail mail. Instead of pussy-footing around with Saturday delivery, switch to every other day and get rid of half the carriers and their associated overhead. Sounds callous, I know, but the fact is that those jobs are toast anyway, it’s just a question of when.
    Then there’s the alternative carrier question: given the USPS claim that it’s doing last mile deliveries for UPS & FedEx, how come I see all three truck most days?
    A coherent system would have *all* non-premium, i.e., “ground delivery” delivered by the USPS (every other day)and all premium (next-day) deliveries done by those set up to do so. It’s going to happen eventually, it’s just (like Greece) a question of how much money gets poured into the rat-hole first.

  • Bart Hall (Kansas, USA)

    Hmmm. Five cents more for a letter. Like the last four cents I presume it’s for STORAGE.

  • Jacksonian Libertarian

    Like I have said many times before, “Monopolies lack the feedback of competition, that forces continuous improvements in Quality, Service, and Price, in the free enterprise system.” Based on this fact, the US Postal Service is incapable of changing on it’s own, and the Government Monopoly is also incapable of making improvements to the USPS, because it suffers from the same lack of feedback from competition.

  • MassJim

    The postal service should be just shut down and the services provided by private companies. I say this in frustration after stopping off in the post office in South Dartmouth, Ma Zip 02748 and even though I was in a hurry having to wait in line while the clerk and a customer rehashed the Super Bowl Game. Amazing!

  • JimB

    Brings up the simile with harness makers and buggy whip entrepreneurs.

    We oughta just bag the whole thing, and let Fedex and UPS take over the job.

  • gbm

    The post office is in trouble because they con not deliver a letter from 200 miles away over night.

  • George B

    I agree with both Andrew and Otiose: Switch to alternate day delivery AND cut wages to market levels. I don’t bother to check my mailbox every day because nothing time sensitive is sent by mail. I also notice that my local UPS driver is fit while my USPS driver is fat. Easy to see who is physically working hard making deliveries and who is just going through the motions.

  • Attila

    The irony is, all the mail that is shipped across country is predominantly by air, especially 1st Class letters and, of course, USPS’s overnight/second-day services. Guess who does that on contract with the USPS? Yep…FedEx and UPS.

    Many’s the time I’ve watched the cans slide into my airplane full of those white USPS basket-like letter containers you see in the post office. If they didn’t use us, the mail would STOP.

  • Some.dude

    Why does the mailman come to my house? There are 3 mailmen in my neighboorhood every day. To reduce overhead everyone house should have a lock box at a convenience store and the mail goes there.

    Some mailmen still walk door to door which is a total waste of their time. Closing distribution centers instead of laying off 99% of the mailmen only delays the inevitable.

  • Narniaman

    Doesn’t the constitution require the government to provide a postal system?

    If that’s the case. . . how would they be able to privatize it?

  • http://rhhardin.blogspot.com rhhardin

    It’s still true today that USPS packages always beat UPS packages, at least to Central Ohio. It’s always 2 days versus a up to a week, from every part of the country.

  • USDOT guy

    Years ago, when I was in college, a letter cost six cents to mail (raised to eight while I was still a student). At the same time, USPS declared they would stop delivering unstamped mail “postage due”. Instead, they would return unstamped mail to sender. I thought about that a bit, and realized it was a classic case of bureaucratic insanity. So I dutifully wrote a letter to a friend, addressed it to myself, left it unstamped, and dropped it in a Washington, DC mail boz. In the fullness of time, the letter was delivered to my friend in Los Angeles (whose address I had put as the “return”). So the Postal Service incurred the full cost of moving a letter 3,000 miles in order to “return to sender”.

    Things have only gone downhill since. Like a railroad with too many classification yards, USPS has too many nodes in its network. Each hode adds 24 hours to delivery time. So if I mail a letter from my home town in southern New Jersey to Washington, DC, I first drop it at our local post office (which I must do since virtually all street mailbozes are gone). It goes from there to the South Jersey regional center (another day), then to a regional center in Maryland (a third day), then to the local Washington post office (fourth day) and then on Day 5, is actually delivered.

    At a time when Amazon offers FREE two-day delivery to Prime customers, this is an utterly unacceptable level of service — especially for 46 cents. Result is that I rarely mail letter any more. I do all my baking electronically, and most of what comes in the mail is the physical equivalent of junk mail. Half of what the postman brings is thrown away unopened.

  • Insert fake name here

    The only reason the USPS has survived this long is that they have private companies do the bulk of their work for them. Any city of any size has pre-sort houses that sort most of the business mail and bar-code it for delivery before it even gets to the USPS. All they do is mingle it with the rest of the mail and send it to the local post office or put it on the truck to the next facility.

    The USPS essentially shares some of the postage with these private companies. Basically the private guys are working for maybe $20k a year at best so that the postal employees can continue to draw their $80k a year. In certain areas even the delivery is outsourced.

