OK, I haven’t actually run any actual numbers on this. But in reading (again) about the imminent demise of the US Postal Service, I had some thoughts on how this quasi-public business maybe could work:
First and foremost, totally jack up the price for sending paper mail — to, say, $1.25 per standard item and up. Hell, why not $2? Doesn’t it seem amazing to you that you can have an actual, physical envelope delivered to a specific doorway, in many cases overnight, for only $0.44? I have no idea what the real price point is for the USPS for performing each standard mail delivery, but I have to think that it’s way more than $0.44. I say: Just price standard mail to cover costs plus a healthy profit margin, let the market shrink to what it will, and then continue on as the reshaped-yet-still-publicly-supported mail system. Raise the prices for packages too, but really just let paper mail prices spike high.
C’mon, we all know it: Most paper mail contains information that can be transmitted electronically. Why shouldn’t paper mail be an essentially premium service, something used mostly by people with money — in fact often used to send money-related documents with sensitive financial information? (Of course even these will likely be mostly transmitted electronically eventually.) I for one would love to get less paper mail, and I know many of the earth’s forests would probably second my vote.
Problem is, as described in the NYTimes article, a lot of legislative and union constraints are in the way of major USPS retooling. The big ones are union “no-layoff” clauses, and legislation preventing postage fees from being raised faster than inflation.
Plus, if these hurdles could be cleared, the big question is whether the USPS could actually survive in the much-smaller paper mail market that will remain. Could they? I don’t know. But it seems that they certainly have enough resources to leverage in being able to survive and compete in a reshaped market.
Mostly, I think it’s unavoidable that in the next generation or so, paper mail will be a luxury — an affordable one, but a premium service that many fewer people will use. If the USPS can retool now, it could continue to be an important player and an essential government service.
So, if I were in charge, I’d first focus mightily on amending the law that prevents the post office from raising postage fees faster than inflation.
And somehow I’d work on getting around the union “no-layoffs” clauses, which are simply untenable in any shrinking business. I’m often pro-union, but in my opinion this is a case of union overreach for sure. I wouldn’t go after other union benefits like pensions or wages, but layoffs are just gonna need to happen. Seriously, get real.
Sadly it seems that a priority strategy right now is to try to squeeze pensions — and in a way that makes me go, “Hmmmm….”:
Senators Carper and Collins do back several of the postal service’s main ideas to avoid default, including recovering around $60 billion that some actuaries say the agency has overpaid into two pension funds. Although the Obama administration is working closely with the senators to find a solution, it has signaled discomfort with the pension proposals, questioning whether the postal service really overpaid. —The New York Times, Sept. 4, 2011
Something in that milk seems to be, say, less than clean.
Please note: The above is a very quickly-considered judgment and just sort of a “snap-vision” of how I see this all playing out. I don’t mean to be glib about the legislative/union hurdles. But somehow some major change needs to happen or the USPS will simply go away. And as much as I hate dealing with real mail (both sending and receiving it), I would really be sad to see it go.
It seems to me it would make a lot more sense if they priced postage based on distance traveled. Why does it cost the same whether you’re sending something across the street vs. across the country?
Postal services in other countries have figured out that you can charge less for items that don’t have to travel very far, and increase prices for things that go across the country.
So true, Martin, and seemingly so simple.
Speaking purely as a residential guy on any number of mailing lists, it seems to me like the USPS is optimized to deliver huge wodges of coupons and circulars. As far as I know, these shipments cost the sender pennies each as bulk rate items. The carriers have to go to *every* home on their route to deliver them every day, spending time and energy. I certainly get one without fail every day. They go straight to the trash. I suspect the majority of homes do what I do.
Occasionally a bill or some other bureaucratic nugget slips through. I think I saw a letter from my mom last month. I ordered some packages from Amazon this year with standard shipping, too. These are the rare, significant items in which I’m actually invested toward a successful delivery. I don’t mind paying more to get them. (A couple bucks shipping from Amazon doesn’t phase me at all, even for a small package.)
Perhaps the USPS needs to re-balance its trash delivery economy.
Spot on Cameron. “Trash delivery economy” indeed!
I don’t think that the mail is priced at actual cost of delivery. working in the medical malpractice insurance world (where true costs lag many years behind when the premium is paid) is similar. Experiential costs should be factored in–and here, we charge a regulated amount and close the claims out. profit is regulated, and we often have to pay back (in dividends) when physicians post better than average experience (are sued less.)
The raise the price argument holds in the same way, for mileage, etc., reflecting the true cost. However, there are no redresses for efficiency. Also, let’s be honest, some of the USPS is run as a social or employment program. They are not run as a business. There would be a tremendous backlash (and there is) for closing unused post offices, ending Saturday delivery, etc.
I believe we have to wait for the old people to die before a dramatic change occurs (like in newspapers). it’s not the young people who are clamoring to throw their money down that hole.