Postal Service privatization: a return to the Pony Express?
The media relish bashing the U.S. Postal Service. Conservative pundits point to it as the classic example of the impossibility of providing good government service. And Saturday Night Live skits depict postal workers as either homicidal or so inept they could lose an elephant behind a cabinet.
Despite this poor image, the postal system remains vital to the goals and promise of American democracy. Its commitment to universal service means that any person can communicate with any other for the same low price (which is especially crucial since fax machines and email are economically out of the reach of many Americans). And it provides a rare avenue of upward mobility for the thousands of minorities, veterans, and handicapped people it hires.
The harsh attacks that have been leveled at the system might explain why few have questioned the current restructuring of the Postal Service, even though it’s likely to eliminate those democratic goals. In an effort to compete with e-mail, fax machines, and Federal Express, the Postal Service is turning over large parts of its work to the private sector.
This year, about 60 percent of the U.S. mail will be sorted by businesses, and there are plans to start contracting for postal delivery services as well, Sarah Ryan reports in the leftist economics magazine Dollars and Sense (Jan-Feb 1995). Congressional Republicans want to sell off more of the Postal Service, and some suggest that the whole agency should be sold.
Critics cite a recent series of scandals in Chicago as evidence of how ill-prepared the Postal Service is for the information age. As reported by Jonathan Franzen in The New Yorker (Oct. 24, 1994), the problems were enough to make residents think twice before sending a postcard: Carriers left tons of months-old mail in their trucks, in their homes, underneath bridges. People lost phone and gas service because of bills that never came.
While an impressive 88 percent of Americans give the Postal Service high ratings in polls, the underlying problems that led to the Chicago mess can be found throughout the U.S. Postal Service, Franzen argues. “Although the postmaster general, Marvin Runyon, is fond of calling his $50-billion-a-year operation the eighth-largest corporation in the country, he labors under constraints that no private-sector CEO has to deal with,” Franzen writes. That’s because Runyon isn’t a CEO—and those “constraints” are government regulations that keep the post office loyal to its democratic principles.
In the tradition of the original Mayor Daley, the Chicago Postal Service has provided jobs for political reasons. Franzen suggests that political pork is bad business because many workers don’t have the right skills or attitude for the job. “Maximal wealth and cutting-edge technology exist side by side with a second- or third-generation urban underclass for which employment at the post office may seem less a responsibility than an extension of its federally funded entitlements,” he writes.
Likewise, Franzen sees the commitment to serving the urban poor—and by extension anyone who is poor—as a naive managerial principle. “With its mission of universal service, the Postal Service is like an urban emergency room contractually obligated to accept every sore throat, pregnancy, and demented parent that comes its way,” he writes. That obligation stops the Postal Service from closing a branch office just because it’s losing money. Franzen concludes that the Postal Service is a dinosaur that will never be able to compete with the new information technologies on its own.
But Runyon, the first postmaster to publicly support privatization, believes the agency that started delivering mail by horse can come of age. A former Nissan executive who stopped the United Auto Workers from organizing a plant in Tennessee, Runyon is restructuring the Postal Service to operate more like a business. He’s currently asking Congress to give him greater leverage in contract negotiations with postal unions.
Runyon joins a growing group of leaders who think that business, free of the rigid demands of government bureaucracy, can provide services more efficiently. “While [privatization] does not exactly mean running government like a business, it does involve introducing corporate concepts to public service,” Camille Colatosti writes in The Progressive (June 1993). Management guru Peter Drucker puts the matter a little more bluntly. “Government-owned enterprises stop performing as soon as political or social values interfere with the single-minded pursuit of profit,” he writes in his book The New Realities (Harper & Row, 1989).
The restructuring of one of the Postal Service’s larger divisions, mail sorting, suggests the broader effects of privatization. Most businesses that provide government services cut costs by lowering salaries, Colatosti reports, and that’s certainly been the case with mail sorting. Mail sorting is tedious and demanding work, but Post Office wages and benefits make it a good job. The booming private mail-sorting industry, which can offer a postage discount to business customers using its services, is paying close to minimum wage with no benefits and has fought vigorously against unionization, according to Dollars and Sense.
But if big business gains under this push to privatization, it’s poor people who don’t have fax machines, computers, or the money to use Federal Express who will probably lose. The private sector is lobbying Runyon and Congress to let them handle mail delivery as well as sorting, and there’s widespread support among Republicans to end the Postal Service’s monopoly on the delivery of first- and third-class mail. Ryan and Franzen both report that businesses are interested only in the profitable parts of the system. It’s easy to imagine low-income neighborhoods and low-density rural areas getting stuck with gutted, ineffective, and more expensive service. “As its most profitable parts are privatized [the Postal Service] will be forced to raise residential rates,” Ryan concluded.