Skip to comments.Is rural mail delivery the real problem with the USPS budget?
Posted on 02/09/2013 1:09:57 PM PST by SeekAndFind
It's Saturday, and I went out on the front porch this morning after shoveling out from Nemo and got the mail as usual. There was an advertisement trying to get me to switch homeowner's insurance and a coupon flyer for the local grocery store. That sort of surprise waiting in the mailbox doesn't exactly get me all up in arms over the Post Office's idea to cancel Saturday mail delivery. Up until now, I’ve been assuming that the Post Office is simply an unprofitable enterprise and they may have to put trucks out on the road less often to reduce costs. I suppose I’ve been mostly in line with Jon Stewart’s rather cynical take on the subject.
I can’t believe the business model of transporting letters with vehicles across the country for forty cents a pop is failing. Sorry… where ya want me to take that? Hawaii? Yeah, no trouble. I’ll put it on a plane, get it there in two days. Uh… ya got a quarter?
But perhaps there’s more to the story than that. Doug Mataconis links to Matthew Yglesias who seems to feel that government subsidy of more expensive deliveries to rural areas is part of the rot at the heart of this business model. What was once a lucrative monopoly, according to this line of thinking, has been squeezed out of the profit margins.
But the monopoly has become less lucrative and thats not going to change in the future. Thats squeezed the budget, squeezed postal workers compensation packages, and is now squeezing the quality of nationwide mail service. As a country, we need to ask ourselves whether providing subsidized mail delivery to low-density areas is really a key national priority. Without the monopoly/universal service obligation, its not as if rural dwellers wouldnt be able to get mail, its just that they might need to pay more in recognition of the fact that its inconvenient to provide delivery services to low-density areas. Nostalgia-drenched Paul Harvey Super Bowl ads aside, its not the case that rural Americans are unusually hard-pressed economically or are disproportionate contributors to the economy. They are, rather, the beneficiaries of numerous explicit and implicit subsidies, of which the Postal Services universal service obligation is one.
Doug seems to agree:
Most of the complaints one hears about privatizing first class mail and ending the USPS monopoly on its delivery center around the issue of what is to be done about delivery to rural areas. The basic idea behind is that it shouldnt cost rural customers, or those who want to correspond with them, more to send first-class mail than it does to send first-class mail from one major city or suburb to another. Theres no economic rationale for this kind of policy. Indeed, it exists nowhere else almost nowhere else in the delivery business right now. If you want to send a package via USPS, you are generally going to pay based on where youre sending it to. UPS prices its delivery services in much the same manner. The only place you see flat-rate pricing is in things such as overnight mail, which is based on an entirely different kind of business model from regular package shipping and for which the customer is paying a premium for the convenience of next-day, or 2nd-day, delivery of something that would ordinarily take a few days longer.
I’m no package delivery expert here, but I’d always sort of assumed that the United States Post Office was pretty much designed with an untenable business model baked into the cake. It’s something which is mandated by the Constitution, thereby bringing the government into the mix, but it’s being expected to run at a profit while conforming to a business model which no sane, private business would ever consider. It costs more to drive a letter or package fifty miles out into the boonies than it does to simply get it to a commercial hub in a city or suburb with the bulk of the parcels. If you charge the same amount for all of the letters, somebody is getting more value for the same price point than everyone else, simple as that. I suppose you have to average all the deliveries together to come up with a flat price which keeps you in the black, but it’s got to be one hell of a lot more than fifty cents per letter.
With that in mind, it’s hard to see how eliminating Saturday delivery does much to address the real problem. You’re still running the same losing business model… you’re just losing money more slowly by doing it one less day per week. I’m still not entirely opposed to just having the Post Office jack up the rates far enough to make the service profitable. If it costs more to mail junk – particularly bulk advertising and such – people might think more carefully about what they are mailing, rather than flooding our boxes. Exceptions could be made for free or low cost postage for the mailing of payments to utilities or answering required government correspondence. But do you really think it’s reasonable to be able to send a letter from Virginia to Oregon in two days for four bits?
Its the fault of the bitter clingers....again.
Haha, no, that’s not the answer. Why nothing mentioned about the bloated pension funds? (Someone had to bring it up in the comments section of that article; another commenter posted about heavily-discounted junk mail rates.)
The Constitution only “empowers Congress “To establish Post Offices and post Roads”. It does not say it must run the Post Office!
I am not sure how this would work. If you live in the country and want to mail a letter somewhere, how could you possibly know how much it would cost? Every letter would have to be taken to the post office to determine the cost.
The postal service would be making a profit if it hadn’t made big promises to the union. Had they paid normal private sector wages there would be no problem. Idiots like this writer should do something productive for a living.
If everyone used the post office to send each other first class letters instead of sending emails or text messages, the post office might even break even. My neighborhood letter carrier told me that about 85% of his mail volume is bulk rate junk mail. As he put it, “Without the junk mail I wouldn’t have a job”. And bulk mail rates are way lower than first class.
Time to just disband the post office. Person to person communications have moved on to other technologies. Want to send something physical? Then pay FedEx, UPS, or someone else to deliver it. Delivering “thoughts” via email is cheap. Delivering real tangible stuff isn’t.
I would support cutting delivery back to, at most, twice per week. Even one delivery per week wouldn’t really impact me, other than perhaps to make the occasional birthday card late depending on timing.
I worked for the Post Office for a few years. Every year management was given a bonus at Christmas. It didn’t matter if they were losing money or not.
Why would a business that’s losing money pay a bonus?
Sorry for shouting but it's clear that, without exception, private enterprise always beats a government-run entity. Look no further than public schools compared to private schools. Likewise, the artifice of the taxpayer-funded Postal Service stifles what would otherwise be a very efficient, cost-effective delivery system with the likes of FedEx and UPS going head-to-head in a free market to offer consumers real value.
No the biggest problem with the post office is that the older workers all OWN jobs and negotiate their work. Make everyone a regular employee, get rid of the union, and treat the temps right and there would be a big profit.
I wonder whether the current rate of 46¢ for the first ounce is too low. To deliver a one page letter to the next town, UPS quotes $11. To send it to NC costs $16.
“The trouble is called JUNK MAIL , raise it to first class postage and watch the profits go up. How many pounds of paper thrown away each year ,that is never read ?”
Profits go up? More likely the post office loses what little it currently makes from junk mail. Does anyone actually think that the junk mailers will pay first class postage rates? Most of these advertisers are probably already wondering if their current junk mail advertising campaign is actually generating enough business to justify the cost. Why would anyone think that the junk mail business is not sensitive to the cost of postage?
From my point of view, the post office should charge $10 postage for every advertising piece - especially the credit card applications! I’m opposed to chopping down trees to make paper to make junk mail to fill landfills. And I’m a conservative! We are currently using tax money to subsidize the junk mail industry.
The airlines did that a while back too. “Paying to fail” (i.e. management) is certainly not uncommon.
Thomas Jefferson feared that the postal service would become a source of patronage and a waste of money. Jefferson also expressed doubt at granting Congress the power to designate post roads, as he considered road building to be a state responsibility.
The real problem: the USPS board of directors (whatever called) refuses to set prices at viable rates.
I don’t understand why the post office needs to deliver to each residence address. Delivery to a neighborhood dropoff should suffice, with residents going there to pick up their mail. This can save a lot of money. If a dropoff point is within six to ten blocks, that is walkable. For those who argue on behalf of handicapped or others stuck in a residence, same rules apply as to how they obtain food and other goods via secondary help.
I also agree that the business model should change, charge more for expensive delivery destinations. And charge more for junk mail; I hate the stuff.