As an author and book blogger, I mail a lot of books, and at the cheapest possible rate. A few weeks ago, a postal clerk informed me that they'd appreciate it if I stopped sealing the shipping envelopes ahead of time because they are now supposed to open all Media Mail packages to make sure that they contain only items classified as "media"-no letters, loose pages, miscellaneous tidbits tucked in for the ride. Obviously the U.S. Postal Service is trying to recover a bit of lost revenue. But given its dire straits, catching a few Media Mail cheats is like bailing the Titanic's flooded hull with a teaspoon.
According to a report from Bloomberg Businessweek, the USPS is destined to default on $5.5 million of healthcare costs in September. Since it's already almost $15 billion in debt and has reached its statutory debt limit, some sort of federal intervention is likely. But a long-term solution will require breaking out of the box the Postal Service has built around itself. The problems are as huge as the structure: more than half-a-million workers (making the USPS the second-largest civilian employer) to whom goes 80 percent of the organization's budget; almost 32,000 post offices, which have to be staffed by members of the four unions; approximately 563 million pieces of mail per week to be delivered, most of which is what we call junk mail.
In the early 1970s, the Post Office Department was reorganized as the United States Postal Service, a government corporation that was henceforth to pay for itself and operate more like a private business than an agency. The USPS based its business model on the delivery of first-class mail, and some of us may remember that the price of a stamp started climbing steeply from that time. It was still a bargain-at 28, 32, or 44 cents-to be able to drop a letter into the mailbox and be reasonably assured it would get to its destination, even to the remotest village in Alaska or the bottom of the Grand Canyon. But something happened on the way to the future-something called the digital revolution. In 2005, the volume of first-class mail dropped below junk mail for the first time. Since 2006, total mail volume has declined 20 percent, and periodic surges in junk mail (which tend to rise or fall with the economy) haven't made up the difference.
Efforts to reverse the trend include some sound proposals: reducing 20 percent of workers by attrition, cutting out Saturday delivery, and closing a small percentage of its post offices. Also some buck-passing proposals, like asking the federal government to take on healthcare pensions for postal employees who served in the military and relieving the USPS of its obligation to build a healthcare trust fund for future retirees. And some of the hopes for future solvency sound like wishful thinking, such as increased volumes of junk mail and reversing the digital trend (e.g., persuading banks and utilities to stick to paper statements and bills).
But more creative ideas for modernizing the USPS have come, surprisingly, from Europe. Many European countries faced their own postal crises years ago and decided to privatize or hybridize their operations. Sweden drastically cut the number of official post offices to 12 percent, leaving the remaining 88 percent to be contracted out to service stations and retail outlets staffed by non-union workers. Germany privatized its postal service, and the resulting businesses now offer their own competitive package delivery and express mail. In some countries, the postal service has developed digital stamps (a code to be written on the envelope) and digital letters. Not all citizens like these newfangled products and innovations, but they adapt.
Meanwhile, the USPS is routinely raising pay and benefits for its unionized workers and hoping for increased volumes of junk mail to make up its deficits. Do we need a government-sponsored ad-delivery service to stuff our mailboxes with more material we never asked for and usually pitch in the wastebasket as soon as it arrives?
Last week saw the last gasp of Borders bookstores. The moral is simple: If you want to stay in business, watch the trends. What customers want today may not be what they want tomorrow. The USPS is supposed to act like a business but never detached itself from the federal teat, and still expects any rough landings to come with comfortable cushions. As someone who still writes and sends letters, I hope the USPS survives. But prospects are not rosy.