Deliver Us From The Postal Service Monopoly

Article Published in the Hartford Courant (CT)

Some 1,300 U.S. postmasters will rally on Capitol Hill today to urge Congress to protect the Postal Service’s monopoly on letter-mail delivery. Although the 42,000-member National Association of Postmasters claims to be supporting your right to regular and affordable mail service, they’re really opposing any attempt to improve service at all.

Debate over how to overhaul the bloated and inefficient U.S. Postal Service has been underway since a presidential commission released its recommendations last August, and continued yesterday in a hearing of the Senate Governmental Affairs Committee, of which Connecticut Sen. Joe Lieberman is the ranking Democrat.

Sensible reformers don’t want to abolish the Postal Service. They simply want to allow well-established private-delivery companies to put packages in your mailbox. Right now, USPS is the only organization allowed to do so. Why is USPS so afraid of letting a private company use your mailbox?

Another proposal on the table – recently urged before Congress by Fred Smith, founder of Federal Express – is to allow a private carrier to transmit a letter, provided the carrier charges at least six times the basic stamp price. Yet the Postal Service is fighting tooth and nail to stop this from happening. Again, why is USPS so opposed to letting a private company deliver an ordinary envelope for $2.22?

Postal representatives argue that without a letter-mail monopoly, USPS will not be able to afford to deliver to all parts of the country. Their reasoning goes something like this: Urban routes are profitable, rural routes are not. Therefore, the USPS monopoly must be maintained so that profitable urban routes can subsidize loss-making rural routes.

If this monopoly is taken away, Postal representatives claim, private companies would sweep in to snatch away the lucrative city business, and the Postal Service would be unable to afford rural delivery.

The numbers, however, put the lie to this “rural delivery” argument.

According to Robert Cohen, director of planning for the Postal Rate Commission, there is no urban-to-rural subsidy. Mail volume, “not population density or urban character,” is what determines whether a route is profitable.

In fact, rural routes, in total, are quite profitable, says Cohen. Among all postal routes, slightly more than half are profitable and the rest are not. This ratio holds true for rural routes as well as urban ones.

Moreover, loss-making rural routes constitute “only 2.5 percent of all addresses served,” according to the Postal Rate Commission. Serving these routes results in a loss of just $121 million or 0.3 percent of USPS expenditures. If private companies were allowed to deliver letter-mail, new tax revenue gushing in from the formerly tax-free $68 billion mail industry would easily cover any subsidies needed to make such deliveries.

Not only is the argument in favor of keeping the Postal Service’s monopoly flimsy, but monopolies also breed inflated costs, inefficiency and a lack of innovation. A cursory look at the USPS confirms as much.

Labor, which accounts for only about 50 percent of total costs at private-delivery companies, makes up 80 percent at the USPS. According to the Presidential Postal Commission, new hires receive a 28.4 percent pay increase, on average, when they join the USPS. Meanwhile, the Postal Service has wasted more than $50 million sponsoring professional sports teams – sponsorships that have absolutely nothing to do with delivering your mail.

Today, the Postal Service is $7 billion in debt and lobbying Congress to fork over an additional $750 million. Yet even as this government organization is hemorrhaging financially, it is vehemently opposing attempts to save it – no matter how sensible.

To justify its own continued existence – including a $68 billion budget and 834,000 workers – the Postal Service simply refuses to accept that it is becoming increasingly less relevant in an age of digital communications.

The postmasters are welcome to march on the Capitol. But no one should be fooled into thinking they’re supporting universal service. They simply want to preserve the Postal Service’s inefficient, outdated, money-losing monopoly.