Sinking Ship: The U.S. Postal ServiceBy: David Freddoso
04/12/10 5:49 PM EDT
The Government Accountability Office issued a rather
bleak report on the state of the U.S. Postal Service this week. The opening sentence states, "
USPS's business model is not viable," and from there the picture only gets worse. The USPS, although no longer officially a government agency, is a case study of the biggest problems with government programs and government agencies.
The 80-page report makes mention of the Postal Service?s
$12 billion in losses in the last three years, $3 billion in debt to the U.S. Treasury, and $55 billion in unfunded obligations for retiree pensions and health care.
What ails the USPS? The immediate problems are flagging mail volume and
inability to cut costs. The largest cost is wages and benefits, which take up 70 percent of the USPS budget. The workforce has already been chopped down from 900,000 to 712,000 employees in the last decade, but is still too large. And the agreements negotiated by its
four unions, which represent about 85 percent of its workforce, contain inflexible provisions that seem to make the crisis intractable:
Current collective bargaining agreements include provisions related to compensation, leave, workforce composition, and work rules. They also include some provisions that allow USPS to make changes, such as relocating employees, but other provisions limit USPS's flexibility to manage work efficiently and rightsize its workforce. For example, current collective bargaining agreements limit the percentage of part-time and contract workers who help USPS match its workforce to changing workload; limit managers from assigning work to employees outside of their crafts, such as having a retail clerk deliver mail; limit outsourcing for city delivery routes; and contain
"no-layoff" provisions for about 500,000 employees and require USPS to release lower-cost part-time and temporary employees before it can layoff any full-time workers without layoff protection. Currently, if the collective bargaining process reaches binding arbitration, there is no statutory requirement for USPS's financial condition to be considered.
This helps explain how, despite the fact that USPS's First Class and Standard Mail operations are profitable, the USPS is not. (There are other problems, too, such as USPS's inability to eliminate unnecessary postal facilities.)
GAO does not recommend wholesale privatization, but it does suggest that
the private sector could take a greater role in postal retail. The report also raises some important questions about just how many unprofitable operations USPS should be running (single-piece Parcel Post and Media Mail, for example) and whether its role should be re-examined:
Role: Should USPS be solely responsible for providing universal postal service, or should that responsibility be shared with the private sector?
Monopoly: Does USPS need a monopoly over delivery of certain types of letter mail and access to mail boxes to finance in part or wholly, universal postal service?
http://www.washingtonexaminer.com/opinion/blogs/beltway-confidential/sinking-ship-the-us-postal-service-90684664.html
