Posted on 06/16/2011 1:58:08 AM PDT by Straight Vermonter
The Bloomberg Businessweek cover story on the U.S. Postal Service a couple weeks ago was a real stunner - filled with so many juicy tidbits that it took a while to digest. It is just phenomenal that a handful of ingnoramuses (ignorami?) are doing this to a once proud example of American ingenuity.
We've heard the story over the past several years - the rise of email has demolished traditional first class mail. Free markets created the likes of UPS and FedEx, and thanks to better and more reliable service customers willingly paid substantially more for those products. So what has happened to the business model of the USPS?
It relies on first-class mail to fund most of its operations, but first-class mail volume is steadily declining—in 2005 it fell below junk mail for the first time. This was a significant milestone. The USPS needs three pieces of junk mail to replace the profit of a vanished stamp-bearing letter.
"The postal service is already carrying more junk than first class," says postal consultant Campbell. "Pretty soon it's going to be a government-run advertising mail delivery service. Does that make any sense? It doesn't make any sense."
No kidding. So my tax dollars are subsidizing junk mailers at a time of severe budget deficits? Yes they are - the postal service is no longer revenue neutral, by a ways.
Since 2007 the USPS has been unable to cover its annual budget, 80 percent of which goes to salaries and benefits.
The USPS has stayed afloat by borrowing $12 billion from the U.S. Treasury. This year it will reach its statutory debt limit. After that, insolvency looms. On Mar. 2, Postmaster General Patrick R. Donahoe warned Congress that his agency would default on $5.5 billion of health-care costs set aside for its future retirees scheduled for payment on Sept. 30.
So what's their plan? You won't believe this...
Under [Postmaster] Donahoe, the USPS is focused instead on trying to slow the migration of its customers to the Net. The man in charge of this task, which brings to mind King Canute's attempts to hold back the incoming tide, is Paul Vogel, a former letter carrier who is now the postal service's chief marketing sales officer. He is less spirited than his boss and understandably so; his job is to persuade banks to keep sending paper statements in the mail. It's a losing battle, and Vogel knows it. "Inevitably, it's going to go to those new technologies," he sighs.
You read that right - they are trying to convince billers to continue sending paper statements and customers from using the internet. In the age of Facebook and Twitter. And with his own federal bureaucracy slapping him in his face...
The other day he got a notice in the mail from the U.S. Senate Federal Credit Union. It said it was going paperless in August. Customers who still want to get their statements mailed to them would have to pay a fee. He dropped by the office on Capitol Hill to find out how much. A credit union worker told him the fee was $5 a month. "I thought to myself, that's $60 a year," he recalls. "Who's going to want to do that? What happens when Bank of America or Citigroup says you are going to have to pay to get your statement on paper?"
But keep pushing paper... where's that green lobby again? But the story gets better. Remember above where I quoted the figure that 80% of postal service costs go to salaries and benefits? Guess what they just did...
In March it [USPS] reached a four-and-a-half-year agreement with the 250,000-member American Postal Workers Union, which represents mail clerks, drivers, mechanics, and custodians. The pact extends the no-layoff provision and provides a 3.5 percent raise for APWU members over the period of the contract, along with seven upcapped cost-of-living increases.
You've got to be kidding, right? Mail volume dropping double digit percentages per year, the primary revenue driver of first class mail dropping faster, 80% of costs coming from employees, and they are giving uncapped raises and a no-layoff pledge? Obviously that won't exactly help their financial situation, so the usual knee-jerk sucker punch to taxpayers has to happen...
The USPS and its employee unions are lobbying for the least painful remedy: They want the agency to be relieved of its requirement to build a health-care trust fund for its future retirees. Democrats receive the vast majority of the contributions made by postal workers' unions, according to campaign finance records, so they tend to be sympathetic. President Barack Obama inserted a proposal in his 2012 budget to absolve the USPS of $4 billion of its retiree health-care liabilities in 2011. Meanwhile, Senator Thomas Carper (D-Del.) introduced a bill on May 17 that would relieve the USPS of its prefunding headaches.
Remember that "relieved" and "absolved" means the rest of us eventually pick up the tab. And we wonder why we have a deficit. There is some good news... or there could be. This situation with migration to email, USPS attempts to thwart notwithstanding, is obviously happening in pretty much every other country. So how are those foreign postal services faring?
Elsewhere in the world, postal services are grappling with the same dilemma—only most of them, in humbling contrast, are thriving.
What? Others are trumping American postal ingenuity? How's that work?
Last summer he [Philip Herr, Government Accountability Office] sent a small team of analysts to Finland, Sweden, Germany, Switzerland, Austria, and Canada. He was fascinated by what they discovered.
Three decades ago, most postal services around the developed world were government-run monopolies like the USPS. In the late '80s, the European Union set out to create a single postal market. It prodded members to give up their monopolies and compete with one another. The effort roused an industry often thought to be sleepy and backward-looking.
