The U.S. Postal Service is hemorrhaging red ink, but rather than raise rates to close the gap, it is talking about cutting out delivery one day a week. The situation is bad, but reducing service should only be pursued as a last resort.
While the postmaster general didn’t actually propose eliminating service yet, he did ask Congress Wednesday to change a law so he’d have the flexibility to do so. The law, part of an appropriation bill 26 years ago, requires delivery six days a week.
During the recession in 2001, a proposal to eliminate Saturday deliveries surfaced, was universally panned and quickly abandoned. That, of course, would have meant two consecutive days without mail — which would have been especially tough on people who rely on deliveries for medicine, money or even their daily newspaper.
Now, the postmaster general suggests the day that would be eliminated wouldn’t be a Saturday, but some mid-week day — such as Tuesday — with relatively light volume. That’s more tolerable, but only slightly.
The postal service lost $2.8 billion last year, 14 times greater than its loss in 2000, which prompted the proposal to end Saturday service. This year, the loss could exceed $6 billion; after the big drop in fuel prices since late summer, that would be especially painful. While more and more postal customers continue to switch to the Internet for communications and bill-paying, the recession has clearly affected business as well. It won’t last forever, and the postal service’s losses should ease when it does.
So a disruptive action like cutting service doesn’t seem to be in order yet. In the meantime, a rate increase of a penny or two might help balance the books until the fog lifts.
Longer-term, the postal service seems a good candidate for review by one of the Obama administration’s new efficiency experts. Its business model seems inherently at odds with the times, so shrinking the business may be the only way for it to survive.