Postal Layoffs and Time to Privatize?

The U.S. Postal Service (USPS) announced plans to lay off 120,000 people. Even though USPS has been around since 1775 it only started to lay off people beginning in 2008. The Post Office is constantly burning through money and at this point they are trying to minimize loses. Next month the Post Office will become insolvent. This is actually positive if we are closer to privatizing the mail system. The number of mail items second through the post office has dropped over the years. The main reason for this is the internet which allows people to send electronic mail for a minimal price.

USPS is now trying to figure out how to remain solvent. Cancelling Saturday mail has already been discussed although I don’t that will do much to solve the major problems of: pensions, compensation, or accountability. In terms of pensions USPS in June of this year had to suspend employee contributions to try to save $800 million. USPS claims that they have been overcharged for pension obligations and are due $75 billion from the government. In 2009, an average postal worker made $79,000 in total compensation (wages + benefits). Economist James Sherk found that postal workers earn an extra 15%-20% per hour than workers in the private sector.

The Post Office employs around 560,000. This means the Post Office spends $28 billion a year on salaries. The total cost is more if you include providing benefits for workers. The Post Office until three years ago had never laid anyone off in their almost 240 year history. The Post Office has little to no accountability for its workers. Take the example in May of a mail carrier in Portland, Oregon who defecated in a yard while on his mail delivery route. The worker was put on unpaid leave but was transferred to a different route. If this happened at UPS or FedEx the worker would have been fired the day it happened.

Hopefully, more people and politicians will realize USPS can’t continue. In 2010, the Post Office had a loss of $8.5 billion. If we had FedEx and UPS delivering mail not only would we get rid of the deficit of the USPS, but more revenue would come into the government since FedEx and UPS would have to hire more workers who have to pay taxes. The idea is to create more productive use of assets and more tax payers.