Tuesday, October 11, 2011

Time to end the first-class mail monopoly

By Rebekah Rast

The United States Post Office lost $8.5 billion last year. If that were any private business, well, it wouldn’t exist any longer.
But not the post office.

Despite a 20 percent decrease in mail volume from 2006 to 2010, and package-delivery competition from UPS and FedEx, somehow the post office stays afloat. But if it weren’t for the federal government propping up the USPS and its first-class mail monopoly, today’s mail system would look much different.

In an op-ed to the Wall Street Journal, Gary MacDougal, writes, “With a well-managed Postal Service wind-down, Fedex, UPS and others could easily and efficiently pick up much of the volume. Some could also be handled by a host of local delivery companies now serving most major cities. Fedex, UPS, DHL, cargo airlines and others can handle long-distance and international shipments. Entrepreneurs will see the demise of the USPS as an opportunity, and new companies will emerge.”

Maybe cutting off the USPS and letting it run as an independent business is just what this country and the post office needs.

As it is structured, it will be nearly impossible for the post office to pull itself out of debt. If mail volume continues to fall while at the same time there is an increase in the number of postal addresses, the cost to deliver each piece of mail will continue to rise and revenue levels will not be able to keep up. On top of this, the USPS had financial liabilities and unfunded obligations of $88 billion in 2009. And its latest mess was only partially resolved when Congress saved the post office from going into default by extending the due date for a $5.5 billion payment due to the U.S. Treasury for retiree health benefits. Also not mentioned are the labor union costs and payouts and the fact that postal workers earn an average of 15 to 20 percent more per hour than comparable workers in the private sector.
Get full story here.

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