Editorial: The problem with efficiency

efficiencyThe household budget looks bleak. There’s bills to pay and, based on what you currently bring in, not enough money to cover it all. The automatic response is to look for things to cut, like trips out to eat or that planned trip to a baseball game. But if there was a way to change the way your bills come in and balance things out, wouldn’t you do that instead? Why then, when a solution to the Postal Service’s debt presents itself, does Congress not bring that to a vote?

Mail collected in Waynesboro, Staunton or Augusta County doesn’t immediately go to its intended location. First, it’s driven to Richmond, where the piles are sorted and distributed as needed. Then the piles for each of the respective areas are brought back, sorted and given to carriers. To be fair, the Richmond division is rated as one of the most efficient in the nation, by USPS rankings. Still, it seems odd to send the mail on a 194-mile round trip, especially for a department that’s looking to save money.

Previously, mail from this area was taken to Charlottesville to be sorted, a much shorter haul. That changed in 2010, when the Postal Service closed that processing center, citing budget concerns. Now the same thing will happen to residents in the Roanoke area next year, with their mail ending up at the processing center in Greensboro, North Carolina, roughly 99 miles away.

The argument is that this is being done in the name of efficiency and to save on cost. It’s cheaper to pay the gas and drive mail to a central location, rather than pay healthcare, salaries and retirement benefits for local workers to sort the products.

Just looking at the numbers, it’s hard to argue against some type of change. The USPS reports that over the last three years, the operation was $26 billion in debt. These planned cuts, and the previous ones, would help slightly balance that out. The first phase of cuts over the past two years happened nationwide, eliminating 141 mail processing facilities and saving $865 million annually. This second round, in which 82 more facilities will shut down next year, would save another $750 million per year.

The problem comes as this efficiency method keeps stretching out. The reality is that at a certain point, you can’t cut anymore. Yes, the postal service can keep cutting processing centers, but as that delays mail delivery more and more, customers will look for private companies to handle their packages and items, with operations in their own city. Then as revenues drop further, where do you cut?

It would seem there’s an easier solution. Part of the financial problem for the Postal Service stems from a Congressional law passed in 2006 that requires USPS to pre-fund retirement health benefits. We’re talking 10, 20 years down the road. By comparison, private companies use a “pay-as-you-go” model, covering premiums only as they’re billed. The Postal Service’s own estimates project that it would save $50 billion over the next decade by switching to a “pay-as-you-go” model. The only catch is that approval for such a change would have to come from the U.S. Congress, which has been slow in responding. In 2012 and 2013, the topic repeatedly was brought up and each time, the Postal Service had to make cuts and increase rates, because no help came from Washington, just talk of the need for efficiency. But while the buzzwords work on the campaign trail, it’s hard to see cuts continue when a solution is just a vote away.

via The problem with efficiency – Waynesboro News Virginian: Editorials.

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