In many ways, advanced technology has diminished the need for traditional mail handled by the United States Postal Service. Instead of sending a letter, people can convey their message much faster by picking up the phone, sending an email/instant message, or even faxing a piece of paper. Society tends to value speed and efficiency, and those virtues are incongruent with the notion of placing a stamp on an envelope and dropping it in the blue boxes posted on various street corners.
The proof is in the severe drop in revenue and volume the U.S.P.S. has experienced in recent years. Compared to 2008, the postal service earned about $11 billion less in revenue and delivered roughly 40 billion fewer pieces of mail in 2012. Nobody would argue that the current state of affairs is sustainable. After all, the U.S.P.S. reported a $15.9 billion dollar loss last year. How can this government agency stem the tide and regain solid financial footing.
Postmaster General Patrick R. Donahue believes he has an answer. “Our financial condition is urgent,” he told the assembled press at a news conference on Wednesday. Donahue then went on to unveil a drastic change to the U.S.P.S. operations. Starting in August, the Postal Service will eliminate Saturday letter delivery service. However, post offices will remain open and packages woll continue to be delivered. The reduced service is expected to save up to $2 billion per year. “This is too big of a cost savings for us to ignore,” Donahue asserted after he made the announcement.
The move has garnered immediate reaction, and the results are mostly negative. Many members of Congress wonder if the delivery schedule change is even legal, and it’s an issue that could spark major debate on Capitol Hill in the coming months. Representative José E. Serrano expressed his dismay for the move by stating, “The U.S.P.S. should work hand in hand with Congress to come up with a successful restructuring and reform package that allows them to become more efficient while maintaining vital services like Saturday delivery.” Others chimed in to bash Donahue for the move:
“Postmaster General Patrick Donahoe’s plan to end Saturday delivery is a disastrous idea that would have a profoundly negative effect on the Postal Service and on millions of customers,” said Fredric Rolando, president of the National Association of Letter Carriers. “It would be particularly harmful to small businesses, rural communities, the elderly, the disabled and others who depend on Saturday delivery for commerce and communication.”
“The U.S. Postal Service’s decision to eliminate six-day mail delivery is a shortsighted solution with questionable financial savings and will only drive volume out of the system, stripping both the U.S.P.S. and businesses that depend on the mailing industry of potential revenues,” said Donna Harman, president and chief executive of the trade association.
While many will inevitably criticize Donahue and challenge the legality of his decision, the Postmaster General made a savvy decision considering current constraints. He had to do something to boost operating profits. The government agency can’t continue to lose $15 billion per year, and his choice seems the least objectionable of all possible options. Operating profits are simply the difference between revenues and expenses, and the ship on increasing revenues sailed a long time ago. Any increase in stamp prices will be more than offset by a decline in volume delivered, and revenue is likely to trend downward as time progresses. Thus, Donahue must focus on costs.
Here, there is very little wiggle room for the Postmaster General. The U.S.P.S’s bottom line is weighed down considerably by the $5.5 billion per year it pays for health benefits to future retirees, but that cost is virtually untouchable. Attempting to butcher the sacred cow that is public benefits and pensions would create quite the firestorm and increase legal costs from the inevitable lawsuits challenging the modification. That leaves two reasonable options to cut costs: cut service or lay off employees and add to the unemployment problem plaguing America and hurting the economy. Without a doubt, the only logical choice is to cut back service. It may unpopular in Washington, D.C., but a 2012 poll found that 7 out of 10 Americans support the move to help deal with financial troubles. From now on, we will just have to live without our letters on Saturday if we want the U.S.P.S. to remain a solvent government agency.