Don’t Kill the U.S. Postal Service. Unshackle It.
(Bloomberg Opinion) -- The U.S. Postal Service has had a foot in the grave for years, with fatalists regularly urging it to accept the inevitable. “The Post Office Is Dying Because We Don’t Need It Anymore,” a tech- savvy writer advised in 2011. “The U.S. Postal Service Is Dying. Let It,” a libertarian blogger suggested in 2017. “Why Do We Have U.S. Mail And How Much Longer Will We Have It?” a self-described “customer experience futurist” asked in Forbes last year.
Mother Nature recently decided to weigh in, too. The coronavirus pandemic has delivered a potentially fatal blow to the postal service, a 228-year-old mainstay of American life that traces its roots to the Constitution and whose services and ubiquity are made real by carriers visiting mailboxes and post offices that remain neighborhood fixtures.
Postmaster General Megan Brennan told Congress recently that unless the Postal Service gets $50 billion in grants and aid, a $25 billion unrestricted credit line from the Treasury Department and $14 billion to pay off debts — $89 billion overall — it will run out of money by the end of the year. Brennan said that mail delivery volumes have plunged so drastically that the Postal Service is likely to have a $13 billion revenue shortfall this fiscal year.
“The Postal Service is holding on for dear life, and unless Congress and the White House provide meaningful relief in the next stimulus bill, the Postal Service could cease to exist,” Carolyn Maloney, a New York Democrat who is chairwoman of the House Oversight and Reform Committee, observed during Brennan’s testimony.
Our romantic attachment to letters from far away, birthday cards and exotic stamps aside, why not just use the coronavirus-crisis to finally put the Postal Service out of its misery and rely on email and private carriers instead? Why do we keep subsidizing a losing enterprise long since eclipsed by technological innovation?
After all, the Postal Service has been struggling for a long time. Unlike private companies, it can’t pick and choose its customers. The law requires it to operate everywhere in the country, and it does. It has nearly 500,000 employees and the nation's largest domestic retail network — bigger than McDonald’s Corp., Starbucks Corp. and Walmart Inc. combined. It operates 34,000 facilities and 232,000 vehicles. That’s expensive; the Postal Service’s payroll alone is about $157 million a day.
Before the coronavirus outbreak, the Postal Service was processing and delivering about 182 million pieces of first-class mail each day at the bargain rate of 55 cents a letter. But a federal agency, not the Postal Service, decides whether or not postage rates can rise — which hamstrings the service’s ability to fund itself more robustly. (Contrary to popular belief, the Postal Service hasn’t traditionally received taxpayer funding for its operating expenses and pays its way by selling postage and other products and services.) Federal overseers also dictate how many days a week the mail has to be delivered and how many post offices have to remain open.
In a press briefing last week, President Donald Trump offered a diagnosis of what ails the Postal Service. Its demise is due to “these Internet companies that give their stuff to the Postal Service — packages.” Yeah, but no. The president’s critique stems from his long-running vendetta against Amazon.com Inc., a large customer of the Postal Service. Amazon’s founder, Jeff Bezos, owns the Washington Post, whose coverage the president resents and, well, you get it. This may weirdly wind up informing how much support the federal government provides the Postal Service as it lies on its deathbed, but singling out package delivery as the force dragging the service down is wildly ill-informed.
Mail delivery, in fact, remains the lifeblood of the Postal Service, and it has been withering for years: 142.6 billion pieces of mail were delivered in 2019, compared with 216 billion pieces in 2006, which turned out to be a peak year. While e-commerce has given a handsome revenue boost to the Postal Service because of a jump in package deliveries, that hasn’t been nearly enough money to right the ship — packages still remain a relatively small part of what mail carriers deliver.
In its semiannual report to Congress last fall, long before the coronavirus emerged, the Postal Service described its financial situation as dire. It recorded a net loss of $3.9 billion in fiscal 2018, following net losses of $18.9 billion for the fiscal years 2014 through 2017. A big chunk of those losses are due to a mandate from Congress that the service prefunds future retiree health benefits for its employees — a requirement that many other public and private entities don’t have to live with.
For most of its history, the Postal Service believed that demand for its mail services would grow alongside the country’s population boom. And demand followed that script. Until it didn’t. Email and other services created an end-run that nobody anticipated when the Postal Service’s business model was invented. Time and crises have since undermined it even further.
But simply pulling the plug on the Postal Service isn’t the answer. It still provides a vital lifeline to often unwired rural communities around the country, and older Americans depend upon it more than millennials and other younger correspondents. Those lithe private competitors – FedEx Corp., United Parcel Service Inc. and Amazon – still rely on the Postal Service to ship packages to the unprofitable “last mile” destinations their own services don’t reach. Households that operate small businesses often depend on the Postal Service’s package delivery as well.
The Postal Service’s reach and its broad network of experienced, committed employees are assets, not liabilities. The network just needs to be reconfigured and repurposed, in some wrenching ways given how the coronavirus may permanently alter how consumers transact. The service should get more control over how much it charges for its services, how many people it employs and how easily it can innovate. Many post offices may have to be closed, but others could be reconfigured to also provide banking and licensing services if and when the world normalizes.
Reimagine the Postal Service. But don’t simply kill it.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
Timothy L. O'Brien is a senior columnist for Bloomberg Opinion.
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