Can The Post Office Be Saved?

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.

Self-Funding

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?

Wrong.

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.

Profitability

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.

Electronic age

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.

Doomed?

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.

  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. 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?

20 thoughts on “Can The Post Office Be Saved?”

  1. I think they need to be allowed to operate like a private business and be able to make decisions like cutting Saturday mail in order to stay viable… they also need to stop offering pensions… so few other places offer them these days that they need to catch up with the times.

    • the PO is also not allowed to close PO’s especially in small or rural communties – over half of the 46,000 PO’s lose money. If they would be closed, that would save a lot of money. Unfortunately, Congress has to approve any PO closing – and no Congressman is going to vote to close a local PO!

      • True, so I guess what you’re saying is that Congress is not appropriating funds effectively, which I just cannot believe is true (sarcasm).

  2. I have to challenge a few things in point No. 2.

    First, “They claim to have better pricing, but it still seems expensive…” OK, so it seems expensive. But is it? Have you taken the same thing to USPS, UPS, FedEx and DHL to get quotes? I have with a bulky boxed item that I needed overnight. USPS had the lowest rate. FedEx “overnight” on a Friday wouldn’t arrive until Monday.

    And why do people get so frustrated about waiting in line? You will, inevitably, wait in line as a consumer because there are millions of other consumers.

    USPS doesn’t deliver your stuff on time? Mine is always early. Always.

    I understand we’re both comparing anecdotal evidence, which has led us to prefer one delivery service to the others. I enjoy USPS not only because I’d like to help rescue it, but because it’s provided me the best service in its market.

    -Christian L. @ Smart Military Money

    • Well for price, I never took the same package from USPS to UPS or anywhere else. It was just a general ‘feeling’ that ‘Boy, this seems expensive’ when I’ve gone to ship something.

      I understand there will be lines but I still think there’s room for improvement. When standing in a line 20 people deep a few times, I tend to observe and ask questions, like “Why are there four stations for workers but only two working? Especially during such a high volume time.” Leading to questions such as: Why wouldn’t they have more people working during such busy times? If they never go above two people, why did they build out those extra spots?

      I also watch and notice them taking every package after every customer to the back. Why not get a small cart, set it there, and only go after every fifth or sixth customer or whenever the cart is actually full? They’d be able to process more customers per hour that way.

      Just little things like that.

      I don’t avoid the USPS, in fact in spite of everything I’ve said, we probably still use them for 80% or more of our shipping needs. But, in an age where companies and organizations tweak and focus on efficiencies in order to reduce steps, reduce costs, and improve customer satisfaction, the USPS can clearly not afford to exempt themselves from doing these things, as the bottom line shows.

  3. Great points. I think there are a number of things they need to look at in order to cut costs and get out of the red. I think the pension and Saturday delivery is key to that. I also think they need to operate more efficiently. If the USPS is run like the post offices where I live, then the USPS is in a complete state of disaray. I’d be hard pressed to find a business that’s run more inefficiently than the USPS if I am basing it off of our local post offices.

    • The USPS reminds me of KMart in many ways…they do embrace technologies, practices, and operations that are designed to make things work better…just that they are doing the things that other companies were doing 15 years ago. Is the USPS better at a lot of things than they were 10 years ago? Absolutely. Are they close to operating as effectively as many of their competitors are today? Not even close in way too many areas.

  4. My understanding is that although the Post Office and Amtrak are government sponsored agencies, they still have to appease Congress, who’s members each want special treatment for their districts (keep my post office open! send the railroad to my town!). It’s my understanding that the reason both are in trouble is because they aren’t allowed to make their own decisions when it comes to cuts like the ones above. If they could, we’d have a more vibrant railroad and post office.

    • Interesting, I know that Congress has to approve many of their proposals but I wonder what they’ve proposed that Congress has turned down, or if they don’t bother if they know it’s unlikely to succeed (though it might get public attention).

  5. Like all government entities, whether or not it should be saved, it will. Given our history of just pissing away the next generations’ money, there’s no reason why politicians would let a little thing like a deficit get in the way. They’ll just keep funding inefficient entities with borrowed money….until they can’t.

    • True but at a certain point I think they’ll have to make it more self sufficient versus just throwing money at the problem.

  6. The Canadian post office isn’t all that efficient either and could definitely do with some improvements.

    We’ve never had Saturday delivery and I didn’t know you did in the US either.

  7. I believe the ability to fire inefficient workers would be a plus, but the postal unions wouldn’t allow that. My in-laws both receive pensions from being rural letter carriers, but future generations should received a 403b like option.

  8. As Brent already stated the unions are a huge cause of the Post Office’s fiscal problems. Not only won’t they allow employees to transition from pensions to 403B plans, they are the ones resisting the elimination of Saturday delivery, because it will lower the number of employees.

    Another problem is caused by the BLS’s bogus inflation rates. The USPS is only allowed to increase postage costs at the rate of inflation, while their actual costs are going up much faster. The same thing is happening to retirees and others with incomes tied to the inflation rate.

    One other thing I think will help the USPS in the future are electric vehicles. Right now, they are too expensive. But, in the next 5-10 years, they could save a fortune on gas and maintenance by adopting EVs.

    • True. I wonder why they would not adopt any of the other alternative fuels like propane or natural gas. Seems retrofitting their fleet would cost less, especially for newer cars, when you consider the cost of the gas they use over the time, especially since they get such poor mileage with the way they drive their routes.

  9. The USPS is there to “deliver”; the others are businesses. Unfortunately, the USPS is forced to function as a business with shackles on. No one mentions the many billions of profit that were siphoned off in the past by the feds when the branch was immensely profitable. Or that a condition of making the USPS an independent entity was that they had to PRE-FUND all pensions…try looking up grandpa’s pension and see if it’s fully funded today. I still think it’s cool that for less than half a buck I can drop grandma’s birthday card in a box on the corner and someone hand delivers it to her house in a rural area. And if someone uses FEDEX or UPS to mail a package to that town, guess who really delivers it? That’ right…the USPS. They need to update and compete but it would be nice on a level playing field…

    • While I can’t argue with you, one thing to consider is that if any entity can’t afford to pre-fund their pesnions, maybe they can’t afford to offer them. I think this is why so many companies and even government branches are moving away from them. For years they just figured that they’d offer them and worry about them later. Now that later is here, so is the reality that they might have been too generous. At a certain point, I expect the USPS ‘fix’ to include cutting back or eliminating pensions. Not just the accounting aspect, but probably the offering as a whole.

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