The U.S. Postal Service (USPS) has long been a favorite target of conservatives. Their primary complaints about the organization generally revolve around the fact that the employees are unionized, make a living wage and enjoy actual benefits such as retirement and healthcare. Today, the USPS announced that beginning in August of this year, Saturday residential mail delivery will end. Will this have any effect at all on the economy? It is unlikely that this will be the last service reduction implemented by the USPS. Has the economic impact of reduced services been considered by the conservatives? It would seem not. An irrational hatred of unions and the long term goal of union busting are behind the conservative’s goal of killing the USPS. Their hatred of unions blinds them to the fact that the USPS is a vital part of the American economy.
The central question that needs to be asked is this: Does the USPS play a necessary role in the nation’s economy? Too many people focus only on the expense vs. profit aspect of the USPS. In my opinion, that is the wrong way to look at the role of the USPS. Does the expense of operating the USPS result in economic growth? Simply looking at the agency’s profits and losses does not give an accurate picture of either the ‘costs’ of the agency, or its contribution to the nation’s economy. One must consider the amount of business that is facilitated by the operations of the USPS. Looking at the data it is apparent that the USPS does play an essential role in the nation’s economy. The USPS is the most efficient postal service in the world. In 2011, they delivered mail to more than 151 million distinct addresses. Every single day they handle more than 500 million pieces of mail. They are an essential component of the American economy.
If conservatives were truly concerned with running the USPS like a ‘for profit’ business, they would be focused on more than the cost of labor. No conservative is advocating that rural customers pay more for their mail delivery than urban customers. If one is only going to focus on cost then a multi-tiered pricing system would need to be implemented that would result in charging rural customers more than those in urban settings. The cost of delivery service for a rural user is substantially higher than the cost for urban users. However, in America, a customer living in a remote Alaskan town pays the same cost as someone who lives in Chicago. I will take the conservative wailing about the USPS’ runaway labor costs much more seriously when they propose that rural America pay more for their mail delivery.
Ask your friends and relatives if the post office is funded by their taxes. Odds are that most will answer with an emphatic yes. The truth is a little more complicated. The ‘modern’ Postal System was born in 1970. On August 12, 1970, President Nixon signed the Postal Reorganization Act which ended the Post Office Department and created the United States Postal Service. The Act was primarily focused on labor issues; however, its most important aspect was that it mandated that the USPS be a self-sustaining entity. As a result of this mandate, the USPS funds their operating costs (including their labor costs) solely through the revenue generated by their operations. In 2011, the USPS received approximately 100 million dollars a year in taxpayer money to fund the expense of providing free mail for legally blind citizens and sending election ballots to American citizens living overseas. The fiction that the post office is waste of taxpayer money is simply that: fiction. No tax dollars are used to cover the operating expenses of the USPS.
Recently the post office has been a victim of remarkably bad legislation and a remarkably bad economy. In 2006, the Postal Accountability and Enhancement Act was passed. This required that future costs of retiree health benefits be completely prefunded at a 100% level – for the next 75 years. There is no other federal agency that is burdened with a similar requirement. Since 2006, the cost of meeting this new requirement has cost the USPS approximately 5 billion dollars a year. This new cost and the economic collapse that began in 2008 has been financially devastating. To control costs, the USPS has been reducing their labor at an unprecedented rate. In 2002, the USPS had approximately 752000 employees. That number had dropped to 551000 by 2011 representing a workforce reduction of more than 25% within a decade. More labor reductions are planned.
The conservatives are not trying to save the post office; they are simply trying to destroy one more unionized workforce. The USPS plays a vital role in the American economy. More and more people receive their prescription medication through the mail. The internet has made it easier than ever for people to engage in the buying and selling of merchandise. However, that merchandise must be delivered and the reality is that private delivery companies do not service the nation’s entire geographic area. The conservative’s hatred of organized labor is weakening a vital component of the American economy.