5 Ways to Fix the U.S. Postal Service

Issue Brief

With the release of their Transformation Plan, the Postal Service is effectively trying to distract attention away from the true nature of its problems: Namely, its management’s unwillingness to accept that the main mission of the Postal Service is to be the provider of hard copy, letter mail delivery. There is nothing in the existing legislation or rate making process to prevent hard copy letter mail delivery from being an efficient and affordable service. By keeping a clear focus on these 5 steps, the Postal Service can be well along the road to a healthy recovery:

1. The USPS must focus on productivity improvement, preferably measured by total factor productivity (TFP), which improved just 12 percent over the last three decades. Despite billions invested in new equipment to increase efficiency, productivity has remained stagnant systemwide. These goals must be made public with quarterly reporting on achievements.

2. Any fix for the problems of the USPS must start with transparency. Postal public relations statements must be replaced with unbiased, timely data releases so the true nature of the problem can be known.

3. The productivity gains must be concentrated in reductions in the workforce rather than unsustainable reductions in such thing as building maintenance. Recent arbitration agreements make reducing the postal labor force extremely difficult. But unless that can happen, sustainable productivity gains are unlikely.

4. Management attention should be focused on core traditional hardcopy letter mail services rather than e-commerce and other non-core services such as package delivery.

5. Make sure that the Negotiated Service Agreements offered to large mailers are not losing money. It has been suggested that these discounts often exceed the very savings they were intended to create. But because the costs have never been subject to public audit, the public has no way to know. Without a complete transparency of postal costs, we may never know for certain.

Lexington Institute Adjunct Fellow Charles Guy, Ph.D. is the former Director, Office of Economics, Strategic Planning, U.S. Postal Service.

– Charles Guy, Ph.D. is the former Director, Office of Economics, Strategic Planning, U.S. Postal Service. He is currently Adjunct Fellow at the Lexington Institute.