The U.S. Postal Service (USPS) announced a much anticipated and comprehensive 10-year strategic plan on March 23. It is a serious and important document that merits study and discussion among policy makers and postal stakeholders.
Like any thorough report about a troubled organization that needs major changes, there are elements that various stakeholders will not like. The more important way to judge the plan, though, is whether it establishes a framework by which holistic, beneficial change can occur. It clearly accomplishes the latter.
There are several positive aspects of the report, including the following.
It is Bold. The report aims to reduce losses at USPS by $160 billion over the next decade, largely by internal changes. It envisions $40 billion in self-funded investments primarily to build infrastructure for package services. In addition, it retains six-day delivery of mail and avoids closing post offices.
Does Not Wait Around on Congress. Left unsaid in the report is that USPS is not going hat-in-hand to Congress for comprehensive postal reforms and help. USPS is calling on Congress to pass targeted legislation to require that retiree benefits be integrated with Medicare, which will save it $44 billion over 10 years. Given that postal reform has consistently stalled, USPS taking charge on making reforms is wise and recognizes reality.
Respects USPS Workers. The plan speaks positively about the importance of postal workers to the organization’s success and aims to improve career development programs and employee retention.
Further Degrades Mail Service. The most distressing aspect of the plan, and its potential fatal flaw, is a call to lower service standards (delivery times) for first-class mail. This is likely to further accelerate a reduction in first-class mail, USPS’s longest-standing, most profitable product.
Take it or Leave It Approach. The tone of the report and at yesterday’s USPS news conference is that everything must be implemented and soon, or else much of the savings are not likely to be realized. Given how politicized postal issues have become over the past years, that is likely to engender significant criticism from the Postmaster General’s critics and lead some to quickly dismiss the plan outright.
Omits Discussion of Financial Measurements. The report does not include discussion of how USPS will measure the costs of its various products and price them accordingly. There needs to be improvement in these antiquated systems.
Plan Addendums and Next Steps
Mail is the centerpiece of USPS’s Universal Service Obligation, or public mission. USPS handled 120 billion pieces of mail in fiscal year 2020 compared with 7.3 billion packages. It delivers 16 times as much mail as packages. Given that only USPS can deliver mail, and that it is especially important to the poor, elderly, and rural Americans, USPS should provide an addendum to the plan that discusses:
- Costs and additional projected price increases to consumers and businesses if there is no reduction in current mail standards.
- Costs and additional projected price increases to consumers and businesses if there is a return to the pre-2012 mail standards.
There should also be more specificity about how the $40 billion will be invested by business (mail versus packages) and product line.
Congress should also review the plan and hold hearings on it. Additionally, USPS should launch a communications campaign about the plan to reach Congress, the media, and the public.
About the Author: Paul Steidler is a Senior Fellow with the Lexington Institute, a public policy think tank based in Arlington, Virginia.
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