(That is, the post office is running out of money. What should we do?)
The Thumbs Thing
OK, the thumbs thing—that’s from ancient Greek and Roman gladiatorial matches. The victor of the battle would be standing over the poor slug he just thwacked into submission. He’d look into the crowd to find Caesar who would then take a cue from the throngs in the Coliseum. If they liked the guy on the ground, who was likely covered in his own blood and dust, they’d encourage Caesar to save him by signaling a “thumbs up.” If they wanted another corpse, the thumbs went down. And then Caesar would usually listen, signal to the victor, and the winning gladiator would do what they were told.
How the Post Office Is Like a Battered Gladiator
Well, we seem to have an oddly analogous situation now with the Post Office, and we have to decide if we want to keep the hallowed institution around through more years of snow, rain, heat, and gloom of night that shan’t keep these postal workers from the swift completion of their appointed rounds…
If we keep it, it will likely cost taxpayers tens of billions of dollars as it appears likely that the post office will never again come close to breaking even. But is this a “national treasure,” an asset we have to keep?
Or do we close it down? Sure, lots of people will be out of work, but maybe there are ways we can find them a job. And even if we don’t, as with most things, it may be easier to take the pain now and send mail delivery functions over to the kindly folks at FedEx or the men in brown at UPS. (Or just do more in email…duh.)
Maybe there is a middle ground: a slow death with increasing amounts of morphine in the form of “managed layoffs” and “reductions of service.” Read: Fire 2% of the work force every month forever, and go down to just 2 or 3 day-a-week mail delivery. Does this help, or will it just prolong the agony?
So What Happened Here?
Well, the post office fought the internet. And lost. The world simply prefers to migrate its mail needs to email, rather than writing it on dead trees. And the rate of migration to the internet has increased at a geometric place. Please check out this great article from the New York Times.
Why Should You Care?
Because you’re paying for it. It’s your tax dollars that will be covering the retirement benefits of these postal workers for the next four decades. You will be the population who decides how our government allocates its increasingly scarce resources.
And lest you roll your eyes that this was “yet another fat contract issue,” the reality isn’t that simple. Yes, the postal workers union cut for itself amazingly good deals in boom times with now-onerous pensions and guaranteed lifetime employment that are now costing taxpayers a fortune. But the post office actually tried to “do the right thing” and not just suck on the teat of the American taxpayer. It wanted to go into additional businesses – like selling frozen yogurt or additional services at its post offices. But it was prohibited from doing so by its charter. It wanted to try to put post offices inside of behemoth retailers – think: Walmart – but it couldn’t because that wasn’t its mandate. Government works, however, are usually not the best entrepreneurs.
And the post office is unique among almost other government unions – it has to fund its own pension from profits selling stamps.
The Problem: Vastly fewer stamps are being sold and prices cannot be raised greater than inflation.
So now mail trucks trundle along country roads half empty (definitely not half full), and the agency is running huge deficits, hemorrhaging money it doesn’t have to lose.
The Question: What do we do? What would you do if you were running the post office?
- Can we live without it?
- What if we just closed it down?
- How hard would that be?
Liabilities and the “Crazy Good Deal”
Well, there are a ton of liabilities associated with closing it down – we would still owe the hundreds of thousands of employees their full salaries for decades to come. Yes, that’s right. They could literally be fired and be sitting at home all day playing tiddly winks and collect their full salaries … for doing nothing. Yes, THAT’S how good their union was in negotiating their deal. Sound like a good gig?
Well, it’s likely “too good” because the average breadwinner in this country doesn’t have a deal remotely as good as that deal. And he/she’s pissed off about it. So there’s not a lot of sympathy out there for “the poor postal worker.”
Because of that “crazy good” deal, a bunch of lawmakers are now questioning whether that “too good” deal has to be honored. Was it signed / made legally? Is it a contract that must be honored? Is it crazy or even unethical to be asking that question?
Thumbs Up? (More Taxes!) Thumbs Down! (Cannibalistic Pension Eating/ Broken Promises!)
And it’s a question with broad ramifications across almost all unions, government or otherwise. Deals that were cut in booming economic times are being questioned now – did unions “overplay their hands”? What should the taxpaying American public do about it? Just pay up and learn a hard lesson so that going forward, those contracts don’t get cut again? Will we actually learn from history?
If we do nothing, the post office will go bankrupt. It needs an injection of about $5 billion just to stay solvent, able to pay its operating bills. Your local postal delivery gal will literally stop receiving her paycheck if the government doesn’t “do something.” The question of what to do, however, is unclear.
The post office has asked if it can borrow money from its own pension to keep operating. Now that’s an interesting idea – recall that the pension was created out of postal workers’ salaries – some percentage (like 5-10%) each year was contributed by the post office employers each year into an investment fund that grew with the stock market, more or less, over time. After many many years, that money compounded to be a large sum. The problem is that the money is there so that it can be paid out over time to postal workers who are retiring. Is it ethical to borrow money from retired or retiring workers to pay the operating expenses of working workers who are working in a business environment that is awful? That is, they are losing money and likely will continue to lose money “forever.”
And this pension issue is ugly – it grew out of another set of deals that were cut without regard to financial responsibility. A worker could work for the post office for 30 years – let’s say they started at age 20 and then retired at age 50. They would then get for the rest of their lives some percentage of their salary – like 70% or so. And benefits like health care and so on. So… your last year you made $65,000 and now get to retire – and do nothing all day long and still collect about $50,000 for as long as you live. And that could be another 30 or 40 years! So the taxpayer really paid way over $100,000 a year for the years that the postal worker worked, if you add in that “pension liability” into the equation. And you should. It’s included in the way fair financial accounting would be viewed.
So What Do We Do About This Problem?
1. Just shut down the Post Office – take the pain now, fight the union, clean up the books – it’s not a national treasure. 1-800-CALL-UPS.
2. Cut Saturday delivery immediately. Prepare for only 3 day-a-week delivery in a year. Shut half the offices. Take on the union but don’t blow it up completely; try to just reduce the billions in liability from the “lifetime employment” guarantees.
3. Extend regular delivery. (Sound like that’s what we’re doing.)
3. Just cut Saturday delivery but that’s it. Don’t hire more people. Try to get the beast to lose as little money as possible and just let the old workers die off. We’ll lose a billion dollars a year but in 15 years, there won’t be many workers left and it’ll just fade away like the “I’m with Stupid =>” writing an old comfy t-shirt.
4. Don’t do anything. Just keep funding it, even if we lose a couple billion dollars a year forever. The Post Office is a national symbol we cannot afford to lose. Taxpayers should foot the bills for operating losses and the lifetime employment guarantees and the pension benefits. End of story.
Well, not technically: there’s this Post Office more-than-mail issue as well.
What’d we miss about the key issues? Please tell us. Send us your thoughts. We want ’em. Thanks!