Rebuilding Place in the Urban Space

"A community’s physical form, rather than its land uses, is its most intrinsic and enduring characteristic." [Katz, EPA] This blog focuses on place and placemaking and all that makes it work--historic preservation, urban design, transportation, asset-based community development, arts & cultural development, commercial district revitalization, tourism & destination development, and quality of life advocacy--along with doses of civic engagement and good governance watchdogging.

Tuesday, September 17, 2013

The only financial solution for the US Postal Service: giving the USPS to the worker pension and insurance funds

I have written about the Post Office quite a bit.  It's an important institution because it's the only federal government agency that operates in every community.  Post offices are federal outposts and community centers. 

But in the 1970s the US Postal Service was sort of privatized.  It was promulgated that the service had to be financially self-sufficient and that no federal funds would be provided to the agency.  But Congress retained oversight, and the various postal worker unions are strong supporters of those Congresspeople sitting on the various oversight committees.  USPS managers argue that frequently, Congressional oversight and the Postal Rate Commission tie their hands in terms of making economically sound business decisions.

In "Rethinking community planning around maintaining neighborhood civic assets and anchors" (and in "Historic preservation aspects of US Post Office downsizing") I argued that the community building element of the post office function is something that local communities should consider "subsidizing," because the USPS receives no federal funds.  Somehow a subsidy may need to be found in order to maintain post offices in those communities where the day to day "revenues" of the office are below the cost of running the facility.  (Although I have also argued that post offices could become entrepreneurial workspaces too, see "Post offices reconceptualized as small business support centers.")

This 1907 postcard (dated by information on the front) has a "Takoma Park" DC post mark.  Before consolidation, it was common for smaller towns and postal stations within larger cities to have their own postmarks.

With all the financial strictures on the USPS plus the ongoing problem of a fall off in mail volume--I saw an ad somewhere stating that a 20% reduction in mailing utility bill payments would result in X% reduction of something or other.

There are 150 million US households (roughly); 20% is 30 million.  x 12 bills = 360 million mailed letters in one year that are foregone, for a loss of revenue totaling $165.6 million.  That adds up.

In the Kodak bankruptcy, to release claims from the British Kodak workers pension fund, Kodak gave to the pension fund its US document imaging business.

Similarly, in the bankruptcies of Chrysler and GM, the insurance responsibilities were hived off into a separate trust and funded in part by newly issued corporate stock (e.g., "Report: UAW trust to get 17.5% of GM shares," from ABC News).

Last week, Royal Mail, the postal service in the UK, announced plans to privatize, and a stock offering is imminent.  They announced that 10% of the stock will be given to the workers, likely to stave off opposition to the privatization.  (Postal services on the continent privatized many years ago.)   According to this story "Royal Mail privatisation - the key questions answered" in the Guardian, the stock given to each employee will be worth about $3,000.

Maybe the USPS should be fully privatized, but with ownership vested fully in the various worker pension and insurance funds, in order to cover the financial liability for those funds.  It would be interesting to see how the fund managers would manage the "company" going forward in order to cover the obligations.

Likely it would mean job losses, which is why the British postal workers oppose privatization.

Note that the reason the Post Office is in dire financial straits is that Congress has required the agency to prefund the next 75 years of pensions, requiring huge annual payments that exceed revenues.  Someone who is more cynical and a better observer than I pointed out that this was done deliberately, in order to break the unions.

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At 9:33 AM, Blogger Jess Holmes said...

Interesting perspectives here, Richard. It will be interesting to see how the postal service progresses on these fronts. Obviously the use of digital communication will phase it out one way or another, but for now, mailing solutions for businesses still go a long way in establishing a better relationship and line of communication with customer bases. Email alone has a harder time of accomplishing that.

At 10:58 AM, Blogger Richard Layman said...

I got a grounding in direct marketing when I worked for a consumer advocacy group 20+ years ago. You won't find me dissing direct mail and that it can work.

That being said, online bill paying, online communication more generally replacing written letters and postcards, decline in subscription to print products that typically are mailed, email business communications replacing mailed and express delivery of documents, are all contributing to a decline in the mail stream, and pushing the USPS to financial losses.

That doesn't even address the strictures on their ability to manage the business without being fettered by Congress and/or the PRC.

Interestingly, the rise of package delivery because of e-commerce is one of the bright elements in the USPS revenue stream. But I am sure it doesn't make up for the losses in other areas. The costs to process such packages have to be higher than the cost of processing letters and magazines and catalogs, therefore the margins on the growing business line of package delivery might not be as good.


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