Showdown at the Post Office

John Watson

The New York Times reported on September 4, 2011 ("Postal Service Is Nearing Default as Losses Mount") that the Post Fffice is close to default and may have to shut down this winter, unless, of course, Congress "intervenes."  The report cites that 80% of the postal service's cost is labor, as compared with only 53% at UPS and 32% at FedEx.  It also cites that postal workers get more generous health benefits than even most other federal employees.  The Postmaster said they may need to lay off 120,000 workers, among other cost cutting measures like closing 3,700 post offices, but there's one major problem: the American Postal Workers Union.  The union has vowed that layoffs are illegal under their contract, and they will fight hard against layoffs.

This brings up an interesting dilemma.  Providing postal services is one of the very few things the federal government is required to do under the U.S. Constitution.  The government, it seems, should be required to find a way to keep the postal service operating.   One obvious way is to take money from programs or departments that are not authorized under the Constitution, of which there are many, and use those funds to pay for postal services, at zero additional cost to the taxpayers.  Another obvious and parallel solution is to slash the labor costs.  Not surprisingly, the union is promising to cause havoc if this is tried, but this contract needs to be legally avoided.  The fact that UPS and FedEx can provide far superior service for as little as 40% of the labor costs speaks volumes.

It will be interesting to see the proposed solutions to this urgent matter. The only acceptable solution should be one that is cost neutral or cost savings and assures long term stability of the postal service.  The steps necessary to accomplish these goals, however, may be quite unpalatable to the union and many politicians who are beholding to the unions.  Borrowing more money to pay ridiculous labor costs should not be an option.  We simply cannot afford it.

While we are at it, perhaps we should address the question of whether unionization of constitutionally mandated services should even be permitted.  What's next, unions for the military?