There’s been talk recently about the United States Postal Service potentially filing bankruptcy, citing lost revenue and increased cost. The Postal Service, which is older than the Constitution of the United States, isn’t funded with taxpayer dollars, but still has to follow many unyielding congressional rules that limit its ability to manage its money effectively. The real reason for the Postal Service’s financial woes, however, is more complicated than that. Further, there are several possible resolutions to the USPS’s money crisis that are being considered, plus more options that, strangely, don’t seem to be on the table at all.
Financial Woes
The USPS is home to a labor union with some amazing benefits. Those are, in a nutshell, the cause of the current financial problems for the service. With 80% of the annual budget going toward salaries and benefits, it’s not hard to see where cuts should be made. Add to that the fact that the union negotiated a 3.5% raise over the next four-and-a-half years with seven cost-of-living raises and the fact that the service is required to provide for the next 75 years’ worth of employee retirement benefits and the picture is made crystal clear. That’s right, 75 years; that means that they have to put money towards retirement benefits of employees who haven’t even been born. It doesn’t make sense to put money away for non-existent people when the Postal Service itself seems to be on the brink of collapse.
Easy Fixes
Postmaster General Patrick Donahue has laid out several possible solutions for the current crisis that he hopes will be enacted quickly enough to save the service. Though first class mail, package deliveries, direct mail campaigns and official legal documents, which are generally required to be sent by US mail, provide billions of dollars in yearly revenue, it seems that they’re not quite enough. IF the service were allowed to deliver alcoholic beverages, it could pick up a good amount of revenue and provide additional convenience for its customers. Some additional options include eliminating Saturday delivery, extensive layoffs, cutting back on pension plans and handling the end delivery for UPS and FedEx.
More Available Options
All of the ideas to save money for the USPS that have been officially discussed would certainly help fix the current monetary crisis, but there are some other options that haven’t been brought up that could help, too. Other countries have found success in breaking up the monopolization of mail services by their postal services and expanding their services to other countries, as in the case of Germany’s Deutsche Post which owns DHL shipping. Closing some physical locations and focusing on providing services for online customers could bring in additional sources of revenue and reduce costly expenditures. If the USPS shifted its focus to package shipping and distribution it could find its niche, provide valuable customer services and gain more revenue.
The idea that the United States Postal Service is on the brink of collapse is the result of a misunderstanding of the institution’s past and present policies. Most of the service’s problems could be solved if Congress allowed it to recoup much of the money it has spent on future employee pensions. Further, if the USPS wants to stay relevant and see continued growth, it will need to shift its focus from the old postal system to a new, hybrid physical/digital system. The Postal Service isn’t nearing bankruptcy; it just needs an overhaul to its policies and vision.