# U.S. Postal Service on the Verge of Collapse

by DoggerDan
Tags: collapse, postal, service, verge
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P: 7,178
 Quote by DoggerDan Why would they be "required" to deliver anything? They're private institutions and may very well restrict their services to legitimate mail.
They are commerical instutitions. They will deliver anything for a price that means they make a profit from it.

If that price was out of reach of the junk-mail originators, I doubt many of the recipients would complain.
P: 1,123
 Quote by Pengwuino Is this meant to be something profound? Why not say you wonder if a $80/night hotel would offer 1000 sq ft luxury suites. Of course it wouldn't because it's a stupid idea. All you're pointing out is the USPS does stupid things that no one else is dumb enough to do . Please finish the thought - and we (as taxpayers) are forced to pay for their decisions - like the extension of the union agreement ratified in May in spite of losses this year projected to exceed$7Billion.
 PF Gold P: 1,434 Minimum rate for a FedEx letter delivery to a residence: $7.621 (add$14.01 for shipments to Alaska & Hawaii) Minimum regular rate for a USPS letter delivery to a residence: $0.44 (including Alaska & Hawaii) Minimum junk mail rate for a USPS letter delivery to a residence:$0.1392 (not counting the non-profit rate, which starts at $0.067 per piece) hmmm.... Everyone hates junk mail. No one would want to pay$7.62 to send a letter. 90% of mail in our boxes is junk. Solution: Raise the junk mail rates. ref 1: Fedex Rates ref 2: USPS DMM
 Mentor P: 16,386 The junk mail rates already subsidize first class mail. Indeed, UPS and FedEx have tried to get into the junk mail business, only to be told that it's a federal crime for anyone other than the USPS to do it. The problem is that if these rates are raised substantially, advertisers will go elsewhere. You're already seeing it - "opt in to Megacorp's email list, and we'll give you a coupon every week".
PF Gold
P: 876
The Postal service has had to survive by delivering Junk mail for a number of years now. We all know that.

Just before the economy tanked and the flow of junk mail slowed, the Postal Service was hit with the pre funding mandate for retirees health care.

 At the heart of the matter is a 2006 Congressional mandate put on the US Postal Service contained in the “Postal Accountability and Enhancement Act of 2006” to pre-fund health-care benefits of future retirees, a 75 year liability over a 10 year period. No other agency or corporation is required to do this. This provision costs the Postal Service $5.5 billion a year. When you add in an adjustment that was made in how workers’ compensation costs were calculated based on interest rate assumptions and long term predictions concerning health care and compensation of$2.5 billion (a non cash accounting adjustment), you come up with $8 billion in cost. http://my.firedoglake.com/mmonk/2011...union/#more-42 75 Years??? Apparently they have mandated pre funded health care for people who aren't born yet. PF Gold P: 876  Quote by Pinguino Is this meant to be something profound? Why not say you wonder if a$80/night hotel would offer 1000 sq ft luxury suites. Of course it wouldn't because it's a stupid idea. All you're pointing out is the USPS does stupid things that no one else is dumb enough to do .
WOW your sure jumped all over that like white on rice. I was actually thinking more along the line of something else entirely. The Postal Service delivers mail everywhere from the bottom of the Grand Canyon to the wilds of Alaska where they use snowmobiles.

Are those Fedex trucks going to work out?? Fedex does want to get some of the junk mail in high density areas but there is no way they would touch any area where they can not make a profit even though the Postal Service is required to deliver in those areas.

Advertising junk is a part of life whether in the mail or in a television commercial.
P: 1,123
 Quote by edward WOW your sure jumped all over that like white on rice. I was actually thinking more along the line of something else entirely. The Postal Service delivers mail everywhere from the bottom of the Grand Canyon to the wilds of Alaska where they use snowmobiles. Are those Fedex trucks going to work out?? Fedex does want to get some of the junk mail in high density areas but there is no way they would touch any area where they can not make a profit even though the Postal Service is required to deliver in those areas. Advertising junk is a part of life whether in the mail or in a television commercial.
On the other hand, does junk really need to be delivered on a daily basis and separately (versus a weekly/bi-weekly or monthly junk bundle)?
PF Gold
P: 876
 Quote by WhoWee On the other hand, does junk really need to be delivered on a daily basis and separately (versus a weekly/bi-weekly or monthly junk bundle)?
Good point, although I would imagine that the originators of the junk mail would want some kind of timely delivery.
PF Gold
P: 7,120
 Quote by Vanadium 50 The junk mail rates already subsidize first class mail. Indeed, UPS and FedEx have tried to get into the junk mail business, only to be told that it's a federal crime for anyone other than the USPS to do it. The problem is that if these rates are raised substantially, advertisers will go elsewhere. You're already seeing it - "opt in to Megacorp's email list, and we'll give you a coupon every week".
I don't understand how junk mail works in the slightest. What is considered "junk-mail" and if it's the cheapest type of mail, how can it really subsidize anything? I would expect the opposite to happen, the more expensive mails subsidizing cheaper ones.

