Snow, rain, heat and gloom of night may not prevent the U.S. Postal Service from making its rounds, but the recession and the Internet might.
The nation's second largest employer is beset by dwindling mail and management restrictions that have it slogging through red ink toward an uncertain future - unless Congress delivers some relief.
The postal service will lose $7 billion this year. Postmaster General John E. Potter told Congress that something has to give or by the end of next month the service won't have the working capital reserves to fund operations or meet its payroll. Punctuating that warning, the Government Accountability Office has put the postal service on its "high risk" list, signaling the need for immediate attention from Congress.
It's not like we'll all wake up one day soon to empty mailboxes. But the postal service can't continue doing business as usual.
Short-term, Congress can help by passing bills to temporarily relieve the service of its $5.4-billion annual obligation to pre-fund health care for future retirees. That, and a bit of borrowing - Congress should lift the $3-billion-a-year cap - would see the service through the present crisis.
Pre-funding retiree health care is the prudent thing to do. But the federal government as a whole doesn't do it. Nor do most local governments. In fact, impending payments for retiree coverage are a ticking time bomb for municipalities and taxpayers alike. Funding that obligation up front puts the postal service in the vanguard of good government. That's why relief from that annual bill, while key, should be temporary.
Beyond that, Congress needs to cut some strings. In 2006, the postal service was ostensibly freed to operate as a profit-making business. Congress should let it. Then postal officials must use any financial breathing room and management freedom they can get to restructure operations. And to secure its future in the digital age, officials need to be creative in reimagining what the postal service does and ways to modernize and expand.
The postal service is a unique operation. It was created to bind the nation together by making it possible for people anywhere in the country to communicate with one another. It served that function essentially alone for much of its 234-year existence, and even today it is singular in delivering daily to each and every household in America.
The post office operated as a government agency until 1971, when it was transformed into a not-for-profit business. It hit the break-even mark every year and by 2005 had retired $11 billion in debt. Then in 2006, Congress changed the business model again and permitted the service to make money.
But along the way the world changed. Electronic communication, such as e-mail and online bill paying, and then the current recession caused the annual volume of mail to plunge from 202 billion pieces in 1999 to 175 billion in 2009. With huge fixed costs for personnel and facilities, and the need to accommodate a million new households and businesses each year, the postal service hasn't been able to cut costs fast enough to keep up.
The workforce dropped by attrition from 797,795 in 1999 to 636,211 today. Cost-cutting averaged $1 billion a year from 2001 to 2007, and hit $2 billion in 2008.
But the effort is hamstrung by constraints that don't apply to truly private companies: The postal service can't lay off workers. It can't renegotiate labor agreements. It can't close any of its 36,723 post offices without congressional approval, and its rationale for doing so can't be solely economic.
Congress must let postal officials do more. The service is seeking permission to cut mail delivery from six days a week to five, lopping off Saturday, the day volume is lowest. Officials project that change alone would save $3.3 billion a year. They also want greater freedom to close post offices. They should get that cost-cutting authority free of the usual "not in my district" roadblocks.
Officials say the erosion in volume due to the Internet has slowed and shows signs of plateauing. That should help ease their woes. So should competitive prices and innovative services, such as the Priority Mail flat box rate - "if it fits, it ships for a low flat rate" - which has helped the service capture 80 percent of the delivery business generated by eBay. But that's just scratching the surface.
With almost 37,000 post offices - more outlets than McDonalds, Starbucks and Wal-Mart combined - postal officials are on the mark when they say the time has come to introduce new lines of business. The U.S. Postal Service is currently limited to mail-related products and services, like selling boxes and tape. But the postal service in France sells cell phones. In Italy it sells insurance. The U.S. service needs the freedom to branch out too.
The ability to deliver to 150 million homes and businesses a day also presents an opportunity. Officials should be thinking about what else they can deliver - or pick up - at all those daily stops.
A service that can find its way to all those doorsteps should be able to find its way in the new, digital world. hN