Postal service leading way in cutting costs

Freedom New Mexico

There’s good bad news and good news in Washington, D.C., for the U.S. Postal Service, a semi-independent federal agency, which is only slightly propped up with tax dollars.

The bad news is that like many businesses, the USPS has fallen on hard times, suffering through consecutive years of operating deficits. Unlike other branches of the federal government, the USPS doesn’t have the luxury of relying on congressional deficit spending to compensate for the red ink.

Consequently, because the bulk of operating costs are paid for by customers buying stamps and other products and because sales are declining, the Postal Service has decided to face up to reality and would like to dramatically cut its costs.

The good news is that postal authorities are considering something almost unheard of in Washington. We hope it catches on. But it will be an uphill battle, even for the semi-independent federal agency.

The Postal Service is seeking congressional approval to establish its own, less-costly health benefits program, administer its own retirement system and substantially downsize its workforce by 120,000 from its current 563,000. Postal authorities also want flexibility to adjust mail delivery, which would result in reducing or eliminating Saturday deliveries.

The major obstacle, unsurprisingly, is the union representing hundreds of thousands of postal workers, vehemently opposed to what seems to us to be reasonable and long-overdue economies.

“If the Postal Service was a private-sector business, it would have filed for bankruptcy and utilized the reorganization process to restructure its labor agreements to reflect the new financial reality,” said Anthony Vegliante, chief human-resources officer and executive vice president. Instead, USPS needs an OK from Congress.

Unions protest that the reforms would abrogate contractual obligations and harm collective bargaining. Perhaps. But both would be bona fide, legal options for a true private business.

Like many enterprises during the digital age, the USPS suffered additionally from changing consumer habits, including greater reliance on the Internet rather than what uncharitably has been termed “snail mail.” Mail volume that peaked in 2006 at 213 billion pieces, plummeted by 20 percent, to 171 billion pieces last year.

In four years, the Postal Service trimmed $12 billion in costs, reducing its workforce by 212,000 through attrition and early retirement. Nevertheless expenses continue to exceed revenue.

As massive an enterprise as USPS is, its proposed reforms would be an astonishing wake-up call to business as usual in Washington. While it’s true other federal agencies are not regarded as quasiprivate endeavors as the Postal Service is, they have enough in common that USPS cost-cutting can — and should — be something they can learn from and implement.

If the Postal Service overcomes union opposition and wins congressional approval for some or all of its proposed economies, the federal bureaucracy would be put on notice that it is possible to reduce government’s costs. We hope this is the start of something big.