Many countries closed as many of their brick-and-mortar post offices as possible, moving these services into gas stations and convenience stores, which then take them over—just as the USPS is trying to do now, only far more aggressively. Today, Sweden's Posten runs only 12 percent of its post offices. The rest are in the hands of third parties. Deutsche Post is now a private company and runs just 2 percent of the post offices in Germany. In contrast, the USPS operates all of its post offices. In 2009 the Swedish mail carrier merged with Post Danmark, the Danish postal service, creating PostNord, a company with $6.2 billion in net sales.
Wait just a friggin' minute... the exhalted oft-cited examples of working nouveau socialist welfare states did what? They privatized a key government function? Egads! Sweden, Germany, Denmark, Switzerland and Finland just for starters. Yes they did. And how's that working?
Some of these newly energized mail services used the savings to pursue new business lines. Deutsche Post bought DHL, a package deliverer that competes with FedEx and UPS.
Many used their extra cash to create digital mail products that allow customers to send and receive letters from their computers. Itella, the Finnish postal service, keeps a digital archive of its users' mail for seven years and helps them pay bills online securely. Swiss Post lets customers choose if they want their mail delivered at home in hard copy or scanned and sent to their preferred Internet-connected device. Customers can also tell Swiss Post if they would rather not receive items such as junk mail.
Sweden's Posten has an app that lets customers turn digital photos on their mobile phones into postcards. It is unveiling a service that will allow cell-phone users to send letters without stamps. Posten will text them a numerical code that they can jot down on envelopes in place of a stamp for a yet-to-be-determined charge.
Innovation and profitability, compliments of the wonders of the free market.
"The question is, are there any special circumstances that suggest all these other countries are wrong and we are right?" says James I. Campbell Jr., a consultant in Potomac, Md., who advises foreign governments on postal policy issues. "The answer is pretty simple: The European countries are on a reasonably viable course. The U.S. is not."
Meanwhile the U.S. postal service business model is trying to keep customers from moving into the modern internet world and protecting an unwieldy bureaucracy rooted in the past.
Yes, go ahead and make me laugh. Or cry. Tell me again that you must raise my taxes to support "necessary" government services.
Sometimes we give up too much control for the sake of convenience.
Mrs. Prince of Space
That would be your own fault for not saving a copy of the file each month.
If you had selected paper billing and neglected to keep a copy you would be in the exact same spot right now.
"The postal service is already carrying more junk than first class," says postal consultant Campbell. "Pretty soon it's going to be a government-run advertising mail delivery service. Does that make any sense? It doesn't make any sense."
No kidding. So my tax dollars are subsidizing junk mailers at a time of severe budget deficits? Yes they are - the postal service is no longer revenue neutral, by a ways.
Where is the logic in this argument? It takes 3 pieces of junk mail to earn the same profit as 1 first-class letter. So that means that junk mail delivery *STILL EARNS A PROFIT*. Therefore, it is not a loss... and you cannot subsidize an activity that is producing profit. You can provide a subsidy to turn something that isn't profitable into something that is (like ethanol), but junk mail delivery, by the admission of the author, is already profitable.
As for the "government-run advertising mail delivery service"... I thought the job of the post office was to deliver mail. Not to determine which mail is more worthy than another and then reject the unworthy mail. Imagine if that *WAS* the case, though. Obama deems Republican mail to be unworthy and then the post office refuses to deliver it. Slippery slope here if you start asking the post office to determine the mail's worthiness to be delivered.
Then the article goes on to say:
Since 2007 the USPS has been unable to cover its annual budget, 80 percent of which goes to salaries and benefits.
Which, of course, disproves the junk mail statements. For our tax dollars are subsidizing the salaries and benefits of the postal workers, *NOT* junk mail delivery.
And the rest of the article goes on to rally against the postal union's bloated benefits. Which is great, but has nothing to do with the initial topic broached by the article in the first place.
Which means this author really needs to take a writing class or three.
Uh, you *save* the file, not print it out.
No catch-22. I have paperless records stored on my computer (and its backups) going back ten years.
Call them. I recently needed information for our friendly IRS that wasn’t on line and my insurance company found it for me.
I love getting all my lawful deductions even if I have trouble finding the paperword, the answer is probably available.
Many industries are required to retain records going back 10 years. I believe the telecom industry is one of them, but I’m not sure if wireless is under that umbrella.
Many of these outfits, esp. Verizon, will archive off legacy data to tape backups or digital backup libraries. You can call them to request a paper copy of the bill, and they’ll probably tell you it’ll take a week or more since they have to call back the tapes from places like Iron Mountain or SCE, run a recovery job on the tape for your record number, and put it somewhere that it can be recovered by another department.
