
The United States Postal Service has been delivering financial efficiency throughout its long history... said nobody. Through rain, sleet, and snow it drops cash flow like it does bills through your mail slot. Why did the USPS lose $69 Billion in 11 Fiscal Years 2008 - 2018? Their cost of doing business was $69 billion more than the money they collected. (we asked our MBA's to do the math) The real question is: Why do they spend so much more than they make? Some people say it is because they have to pre pay their retirement liabilities. Some say it is because no one uses snail mail anymore. Some say its revenge from Santa Clause for not delivering all those kids wish lists because the North Pole was just too far for the USPS. Santa had to guess what they wanted and all the kids were upset because all they got were socks. (Santa is a terrible guesser) Truth is: Pre paying retirement liabilities is a financial strain in the short run but in the long run actually is more financially efficient. Snail Mail delivery has dropped significantly in the last 10 years but package delivery continues to increase substantially. No one really wants socks for Christmas but we only have 3 mismatched pairs left and 2 socks have holes in them so we probably need them.
USPS has ignored trends and failed to capitalize on new ones. Congress had originally set up a sweet monopoly situation for the USPS thus it limited the amount the USPS can raise prices on stamps and packages. This has become a huge problem on the revenue side. The USPS inexplicably still delivers mail 6 days a week to everyone. That is a huge problem on the cost side. Dear USPS, we really dont need that coupon for pizza and that flyer for discounted mattresses delivered everyday. (we know our grandparents still need those paper bills and to mail out check payments but everyone else pays online) If you delivered mail 3 days a week that would be sufficient and 1 day a week in rural areas (or more frequently as needed for medications, but if you need your meds everyday... you should probably have more than a 1 day supply on hand. We've heard doctors can even give them out for a full month supply or more, please check with your doctor for more information) That will cut your staff and your costs significantly. We wish this was our idea but.... the USPS office of Inspector General had this idea in 2010! (
USPS Inspector General 3 Day Delivery) WTF?! Their own math estimated 3 day delivery could save $10 Billion. So lets get this straight... The USPS has known about solutions to some of their financial problems for at least a decade, and then continued to do the same things. (Doing the same things over and over and expecting different results... whats that called again?) Now they are asking for billions of dollars because no one wanted to make the tough decisions years ago. How very democratic of you. We dont want to hurt anyone right now so lets screw everyone in the future!
Change is hard. We get it. We once had to stop eating ice cream for breakfast. (Worst week ever.) It is a shock to the system to realize the way things were is not the way things are. (We're sure that eating a pint ice cream for breakfast cant possibly be contributing to being significantly overweight and pre-diabetic) Many of you will get stuck in the first step of grief. (denial) Yes, some mail workers will lose jobs. This is unfortunately unavoidable no matter what. Most companies no longer offer pensions because it has drove many companies to the brink of bankruptcy (or put them into bankruptcy, see big car companies or most cities in Illinois) which is why (we're guessing who really knows why congress does some things) congress mandated a prepayment for these liabilities. The argument that most companies dont have to prepay retirement liabilities is true because most companies dont offer them. Most companies offer things like matching contributions to IRA's and 401k's which are paid into by employers as you get paid. Most companies also would have ability to file for bankruptcy. USPS being a quasi governmental body doesnt have that ability. (Or does it?) So, which is worse? Allowing the USPS to continue to operate seeing that pensions and liabilities will drive it into bankruptcy within 10 years. Or, make them prepay their future liabilities so they are forced to quickly (like 10 years quick) come up with long term solutions to their financial problems? The longer you wait the more cuts will eventually have to be made. It sucks, the choices are hard, and no one wants to be the person(s) that killed jobs and took away any persons livelihood. The post office needs to move posthaste and stop mailing it in before they reach the point where everyone's termination papers get stamped.
The solutions seem somewhat simple. Cutting overhead. Raise prices on packages and ship more of them if you would like to continue everyday delivery. (good luck with those economics) Raise prices on stamps. Of course you dont have to raise revenues or cut costs. You can just take a huge taxpayer bailout and continue business as usual. You can even continue using the claim that the USPS is a public institution as an excuse. It was a necessary public institution until people invented better ways to communicate. (like Blogs, insert eye roll) The USPS first ran into financial trouble in the 1840's with an out of date business model. Luckily, congress stepped in and solved the problem for good. Until 180 years later... history it seems has sent a first class disaster package to the future. Its all good, we are sure that congress will step in and solve the problem for good!
Art from:
MAD #512, December 2011
Writer: Jeff Kruse
Artist: Anton Emdin