I'm trying to think of what kind of junk mail is actually half decent... but I'm having problems with that.
Mentor
P: 16,386
 Quote by Pengwuino I don't understand how junk mail works in the slightest. What is considered "junk-mail" and if it's the cheapest type of mail, how can it really subsidize anything? I would expect the opposite to happen, the more expensive mails subsidizing cheaper ones.
The price doesn't matter. What matters is the difference between what you charge and what it costs. Junk mail has a low price, but an even lower cost. It comes directly to the local Post Office, and doesn't have to be sorted: just delivered, one per house. (This is why they don't allow opt-out of junk mail) It goes straight on the truck, which was making the route anyway. So the incremental cost is close to zero - it's pure profit.
PF Gold
P: 7,120
 Quote by Vanadium 50 The price doesn't matter. What matters is the difference between what you charge and what it costs. Junk mail has a low price, but an even lower cost. It comes directly to the local Post Office, and doesn't have to be sorted: just delivered, one per house. (This is why they don't allow opt-out of junk mail) It goes straight on the truck, which was making the route anyway. So the incremental cost is close to zero - it's pure profit.
Thanks! Like any good forum member, I realized I should just wiki it after I had already made the post.

So what about mailings from credit card companies? They seem to always have my name/address on it but I assume those can be given to USPS in one massive distribution, but it seems like that would still need to be sorted by address on the delivery end.
Mentor
P: 16,386
 Quote by WhoWee On the other hand, does junk really need to be delivered on a daily basis and separately (versus a weekly/bi-weekly or monthly junk bundle)?
Let me say this again. This will not help. Under the present UPWA contract, the Post Office cannot cut staff, except by attrition. Finding less and less for the USPS to do won't save any money, because you still need to pay the staff.

This can't be solved on the expenses side - it has to be attacked from the revenue side. Perhaps an individual mandate, where each citizen is legally obligated to send a certain amount of mail?
PF Gold
P: 7,120
 Quote by Vanadium 50 Let me say this again. This will not help. Under the present UPWA contract, the Post Office cannot cut staff, except by attrition. Finding less and less for the USPS to do won't save any money, because you still need to pay the staff. This can't be solved on the expenses side - it has to be attacked from the revenue side. Perhaps an individual mandate, where each citizen is legally obligated to send a certain amount of mail?
take that internet!

How in the world did the USPS get into such a horrid contract?
 PF Gold P: 3,098 If the USPS is overstaffed, and the staff can not be cut under current contract, might it be possible to assign postal employees to other tasks, outside of normal mail handling, where labor is short and they could be useful in reducing net government expenses?
PF Gold
P: 7,363
 Quote by Pengwuino How in the world did the USPS get into such a horrid contract?
The contract negotiated last April contains no raises for the next two years, and establishes a two-tiered pay system that would pay new hires less than current employees. That's not so horrid. USPS is in a bind partly because of a \$5.5 B requirement to pre-fund the retirement fund. Congress can change this if they wish.
Mentor
P: 16,386
 Quote by Pengwuino So what about mailings from credit card companies? They seemto always have my name/address on it but I assume those can be given to USPS in one massive distribution, but it seems like that would still need to be sorted by address on the delivery end.
It's been a while since I had anything to do with bulk mail, but this is most likely presorted first class. Essentially, you get a 5 cent discount if you meet certain minimum volume requirements, put a machine-readable bar code on the address, and give it to the post-office sorted by Zip Code.

If this saves the post office a dime, and they refund a nickle, they have made an extra five cents profit on this.

The problem is that this is not infinitely elastic - if they raise the margin too much, outfits will crop up that will presort the mail for you. They actually do to some degree already, but they are fairly specialized.

 Quote by Pengwuino How in the world did the USPS get into such a horrid contract?
"Horrid" depends on your point of view. It's a good contract if you are a postal worker.

It's also not clear who has any incentive to oppose union demands. In the private sector, management often owns stock, so if they reduce labor costs and increase profits, they get a fraction of the savings. USPS management are political appointees, and enraging 500,000 voters (the size of the USPS staff) is a bad idea for any political appointee. Finally, if they aren't solvent, the only consequence is that they have to go to Congress and explain that they really, really, really need the money.

As Turbo points out, the problem can be solved by diverting the money that goes into funding the pension program into operations. Of course, when the money in that fund runs out, the USPS will have to go to Congress and say, "But we promised these people a pension...it wouldn't be fair not to pay it. We really, really, really need you to gives us the money to pay them." But it wouldn't be happening under this administration.

 Quote by mheslep If the USPS is overstaffed, and the staff can not be cut under current contract, might it be possible to assign postal employees to other tasks, outside of normal mail handling, where labor is short and they could be useful in reducing net government expenses?
It would depend on the nature of the work and on what the union contract permits. I suspect that the contract is fairly restrictive on this, but don't know for sure.
P: n/a
 Quote by DoggerDan What's this? http://finance.yahoo.com/blogs/daily...153600714.html They have 650,000 people on the payroll (1 person serving every 461 Americans). One would think at least a few of those 650k have the training and smarts to figure out how to restructure the post office so that it's in the black like the other delivery services out there.
This is a perfect example why all forms of collectivism, from various flavors of socialism to state owned and operated enterprises, eventually must either collapse or turn into parasites on the body public: that people are in name public servants does not make them so, they still have self-interest strongly overriding public interest. If they distribute the costs of their benefits over the rest of society and concentrate the gains on themselves, they will do so.

In Poland, the govt post office is under pressure from commercial operators, so the post office lobbied out the law in government that a letter is a mailing that weighs more than 100 grams or so.

OK, so the commercial operators started adding a small metal plate to the letter and then argued that according to definition that's not a letter since it weighs more than it is written in the law.

Then the post office took the commercial operators to court saying that while the law itself is not good, it must be obeyed. And so on.
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