To Save the Post Office, It Has to Be Tremendously Downsized

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President Donald Trump wants to restructure the U.S. Postal Service (USPS). It cannot keep itself afloat financially. It should not be an agency that requires endless government financial support. The only reasonable way to reach a goal of financial independence is radical cuts in the cost of operating the Post Office, which, among other things, requires tens of thousands of job cuts.

In its most recent quarter, its first fiscal quarter of 2018, which ended December 31, the USPS had revenue of $19.2 billion, virtually flat with the same quarter the year before. It has a net loss of $540 million, compared with a profit of $1.4 billion. After workers compensation plans, pension costs and other costs related to retired employees, the USPS management claims it had “controllable” net income of $353 million, compared to $522 million in the same period the year before. It is a razor-thin margin and is shrinking. It is also nowhere near the profits made by competitors UPS and FedEx. The USPS management would say it has to perform functions the private sector does not.

The two most frequently suggested ways for USPS cost-cutting are to reduce delivery to three days from six. The other is to shutter thousands of small post office locations, many of which lose money. The USPS has over 500,000 career employees and 141,000 non-career employees, as well as 30,800 USPS-managed retail offices.

A cut in the number of delivery days would allow the service to cut tens of thousands of workers, if not over 100,000. A cut in locations by a third would also allow for a huge downsizing.

The USPS Inspector General already has said past cuts in costs were related to employee reductions. In April 2016, the office reported:

When total cost is adjusted for inflation and the Retiree Health Benefits prefunding obligation is excluded, the Postal Service has decreased its total costs by $13.7 billion since 2006, our paper found. More than 70 percent of the savings has been from labor expenses.

In 2014, the Washington Post reported:

The U.S. Postal Service’s push to eliminate Saturday delivery for all but parcels has spawned a war over the number of jobs that would be eliminated. Lawmakers such as Connolly cite an estimate of 80,000 that was generated by the National Association of Letter Carriers. The NALC says its number comes from USPS data. But the USPS, in a letter to Congress, claims the figure is really just 25,000 full-time equivalent jobs — and it would be accomplished through attrition, not layoffs.

Even if the number is in the middle, or 50,000, cutting two more days during the week would take job eliminations much higher.

Research on the cost of the USPS shows that some locations bring in only tens of thousands of dollars a year. If these are not shuttered, at least their hours of operation could be cut.

The mission of the Post Office was once that it deliver mail six days a week and have a post office location near most Americans. It cannot afford either of those anymore. It is time to rethink the service’s mission and make it much smaller.