Crippling Labour Premium is US Post’s Most Pressing Problem

Letter to the Editor

Sir, your comment on the U.S. postal reform bill (“American dynamism is lost in the mail,” Sept. 1) suggests that e-mail is the biggest threat to the postal industry’s future.

In fact, while e-mail has caused a drop in mail volume, it’s a relatively minor cause among the many that have led the U.S. Postal Service into dire financial straits.

The USPS’ biggest problem is out-of-control spending. Some 80 percent of its expenditures go toward labor, compared to about 50 percent at private delivery companies. Postal workers earn about 25 percent more than their private-sector counterparts. This crippling labor premium, defended by powerful unions, is the Postal Service’s No. 1 problem.

The problem is compounded by a worrying lack of financial transparency. The Postal Service lumps some 40 percent of costs into the vague category of general overhead, making it virtually impossible to know whether any particular product is making money.

To survive, the USPS will have to, at a minimum, rein in costs and improve its accounting. The congressional reform plan doesn’t encourage it to do either.

Yours truly,
Mr. Sam Ryan
Senior Fellow
The Lexington Institute