Brookings Paper Calls For USPS Breakup

Is the United States Postal Service hampered by its constitutionally declared and much assumed mission to deliver mail to places near and far in the U.S., no matter what it takes or costs?

According to a Brooking Institution (.pdf) white paper, that universal mandate must be reevaluated and the agency should no longer be under the thumb of Congress if it is to survive and compete in a radically different marketplace from when it was conceived in the 18^th century.

In fact, the paper’s author argues that the USPS should initially be broken up into two entities: one a public entity that serves the universal mail mandate, and the other a private entity that is free of government intrusion and allowed to exercise immediate entrepreneurial innovations and business practices in order to be able to better compete against commercial carriers like UPS and FedEx.

“The USPS exists right now in never-never land. It is not fully public and it is not fully private,” according to the paper’s author, Elaine C. Kamarck, a senior fellow in the Governance Studies program at Brookings and the Director of the Center for Effective Public Management. “It is supposed to compete and innovate but it is stifled by law and saddled with a governance structure that impedes innovation. It is time to decide its future.”

Yet because of its mandated ties to Congress in which some business decisions must receive legislative or regulatory approval, the USPS doesn’t have the business advantage of innovative flexibility that the private sector offers.

“Unlike a private sector business that would adjust to the changing market, the USPS cannot, for instance, move to five-day delivery — the most obvious market adjustment — without a recurring act of Congress,” Ms. Kamarck argues. “Congress continually blocks USPS from cutting Saturday delivery by attaching a rider on a spending bill.”

In addition, the universal mandate is proving to be a tricky proposition in the 21^st century. Transforming that obligation to deliver mail to every U.S. resident into a financially viable venture will be difficult as communication is increasingly becoming digitized. Mail volume has plummeted, along with revenue. That trend will likely never reverse.

“The Internet began having an effect on mail almost as soon as Americans were online. Between 1998 and 2002, the number of first-class single piece letters dropped from 54.3 billion pieces to 49.3 billion pieces. And the trends have continued,” Ms. Kamarck writes.

While these arguments for transforming the USPS into an “entrepreneurial organization” are interesting, the agency’s fate must be determined by Congress; and Congress hasn’t been keen on engaging in a major revamp of the agency’s business model, never mind such grand structural changes as this study lays out.

In addition, like Ms. Kamarck notes, her suggestions would be a “tall order” for the agency itself, which would involve a “cultural shift on the part of managers and employees that are accustomed to working in a public sector organization.”

Here’s our take. The USPS is likely in for dramatic change. It is a starkly different marketplace now and with a lot more competition. The question is not “if,” but “when.”

And ultimately, we don’t want to see your agency dismantled. We don’t want to see your jobs threatened. But you must stay on your toes and monitor the situation. You may see changes in your benefits — and likely not in your favor.

Yes, it’s likely that we can find bias against the agency and its workforce in this report. But the facts, in general, are clear: change is afoot.

For better or worse, everyone is calling for it, from think tanks to politicians. There are a lot of voices weighing in — some in favor of protecting your jobs and benefits, and some that are making proposals that are not so kind to you and your colleagues.

In light of all these considerations, our advice to you is simple: start preparing today, prepare for your future, and prepare for your retirement so you don’t get caught flatfooted.

We support you.