We do this sort of stuff for medical records here all the time, and we have 2 operators who worked for Verizon and AT&T and had similar processes there.
"In other news, the almost defunct Buggy Whip Manufacturer's Union press officer has paid multiple visits to Ford, GM and Chrysler. The purpose of these visits is to convince the car manufacturers to build corrals on their car lots so car dealers can offer "green" alternative means of travel to car buyers...horses and buggies"
The gist of the article is that junk mail pays a cheaper rate than what other mail pays and thus does not bring in the same amount of revenue per item.
Why should junk mail get a reduced rate and then the post office have to beg for money? The cheaper rate is thus subsidized.
“I thought the job of the post office was to deliver mail”
Indeed it is but nothing demands paper be carried from post to post. And that is what the Post Office is trying to preserve, an outdated and obviously unworkable system at the expense of the public, a public who really is getting fleeced.
“Slippery slope here if you start asking the post office to determine the mail’s worthiness to be delivered”
It already does. Unless you pay extra your mailed packages take longer to deliver. And here where I live on Saturdays outgoing mail will not be picked up unless there is mail to be delivered at the same address.
“Since 2007 the USPS has been unable to cover its annual budget, 80 percent of which goes to salaries and benefits.”
If the postal service cannot cover its costs and 80% of these costs are salaries and benefits it makes sense to look there for cost cutting measures but due to the unions
that hasn’t happened. and probably won’t.
Increasing amounts of cut rate mail, declines in full rate mail, inability to reduce labor costs and following a dying model of service to its customers is killing a valuable part of our society. If the decline of the postal service continues something will replace it, whether as good or not is unknown.
But here you are blabbing about the author needing writing lessons. Try reading the article
i do no paperless billing. I mail every bill with a stamp.
Do not trust the cloud.
The clooud is not your information it is the clouds information and it is controlled by the cloud.
The postal service should have taken heed of things to come with the innovation of the fax machine. Next came the internet and then came it’s obsolescence because it thought that it was the only game in town.
Worse yet, every time they increased postal rates, they actually stimulated the need for more and more business to be shifted away to the internet.
The postal service is a classic example of a governmental agency trying to even comprehend what a competitive, profit driven business is like.
The Cloud, from a freedom perspective, is very interesting. People are willingly giving all their personal information to people who have no real motivation to keep it private, and a lot of motivation to mine it.
The cloud is for the stupid in my opinion.
The very name “electronic mail” came from the Post Office’s attempt to enter the nascent internet age with “e-fax and email” machines which for a while were in the lobbies of the PO’s.
But, if you had only one machine, you then had a line, and a lack of convenience and these things died quickly in the face of the laptop and portability and... wireless.
There are 3 unions at the USPS— the mail carrier, the people behind the storefront (the clerks) AND the people you never see— the people who sort the mail in back. The latter group went wild when zip codes were introduced and then later the Linear Sorting Machine.. the LSM was part of a long history of addressing volume increases mostly in first class mail.
Those interested should contrast this unionized govt. subsidized system with obambi’s comments on ATMs and jobs— the unions of the Postal Service are one of the most classic Marxist line unions there are... and the Postal Inspectors have to/had to keep an eye on them for espionage and for theft.
Post Office automation history.
http://inventors.about.com/od/mstartinventions/a/PostalMechanization.htm
Gimmegimmegimmegimmegimmeneithersnownorrainnorheatnorgloomofnightwillkeepyoufrompayingformyretirementgimmegimmegimmegimmegimme
Why should junk mail get a reduced rate and then the post office have to beg for money? The cheaper rate is thus subsidized.
But legal monopolies are enemies to competition and the innovation which they foster. A logical interim step would be to sub-license territories for the postal service, creating a bunch of new realistically priced jobs to replace the outmoded overpriced union jobs.
A densely populated area like New York, for instance, could probably hire kids on bicycles or motor scooters to deliver mail for a dime a letter, returning 34 cents to the system for early retirement buyouts and such.
A subcontractor in a less densely populated area would probably be able to return somewhat less than 34 cents per letter. But the concept is the same-- a cheaper delivery system which most subcontractors can actually make money on and return a little extra to the USPS to phase out their dinosaur model.
Then you get down to the really sparsely populated areas where some postal union clerk is probably only doing one hour or less of actual work per day even if the post office is open eight hours and paid at the handsome USPS rate. Subcontract their function to the local grain elevator or cafe or gas station which everyone in town drives through on their way to work, shop or whatever everyday anyway. You don't need daily delivery to your front door anymore. Give these people a post office box in a secure building down the road. The people drive by anyway. The businesses could use the extra traffic stopping to maybe buy a 6-pack, fill their gas tank or whatever when they are picking up their mail.
I don’t lose files from my computer - not only do I have automatic backups, I make periodic manual backups to optical media.
Paper copies can get lost, damaged by water or gnawed on by household pets.
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