Earlier this week, the U.S. Postal Service reported that it had suffered a $2.1 billion loss in the second quarter of 2014. That's much worse than the $740 million second-quarter loss last year, and marginally worse than the $1.9 billion loss in this year's first quarter. But before readers scoff at bureaucrats' business acumen, understand that those in charge of running the Postal Service have had their hands tied for decades by short-sighted politicians and a powerful government employee union.
It's not surprising that the role of mail has diminished significantly in America, as the Internet has steadily undermined the Postal Service’s business model, including its monopoly on first-class delivery. According to Postal Service statistics, first-class mail volume is down 32 percent since 2004. Total volume is down 23 percent — even junk mail, which now makes up more than half of all mail, is down — and despite several price increases during that period, postal revenues are down as well.
|Postal Service leaders have had their hands tied for decades by short-sighted politicians and a powerful government employee union.|
Postal managers have tried to keep up with the times, slashing staff by 31 percent, cutting back the number of carrier routes, and keeping their vehicle fleet level through the same period. And, like the managers, President Obama has tried to do the right thing, presenting a sensible reform plan that enjoys significant Republican support in Congress.
But the Postal Service remains unmanageable chiefly thanks to Democrats in Congress. They oppose both Obama's and the Republicans' plans, which would allow the Postal Service to manage its business properly. They have vigorously fought attempts to cancel Saturday delivery, which is expensive and less necessary than ever before. (At one point, Senate Majority Leader Harry Reid, D-Nev., argued that any reduction in service would hurt seniors because they “love to get junk mail.”)
Members of Congress are even more hostile toward closing underused post offices, even though office visits are down 19 percent since 2004 and millions of customers now only access USPS online. Twenty-two senators, nearly all Democrats, recently signed a letter opposing even consolidation of mail-processing facilities.
Politicians are treating the Postal Service as if it were a pork project, forcing continued poor management practices while pandering to a union that wants it both ways. Union leaders want their members' health care to be paid for in retirement, but they don't want the Postal Service to have to fund their health care obligations. That's because an honest accounting for these obligations unmasks massive losses, calling into question the efficiency of the entire operation. Rather than provide fodder for those who advocate further downsizing or even privatization, postal union leaders are gambling on an eventual taxpayer bailout.
Instead of pandering to unions and cynically working to make a bailout inevitable, Democrats in Congress should stop obstructing and start listening to Obama and Republicans on this issue. If the opponents of reform will do that, there can be an economically viable future for the Postal Service.