What's the answer for the Postal Service?

Monday, August 2, 2010

Postmaster General John Potter is a man on a mission. Like many of his predecessors, he is seeking to save the United States Postal Service (USPS).

This week, Potter announced that he will be seeking rate increases for nearly every class of mail, from first-class stamps to periodicals (newspapers and magazines) to standard mail (shoppers and flyers). It has been reported that first-class stamps may rise to 46 cents after the first of the year.

The USPS does not receive tax funds for its operations, but must seek federal approval for making changes, including raising rates. By law, the post office is limited to cost of living increases, being able to raise rates no more than inflation -- 0.9 percent for the year that ended in May.

But, under "unusual circumstances," USPS may seek larger increases. Postmaster General Potter voiced his intentions to use this provision earlier this year.

USPS lost $3.8 billion last year, despite cutting 40,000 full-time positions, negotiating better deals with contract haulers and adding more automation.

It is clear to all that something must be done, but what?

Potter wants to eliminate Saturday delivery and has suggested closing low volume post offices. As you might imagine, neither proposal was popular.

Like any business, sucess or failure lies in the numbers. And the numbers for the postal service have not been good lately. The volume of mail has declined each year since 2006. The recession has cut mail volume even further, and people have turned to the Internet to communicate, pay bills and conduct business. Then there is the issue of the labor agreements and the financial requirements that have been placed on USPS to pre-fund future health benefits for retirees, something not required of other government agencies.

Potter says the rate increases are needed to help staunch the flow of red ink while the agency works out ways to better serve customers.

We urge Congress to give Mr. Potter more leeway in his dealings with his employees. Labor costs for the USPS, as well as any other business, must be controlled to be profitable.

Raising rates and cutting service is never a good business plan.