Postal Service Ends Saturday Delivery, Still Has Big Problems


A faded USPS logo
Credit: Kevin Dooley/Foter.com

With the announcement that the United States Postal Service (USPS) plans to stop delivering mail on Saturdays after August 2013, Netflix subscribers and recipients of generous checks from Uncle Sam are understandably a little upset. It's safe to say, however, that no one will mourn the death of the weekend credit card bill.

That the USPS is on its financial deathbed is no secret. Last year, the organization hemorrhaged $15.9 billion. By eliminating Saturday delivery, they project that they'll save $2 billion per year through downsizing certain positions, reducing overtime, and otherwise cutting costs.

The union complains that a congressional mandate—which requires that 75 years worth of retiree health care benefits be fully funded before 2016—is overly-burdensome and the cause of most of the USPS' stress. It has even been suggested that it's all a GOP plot to ruin the proud and noble Postal Service. But this only represents a $5.4-5.8 billion annual expenditure, which means there's still about $10 billion in losses that can't be blamed on congressional meddling.

Or can they? Although the USPS operates mostly as a private company does, it is subject to far more legislative interference than your average American business. One example: Congress sets postage rates.

Largely as a response to the exorbitant cost of postage in the early 1800s, Congress standardized stamp prices in 1845 at 5 cents for a local letter and 10 cents for one addressed more than 300 miles away.

If we had allowed prices to increase with inflation, it would cost $1.19 to send a first-class letter; $2.38 if it were traveling more than 300 miles. Instead, it costs 46 cents flat.

Congress also mandates that the USPS service all areas of the country once per day—even the rural counties that are a perennially money-losing proposition. 

The federal government faces a choice: relinquish control of the USPS and allow it to function as other, less dysfunctional companies do, or just admit that this is a money-losing pet project and start shoveling taxpayer cash directly into the Post Office's coffers.