It’s no secret that the United States Postal Service (USPS) hasn’t been the model of financial health over recent years. Many people blame the electronic age on the fact that the USPS has been losing money recently.
This may be true, but it’s not the sole reason that the USPS has been on the negative side of the news.
The first thing to get out of the way is to understand how the post office works. Many think of the USPS as a government agency, so the simple thought is that if collecting postage doesn’t make up for the costs of running the USPS, the federal government could just give money to cover the difference. After all, what’s a few billion more dollars when you’re talking a trillion dollar a year deficit, right?
The fact is that the USPS is a self-funded government entity, meaning that it is required to cover all expenses with operational revenue. In other words, the government cannot simply allocate money from the annual budget.
Another misconception is that the post office loses money delivering mail and packages. Actually, this is not true. From the operational side of things, the post office actually collects enough money to cover costs. What throws it back into the red is funding pensions for workers.
Ah, pensions. Always the difference between financial health and financial uproar. It makes me wonder how companies and governments paid out pensions to so many people for so long yet still stayed in business. We’ve gotten better and better at doing things, yet profit margins have shrunk so much that pensions are the enemy.
The number of letters, bills, and other assorted items has taken a big fall over the years, as more and more people write letters, pay bills, receive bills, and communicate electronically. To make up for this, the post office now handles more ‘junk’ mail than ever.
So are we doomed? Will the post office fall into ruin? I hope not and what gives me hope is that postal services run by other countries are actually able to make money, even covering pension obligations. There is hope.
What to do?
Here are a few things I would do to ‘fix’ or at least modify the Post Office. Some of these are things that the other countries are seeing work, some are just purely my own ideas.
- Cut Saturday delivery – For years we’ve all gotten used to mail coming on Saturday. When I first heard of this proposal, I was aghast. Totally against it. Hated the idea. That was a few years ago when I was a Netflix subscriber. I got lots of movies back then and didn’t want to lose a day of movies. Now, we don’t even subscribe to Netflix, and now that there are so many options that let you stream content online, even this isn’t a big deal. As to the rest, it never was an issue. I think Saturday delivery would be missed for about a month, then we’d all wonder why it didn’t happen sooner.
- Get better – For letters and such, the USPS has everything locked up as they’re the only ones allowed to deliver these types of items. Packages are a different story as they have to compete with UPS, FedEx, and the like. I’ve never been impressed with the USPS. They claim to have better pricing, but it still seems expensive, plus you have to usually wait in line no matter what time of year. Add to this the fact that I rarely ever get a package on an estimated date from the USPS. Whenever I see that a package I’m expecting is being shipped via USPS, I automatically add 1-2 extra days to when it says it’s supposed to arrive.
- Reduce the grandfathered mailboxes – In years past, mailboxes would be attached to houses and the postal delivery person would walk door to door delivering the mail. In newer neighborhoods, you have mailboxes grouped together, allowing for the delivery to be more centralized, increasing the number of customers one delivery person can handle. For some reason, the older neighborhoods are ‘grandfathered’ in. This is very quaint, but it no longer makes sense. The mailboxes need to come off the houses.
- Electronic mail – One of the things that European postal services have introduced is secure electronic mail. The USPS still sees anything electronic as competition and has resisted entry to this area. Customers could have an electronic mailbox that other customers or companies could deliver to, reducing the reliance on third party email that they hope are secure. This model has worked in other countries and I see no reason why it couldn’t work here.
- Be more efficient – Many processing centers are old and require manual work, thereby cutting efficiency. Investment and upgrades need to happen to allow for faster processing with lower costs.
Improvements have to be made to keep the Post Office from sinking further in the red. It’s not hopeless and I think just a few of the ideas as well as others that I’m sure are out there can help.
What do you think of the Post Office? What can be done to return and keep the USPS to solid financial ground?Copyright 2013 Original content authorized only to appear on Money Beagle. Please subscribe via RSS, follow me on Twitter, Facebook, or receive e-mail updates. Thank you for reading.