Problems with the Postal Service

by Ike Brannon

A Wall Street Journal article published yesterday details a push by U.S. Postal Service senior management to offer additional services and sell things besides stamps at post offices. This is a perfect illustraton of one of the many reasons the USPS is hemorrhaging money.

I am agnostic on whether offering more services would help. Some of the ideas mentioned in the piece might well be workable (e.g., offering their expertise in logistics to various companies). I’m a bit more skeptical about USPS entry into the retail market space, but I’m all for letting them try it out, despite worries from unnamed congressional staffers that post offices would threaten the solvency of main-street businesses having to compete with them.

These unnamed staffers’ concerns highlight the biggest problem with the Postal Service: As long as it needs permission from Congress for relatively minor innovations, it will always struggle. Instead of continuing to throw money at the USPS, Congress should make the post office fend for itself. Every single social-democratic EU country long ago transitioned the government out of the business of mail.

The other problem with the Postal Service is its high labor costs, which is precisely why I want them to enter into the retail market: Nothing will bring home the need to close the gap between post-office salaries and their private-sector equivalents than a breath of market competition.

On occasion, I dine at the Union Station food court here in Washington, D.C. (I highly recommend the Cajun chicken.) Besides the usual variety of fast-food kiosks, the food court includes a few retail shops: a bookstore, a souvenir shop, and now a post office, which moved there a couple months ago. It’s safe to say that the people who are slinging hash, ringing up sales, and keeping the restaurants clean all make somewhere between the minimum wage and maybe $12 an hour. At the post office — which has hands down the worst service of any shop in the food court, as well as quite possibly the easiest job — their clerks are paid at least twice that amount.

So I’m not terribly worried about the post office putting Starbucks out of business. I am worried about some ignorant congressional staffer convincing his boss to stop the USPS from attempting to raise revenue or reduce costs, which is why we need to get the government out of this business ASAP.

— Ike Brannon is the director of economic policy and the direction of congressional relations for the American Action Forum.