    Overall the USPS hasn’t been run that badly since they started outsourcing everything but the advance of technology has made their service superfluous in most areas and the requirements placed upon them in a lot of areas raise expenses they can’t avoid. Unfortunately the law still requires the US mail be used for certain things and that will have to be changed before it is all phased out. There is also still a use for bulk mail advertisements but if the rates continue to go up and the delivery continues to slow then that will dry up as well.

  • Mike Mahoney

    Let high schoolers with a fresh license deliver for minimum wage and the weekend use of the delivery vehicle. See also: Gingrich and his H.S. janitors. This isn’t an insurmountable problem.

  • Arty

    Save this post Mr. Mead. In another 15 years you’ll be able to recycle it by substituting the words ‘United States Postal Service’ with ‘Single-Payer Healthcare’.

  • smart dude

    I have never seen that lunatic liar Sanders’ name as point man for any legislation previously.

    But here is his Holy Of Holies, that Temple of the State, the United States Post Office under attack to become competent and solvent.

    Horrors!

  • Robert

    Just a small practical suggestion for Post Office branch closings — do it the way military bases are closed. A committee comes up with a list of appropriate ones to ax, then the entire list is subject to a yes/no vote.

  • Bitter Clinger 51

    I read somewhere if the postal service were to cut out Saturday delivery, they would survive. Because we have Saturday delivery, a whole second staff is needed – cut those folks, go to M-F delivery, problem solved – but the union doesn’t like that plan.

  • bandit

    Sen. Sanders doesn’t seem to understand the meaning of ‘productive’.

  • dean

    If they’d make junk mail pay regular postal rates it would cut down on the junk mail, and the junk mail that would remain would still make the postal service money.

  • Real American

    the first thing that needs to happen is to end the USPS’s monopoly on first class mail. make them compete and when they can’t, bankruptcy – the real kind, not the GM/bailout kind.

  • gringojay

    Burny Sanders probably still thinks the Pony Express delivers the mail outside of Washington D.C. & we need all those postal employees for back up in case one falls out of the saddle.

  • Long time VT resident

    Vermont’s “Junior” senator is a left-wing joke who keeps on giving. The ONLY reason he keeps on being re-elected is because he keeps feeding his base more goodies from the Federal money bag (which is about to run dry. Unfortunately, he makes this state look like an even bigger joke than it already is.

  • MarkJ

    What’s amazing is that, from what I’ve been able to tell, the postal system was just as, if not more, efficient during the Civil War–that’s 1860′s!–than it is today. The USPS only handled letter traffic and left parcels to the private express companies. Even in an age with no motorized or air transport–only horseback, animal-drawn vehicles, and steam locomotives–Northern families would frequently receive letters from their Union Army friends and relatives posted in the South within a few days.

  • that guy

    The Constitution says:
    “The Congress shall have Power…To establish Post Offices and post Roads.”

    Doesn’t say they’re required to. Just says they have the power.

    I guess they could say that UPS and FedEx are now the new post office if they wanted to.

  • Biff

    Just once, I’d like to walk into my local Post Office and see the staff hustle even half as much as the staff at the local UPS Store or FedEx store hustle.

    They’d probably need someone trained in CPR first, because the Postal employees in my area show little evidence of exercise — including the letter carriers!

  • Jeffersonian

    “Sen. Sanders doesn’t seem to understand the meaning of ‘productive’.”

    Of course he does. It’s just a matter of how you define the term. If you mean by it the efficient provision of a useful service, then no, he’s utterly in the dark. If, OTOH, you mean the cynical retention of political power by diverting scarce resources to constituencies beholden to your largesse, then he’s the soul of “productivity.”

    And really, when one thinks of efficient, well-run organizations, doesn’t the image of a communo-socialist state – the one envisioned by Sen. Sanders – just pop into mind?

  • daveinga

    i don’t understand, its the same post office as always … oh wait, you say the hiring is now 100% affirmative action (privilege) based? and these days the unions protect the rotten workers jobs?

    never mind, i understand now.

    i wonder do they put the really fat ones in the offices and just let the leaner ones deliver the mail? some i see in the offices would likely tip over the lttle trucks.

  • AD-RtR/OS!

    Why does the “Print” feature not function?

  • http://www.the-american-interest.com Damir Marusic

    Print feature works fine over here, in Firefox, Chrome and Safari. I haven’t tested it just now in Internet Explorer, but I did when we rolled it out. We use a service called PrintFriendly. Please give us some more information about what kind of browser and operating system you’re using.

  • San

    Say anything you want about how inefficient the Post Office is. Everything they do, and don’t, is ruled by the Congress. They don’t get your tax dollars, only from selling stamps and other services people buy, which is why they are in this predicament. Congress takes away the revenue, but they don’t get bail-out. If and when Obama decides to give money to the institution, you will not hear the billions of dollars it is bleeding. And the last time I heard, Obama wants the post office to cut Saturday delivery, the Union is the one going against it.

