(July 28, 2014) Congress is once again engaged in a fight over whether the U.S. Postal Service should deliver mail on Saturdays. But all the wrangling just goes to show that this should be a business decision, not a political decision.
The Postal Service has been struggling for years with high labor costs and declining first-class mail volume as people increasingly rely on electronic/social media communication and online bill payment services.
First-class mail volume has declined by 34 percent over the last 10 years, and is now about what it was 30 years ago.
For the first quarter of the calendar year, USPS posted a $1.9 billion loss, which marked the 20th time in the last 22 quarters it has been in the red. It has also failed to make required pre-payments of roughly $5.5 billion to its retiree health care system for several years running, and faces tens of billions of dollars in additional unfunded liabilities and deferred capital investments.
In addition, the USPS has maxed out its $15 billion borrowing limit from the U.S. Treasury.
The Postal Service has estimated that getting rid of Saturday delivery would save about $2 billion a year. President Barack Obama called for an end to Saturday delivery in his fiscal year 2015 budget proposal, but the idea has faced stiff resistance in Congress.
So should mail be delivered on Saturdays?
Should the Postal Service be allowed to branch off into other lines of business to grow revenues, as it has also proposed? What should the price of stamps be?
There is no way to determine the answer to these questions in such a politicized, monopolized atmosphere with price controls and various other congressional dictates.
The only objective way to find out would be to privatize the Postal Service and let that question be answered by consumers’ demands and the companies able and willing to supply them.
If businesses see a profitable opportunity to deliver mail on Saturday, or any other day for that matter, and consumers are willing to pay the price to make it so, there is your answer.
To determine the solution any other way is to substitute arbitrary decisions and political calculations for sound economics.