April 18, 2013

Editorial: Postal Service options dimming


---- — Congress has rebuffed the U.S. Postal Service on its plan to drop Saturday mail delivery in order to get expenses into a break-even situation.

As always, in a business that can find no other avenue for remedy, it will now turn to its labor force for concessions.

The long-beleaguered USPS has been looking, for many years, for ways to restore solvency. As anyone who has run any kind of an enterprise will attest, there are but two ways: raise revenues or cut costs.

Last year, USPS lost $5.1 billion. That was a bargain compared with this year’s $15.9 billion.

Much of the red ink was due to mounting costs for future retiree health benefits, which made up $11.1 billion of the losses. Without that and other related labor expenses, the mail agency sustained an operating loss of $2.4 billion, lower than the previous year.

Postmaster General Patrick Donahoe said the agency has been able to reduce costs significantly by boosting worker productivity. But he said the agency must be allowed to eliminate Saturday mail delivery and reduce its $5 billion annual payment for future health benefits — a virtually unheard-of burden in any other endeavor.

Earlier this year, the post office defaulted on two of those health-benefit payments. It is forecasting additional losses next year of roughly $7.6 billion.

Congress is trying to keep the vital public service functioning as Americans are used to having it. Cutting out Saturday delivery would affect almost everyone and would seriously damage or cripple some businesses, so that idea was rejected. Efforts to close many post offices were scrubbed when lawmakers around the country responded to public outcry.

Raising the price of a stamp is anathema to the Postal Service. However, in spite of the virtual saturation of the Internet, Americans still largely rely on mail and would likely forbear a price increase. Everyone understands the fix the Postal Service is in, and most people would be willing to pay a little extra for stamps to preserve Saturday service and maintain rural post offices.

As for going to the postal union as a remedy, the largest cost for practically every business is personnel. That may have to be the second element of the equation, unfortunately.

Postal workers start out at $20 an hour, according to the USPS website. They receive time and a half for overtime, a pay differential for night work and another boost for Sundays. The Postal Service pays most of the premium for the employee health-insurance plan and contributes to a 401(k)-like benefit. Vacation, sick leave, life insurance, Social Security and Medicare coverage are all standard.

That contract will probably be the target that budget cutters focus on now. And cutting is no longer optional.