USPS - Does it have a future?

I walk my dog in the late afternoon. The past couple times I've walked him, there has been a USPS truck with the driver just chilling in the front seat. Now, I was going to take a picture of this today, but I decided not to because I don't want my mailman to lose this job if this actually becomes more publicized, but I wanted to use it as an opportunity to get into the USPS debate.

As for my postman, is he off the clock? Did he already finish his routes and is he just waiting for quitting time? What's the deal here?

If you are unaware, USPS posted a $3.1 billion loss in its third quarter:

Total mail volume for the quarter that ended June 30 fell to 39.8 billion pieces, a 2.6 percent drop from the same period a year earlier, as consumers turn to email and pay bills online.

And what might exacerbate the system is a series of prepayments that will create cash concerns for the struggling postal service:

"We are experiencing a severe cash crisis and are unable to continue to maintain the aggressive prepayment schedule," Joseph Corbett, the agency's chief financial officer, said in a statement.

"Without changes in the law, the Postal Service will be unable to make the $5.5 billion mandated prepayment due in September."

With the government's debt as it is, it is unlikely that the government will be able to assist the USPS as it could in a more stable financial situation.

Additionally, like many government run bureaucracies, the post office isn't run efficiently and isn't allowed to be run in that way without the permission of congress:

Postal officials have called for Congress to change the way USPS operates, saying it needs more flexibility to close failing post offices, cut Saturday delivery and raise rates.

The agency is studying about 3,700 of its 32,000 post offices, stations and branches for possible closure. Officials plan to replace post offices by contracting with private retailers to sell stamps, offer shipping and provide other postal services.

The losses have caused postal higher ups to take shady measures in order to limit costs and to maintain its public image:

Managers at the U.S. Postal Service have skirted the agency's performance evaluation rules, reducing or eliminating employee salary increases in some cases to avoid the negative publicity that bonuses could bring the financially ailing agency, according to a new audit.

Here's how it was done:

Forty-six percent of evaluators and 40 percent of second-level reviewers surveyed reported that employee ratings were lowered during the review process. Respondents said they were instructed by a superior to bring ratings into line with average scores or believed that ratings should be lowered to avoid raising suspicion. Others were concerned that employee performance targets were too easy to meet or that the public would react negatively to workers receiving bonuses given the agency's fiscal condition, the IG found.

I don't want to get into an argument about whether these measures were right or wrong. I understand why they did them, but it doesn't make it right. The problem is the system.

As far as solutions, there are many. These range from finding cost savings or getting rid of the postal monopoly all together. Here's a bit of a cost reduction argument, regarding those pre-payments:

The problem lies elsewhere: the 2006 congressional mandate that the USPS pre-fund future retiree health benefits for the next 75 years, and do so within a decade, an obligation no other public agency or private firm faces. The roughly $5.5 billion annual payments since 2007 — $21 billion total — are the difference between a positive and negative ledger.

Mail is not the problem. It's these pre-payments that are the problem:

Furthermore, USPS' financial problems have surprisingly little to do with delivering the mail. In the past four fiscal years, despite the worst recession in 80 years and despite Internet diversion, revenues from postal operations exceeded costs by $611 million.

Mack Julion of the National Association of Letter Carriers has this to say in defense of the postal services:

The fact remains that everyone does not pay their bills online or even have access to the internet. Those who live in rural communities, low-income areas, and the elderly would be impacted the most by the slower delivery time that would result from just one less day of mail service. The Postal Service is still very relevant and for only 44 cent a stamp we don't require a dime of your tax dollar! If it was not for the congressional mandate to pre-fund our retirement, the Postal Service would have seen profits of over a half a billion dollars over the past five years. Right now the United States Postal Service does not need to close post offices, reduce services or a bailout -- we just need Congress to fix the law that is breaking your Postal Service.

The cause of the trouble is something everyone agrees on. It's the pre-payments.

How to solve this issue is the disagreement. Some think this should be done directly. While the proposed solution is to close down branches.

Personally, I believe the solution is more institutional than anything. The constraints put on the USPS put them in this situation. They need more leeway in how they can manage these things. They cannot make decisions regarding it's financial viability without the approval of congress. This puts them on an uneasy plain. It is not efficient to have this bureaucratic liability. The post office needs more freedom.

As far as getting rid of the post office, I think it's a bad idea. While most services have become digital, the post office still serves a purpose. It would be unwise to disband it.