published Thursday, November 3rd, 2011

Hard times at the post office

The U.S. Postal Service is in serious financial trouble, and there is no readily apparent solution.

Just this year, the Postal Service is expected to lose $10 billion! That's on top of the nearly $9 billion that it lost in 2010 -- and there's little reason to think the post office is going to be able to turn things around anytime soon.

Exactly what has taken place that has put the Postal Service in such difficult circumstances?

Well, the key has been rising consumer use of the Internet in place of traditional mail. Millions of Americans today are using the Internet to pay their bills, rather than using traditional stamp-and-envelope mail to send in payments. And millions prefer the speed and convenience of email versus traditional letters to keep in touch with friends and family. Businesses, too, are able to rely more and more on online correspondence.

As Randall Stross, a business professor at San Jose State University, noted, the Postal Service "continues to maintain the huge human and mechanical infrastructure that was assembled for a pre-Internet age."

How huge is the Postal Service? Well, it has more than 570,000 employees. It also has nearly 216,000 vehicles, which drive 1.25 billion miles each year.

But how much has the Internet reduced the volume of traditional mail routed through the Postal Service? Consider this: In 2006, annual mail volume was more than 213 billion pieces. By 2010, it had declined to 171 billion pieces. That is a drop of 42 billion pieces of mail in just four years!

Of course, that means huge declines in postal revenue because people are buying far less postage. From just the second quarter of 2010 to the second quarter of 2011, for instance, there was an almost 9 percent decrease in revenue from first-class mail.

The Postal Service and Congress are seeking solutions, including the possibility of closing literally thousands of low-volume post offices around the country. The Postal Service is also trying to address the fact that often it doesn't have enough work to keep all of its hundreds of thousands of employees occupied.

As we said, there is no easy answer.

But one obvious "non-answer" is any sort of taxpayer bailout of the Postal Service. The number of post offices and postal employees around the country should reflect true market demand. Taxpayers should not have to prop up unneeded services with a bailout by Congress.

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hambone said...

Why would I expect the TFP to mention the real cause of the post office's problems?

November 3, 2011 at 12:21 a.m.
nucanuck said...

Look into the USPS pension fund and the huge amounts of money they paid forward into the US General Fund. There you will find a different story from the editorial above.

November 3, 2011 at 12:21 a.m.
acerigger said...

I'm sure there is a group of "investors" hoping to privatize the postal service. I'm also quite sure that their lackeys and boot-lickers in the corporate media will be contributing all the mis-information they can to the effort.

November 3, 2011 at 2:15 p.m.
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