[rdl]

IMO it would be pretty easy to change the USPS to be profitable or sustainable, but politically difficult. Preserving universal service (expensive rural routes and facilities) should be done via direct government subsidy, vs. commercial cross subsidization.

Reducing or contractorizing staff (to cut medical and retirement costs) would have been done already by a really private company, but would have political and economic consequences given the size of USPS and government affiliation. It is probably easier to cut facilities and routes, lower delivery frequency, vs change employment terms.

The USPS is increasingly b2c and spam delivery service; used a lot less for b2b and c2c, so reducing frequency to even twice a week would be fine.

[wildgift]

The first thing they need to do is reduce the pension funding requirement, which was forced by a 2006 law. They have to fully fund the pension for 75 years, and do that in 10 years. That would reduce their operating budget deficit.

Second, they need to push their parcel service, and open the counter all week long. The internet has caused a reduction in regular first class postal mail, but is also increasing the number of packages people send. Rising fuel costs make sending packages locally a good option.

I like Saturday home delivery, but from a business perspective, it's not critical. Parcels, however, I think are critical.

[yummyfajitas]

The first thing they need to do is reduce the pension funding requirement, which was forced by a 2006 law.

Yes, rather than fully funding their pensions like any private company, they should be allowed to push massive problems into the future like the public sector does.

[rdl]

Private companies don't really fully fund their pensions, but during the period where pensions were common in private companies, those companies were expanding in revenue and headcount, so it was ok. Was.

High-risk private enterprises don't do pensions now (can you imagine a Zynga Pension Plan?). Approximately everyone has shifted to defined-contribution from defined-benefit. The problem is USPS and the fully-private companies with legacy pension plans are both in long-term decline and have underfunded pensions, but USPS is particularly large in workforce and obvious in long-term decline (and political).

[yummyfajitas]

Private companies are legally obligated to fund defined-benefit pensions. There are some waivers given out, but it is generally required.

http://thomas.loc.gov/cgi-bin/bdquery/z?d109:HR00004:@@@L&#3...;

Though strangely, defined benefit non-pension plans (e.g., retiree health care) are not required to funded. That's a loophole which should definitely be closed.

You are correct that the private sector has abandoned pensions for defined-contribution retirement plans, and with good reason. The public sector should do the same.

[quinnchr]

"The PPA increases the funding target for single-employer defined benefit pension plans from 90 percent to 100 percent of the plan’s present value of all accrued benefit liabilities"

Cool, now just make them fund the next 75 years of expected liability, instead of just the current liability.

[Danieru]

They already do, that is what "present value of all accrued benefit liabilities" means.

[quinnchr]

Hmm yes those 1/3 of Fortune 1000 companies who do decide to prefund (which is entirely optional, unlike for the USPS) do so at average of 30% of liability. At the USPS pre-funding rate they're projected to have 73% of future liability funded by 2016.

I think you're on to something though, we should definitely require private sector retirement benefits to be pre-funded by 100%, then we can all point our fingers and say how obvious it is that the private sector is less efficient.

[rdl]

I don't really understand the pension funding issue -- I assume it was that the pensions were previously underfunded, and this was to correct it.

The issue is that even the GAO thinks there are "pyramid" issues -- the USPS revenue is going to be in a long-term decline, and peak-retirees will hit in a period where the revenue is lower than today. So, pre-funding makes a lot of sense.

Similarly, SS (and I think medicare?) were supposed to be pre-funded during high tax years of the baby boomers. There's technically a surplus, but it's invested in US treasury debt, essentially an accounting trick. (although I don't know what an SS surplus would otherwise be invested in -- you don't really want the government investing in private securities, either).

Parcel drop-off could be automated, extended hours, partnerships with businesses, etc., although I think most parcels originate from businesses now.

Maybe a good compromise would be fewer post offices, open later, and less delivery, but with mail available for pickup at the post office up to the day before delivery. This would be capital expensive vs. operating expense intensive, which should be good for the USPS (they can borrow at cheap rates, and the government could fund some of this).

[niggler]

The one sentence summary that explains the entire situation is: the 2006 pension funding requirement change was written and pushed by congresspeople who have taken campaign contributions by UPS and Fedex.

The reality is that most of the losses since 2006 were directly due to the overfunding requirement (they had to prepay 75 years of projected liabilities in 10 years time -- a requirement that no other agency has). They are also prohibited from cutting back service because they need congressional approval to do so (and a bunch of rural congresspeople are pushing back against it), so the USPS is in a real bind where they are being essentially forced to make changes but don't have the authority to do so.

[quinnchr]

The USPS hasn't taken tax payer money since 1982 and has posted profits almost every year up until 2006 when the new retirement pre-funding requirements were introduced. The USPS is the only agency required to pre-fund their retirement plans for 75 years.

You could certainly cut the facilities producing the least revenue, but then you'd be closing mostly rural post offices. Incidentally Fedex and UPS use USPS infrastructure for rural delivery. Since we're all guaranteed postal service in the constitution, perhaps it would be better to question the idea that the USPS has to be profitable and run like a business.

[yummyfajitas]

Since we're all guaranteed postal service in the constitution...

Could you cite the relevant part of the constitution?

As far as I know Congress has the power to "establish Post Offices and Post Roads", but there is no requirement that they do so.

[niggler]

All the constitution says is:

"The congress shall have power ... To establish Post Offices and post Roads;"

I haven't chased down future acts, but the post office act of 1792 definitely does mandate certain postal routes to be maintained by the postal service.

[rdl]

I'd subsidize the rural operations directly from the government, similar to the "universal service fee" for telephony, and rural electrification.

[chernevik]

Wages, staffing and work rules are huge problems. I strongly suspect that the USPS falls very, very far short of UPS and Fedex on almost any productivity measurement. Because it is politically impossible to take on the postal unions.

Universal delivery is a very important service, but it probably ought to be directly subsidized by Congress. Because the current system of subsidy through monopoly gave a false sense of security in their revenues. Now technology is killing those revenues, and the system is trying to avoid job losses by service reductions. The logical end of that spiral is obvious.

[rdl]

UPS is union, actually, and not horrible. I think some of the elements of FedEx are as well (FedEx Ground is basically RPS via an acquisition, and their employees have universally sucked in my experience, but they're not union -- there's a push to unionize. I do believe FedEx pilots and maybe some other parts of the air operations are union.)

I don't think USPS is that inefficient for some of its operations.

FedEx (Air/Express) is the gold standard for premium delivery.

[chernevik]

But UPS isn't run by political appointees, has an equity return objective, and is disciplined by market forces without a monopoly protection.