  • BooMushroom

    It’s not that the cost of a stamp has increased, it’s that the Dollar you use to buy it has become less valuable. Inflation adjusted stamp price graph here: http://en.m.wikipedia.org/wiki/File:US_Postage_History.svg

    That said, six day delivery is not sustainable with their union workforce. They go back and forth between hiring and paying gobs of overtime, and with their benefits, who is to say which is cheaper?

  • Melvin Swartz

    It looks like our postal delivery people make about $55k/yr,plus ot. Go to
    http://php.app.com/usps/search.php
    to see what your USPS person makes.

  • Rich K

    Quit being so lazy and use the automated shiping services in the post offices . I rarely use the counter anymore. I can print postage labels on my printer and charge to a CC. I then toss it in the bin at the nearest outlet or can arrange for pickup if I want. And banks have stamp vending from ATMs.So help yourselves out and learn how to use the new features they do have or go to UPS or FedEx and stop [complaining].

  • CJ

    Living in Canada I don’t have a dog in the USPS fight, but what I do know is that the end of postal services isn’t a slow-motion spiral but rather a sudden collapse. I personally know a couple of Canada Post employees who tell me that recently when they open mailboxes for pickup there often are no letters inside. I’m talking about public letter-drop mailboxes in densely-populated Vancouver, the kind that would be blue USPS mailboxes in American cities. Hardly anyone is sending personal snail mail anymore. Most postal traffic appears to be commercial promotion “junk mail” and you have to wonder how long that is going to continue in the internet age. Moral of the story: the post office isn’t doomed, it’s already over.

  • Koblog

    ALL the bureaucracies of government–and especially the Federal government–are inefficient wastes of money. It’s just that the USPS is visible.

    How much is dumped into the Dept of “Education” that doesn’t educate?

    …The Dept of “Energy” that produces no energy?

    etc., etc., etc.

    Washington DC is the richest town in America…the only place wages and housing values have gone up.

    And for what?

  • onetermer

    “gbm says:
    February 26, 2012 at 11:22 am

    The post office is in trouble because they con not deliver a letter from 200 miles away over night.”

    Recently, I had the misfortune of ordering a part for our car on eBay. I needed the part shipped overnight, but the seller only uses USPS for delivery. I ordered the part on a Wednesday and paid overnight delivery. USPS delivered the part “overnight” the following Monday.

  • onetermer

    I addition, the part was shipped in So CA and I live in No CA.

  • gs

    Ten or fifteen years ago, when the Internet was taking off, the USPS got interested in email. Their position was that either they had authority over it or should be granted authority over it–at a per-message fee, of course. Maybe they offered to do spam filtering.

    I trust the bullet we dodged back then will stay dodged. Not even the government would be misguided enough, knock on wood…

  • Mahon

    It seems to me that the obvious thing to do is to go to every-other-day deliveries. Each local post office divides its area in two and delivers to one half Monday, Wednesday and Friday and to the other half (with the same people and trucks) Tuesday, Thursday and Saturday. This would have to generate huge savings. Anyone who cares about a single day’s delay uses another service anyway. How hard is that?

  • Steve Adams

    As far as I am concerned for my home and work I’d be happy with once a week last mile delivery.

  • JimB

    Looks like our local post office employees make about $55K. Dont know what the UPS folks get. Might be a little high based on the skill set required, but not living high on the hog.

  • HC

    The Postal Service is actually an example of a _viable_ government agency. What the various reports about the PS leave out is that it generally brings in enough money by selling its services to cover its costs, and in fact indirectly contributes to the budget, because Congress plays various games with the Postal budget.

    It’s no good hoping that the government shrink away to a libertarian day dream. All that does is make right-wingers and small government advocates look silly. The ‘blue’ social model is not going away, it’s transforming into something else, _along with the red one_. The two are joined at the hip.

  • Skip

    I emailed someone today telling them I was mailing them a form to sign, and they replied that there was no attachment to the email. Slightly embarrassed, I answered that I was sending it by US Mail. It’s as if I had a flashback to the Pony Express. That’s about all Bernie Sanders needs to know.

  • bobby b

    “Quit being so lazy . . . help yourselves out and learn how to use the new features they do have or go to UPS or FedEx and stop [complaining].”

    Okay.

    (Do you work in a Minnesota Post Office? You sound just like one of the counter guys I ran into here right before I switched to UPS and FedEx.)

  • http://www.tau.ac.il/~kochin Michael Kochin

    Historically (going back to the Royal Post), the reason the government runs the post is so that it can open the mail.

  • LarryD

    Just because the Congress has the power to do something, doesn’t mean it has to, or should, exercise that power.

    Congress could “establish Post Offices” by setting regulations and criteria that private entities could meet to be carriers of first class mail. There is no longer any reason that the Federal Government has to preform this service.

  • http://www.pacrimjim.com PacRim Jim

    One reason for the death spiral is that anything that needs saying can be done for (relatively) free, via the Web.
    When Moore’s law puts us all out of work, how shall we buy anything, even for almost free?