In addition, the bill —which is unlikely to pass the Senate—mandates that the USPS must reverse any policy changes that have led to delays in mail delivery and refrain from any new policies that would reduce its mail delivery performance until the end of the COVID public health emergency. The Task Force produced a report in December , urging cost-cutting and price increases. Duncan , a former chairman of the Republican National Committee, suggesting Louis DeJoy , who has a background in the logistics business.
Second, I did not direct the cut back on hours at any of our post offices. Finally, I did not direct the elimination or any cutback in overtime. He promised that there would be no changes to Postal Service retail hours, that collection boxes and processing equipment will remain where they are though no commitment was made to return boxes and equipment already removed , and that overtime hours would be granted to employees as necessary.
Up Front How does unemployment insurance work? And how is it changing during the coronavirus pandemic? And what is the Fed doing about it? As the governing body of the Postal Service, the member Board of Governors has responsibilities comparable to the board of directors of a publicly held corporation.
The Board includes nine Governors appointed by the President of the United States with the advice and consent of the Senate. The Governors appoint the Postmaster General, who serves at the pleasure of the Board without a specific term of office. Giuliano was elected Vice Chairman. There are glimmers of hope. In February, the House passed a bipartisan bill, with the support of 87 Republicans and Democrats, that would eliminate retiree health prepayments and forgive the remaining balance Katz ; U.
House Clerk However, the Republican-controlled Senate has yet to schedule a vote on a companion bill. Congress urgently needs to provide the Postal Service with the same pandemic relief as airlines and other private-sector employers facing a collapse in demand Steinberg Allowing the Postal Service to fail would have negative economic and social consequences throughout the country, especially in rural areas and low-income urban neighborhoods.
Postage rate caps should be relaxed after the economy recovers. A postage increase is not the answer during the coronavirus crisis. Raising rates now would amount to a tax on businesses and households at a time of high unemployment. The bigger issues that need to be addressed are outsourcing and limits on Postal Service activities that benefit big corporations at the expense of American families.
We should worry less about regulated public monopolies and more about underregulated large corporations. While the e-commerce and package delivery sectors tend to be highly concentrated due to network economies, there is also increasing consolidation in mail-processing and related industries due to technological, regulatory, and other barriers to entry.
Industries undergoing consolidation include direct mail printing, mail-processing software, and third-party logistics Patel and Qian ; Stoller ; Burnson The goal of government should be to raise, not lower, labor standards. A range of federal, state, and local laws are designed to ensure that government actions do not exacerbate poverty and inequality.
Living wage ordinances in many municipalities around the country require businesses that have government contracts or receive government assistance to pay above-minimum wages to ensure that workers and their families do not live in poverty. Though Postal Service contractors are generally covered by these laws, the laws do not apply to companies taking advantage of worksharing discounts as opposed to directly contracting with the Postal Service.
Steep workshare discounts allow outsourced work to be profitably performed by any company with lower labor costs than the Postal Service, not necessarily the most efficient company. This would have the dual benefit of allowing the Postal Service to capture some cost savings and potentially reduce race-to-the-bottom outsourcing to low-wage companies. Though this change would not require legislative action, the Commission has not implemented this recommendation.
A more far-reaching solution should address the loophole allowing low-road employers who would be prevented by the Service Contract Act to perform contracted work for the Postal Service to take advantage of workshare discounts to perform outsourced work. The Postal Service should not be prohibited from entering markets that fit with its public service mandate.
If there were less resistance to expanding the scope of government to meet unmet needs and take advantage of natural monopolies, the Postal Service could not only offer postal banking services but could also compete with Amazon as a one-stop shopping and delivery conduit to independent retailers.
Another way to look at this trend is to see that a private monopoly—Amazon—is replacing a public one, without, however, a public service mandate. The Republican Party has historically balanced individual and community values; the interests of global corporations and patriotism; free enterprise and public service.
In its support for privatizing a beloved public service, however, libertarian and narrow business interests have trumped tradition and broader community interests, including those of rural residents and small business owners.
Rather than openly attacking popular government programs, anti-government activists try to paint these programs as obsolete and inefficient. For would-be reformers, recessions and other crises present opportunities for radical change.
But privatizers can cite no hard evidence of poor service or a reluctance to innovate Keating If anything, the fact that Postal Service jobs—unlike many in the private sector—provide a decent middle-class income has forced the Postal Service to innovate and invest in labor-saving technology because it is less able to rely on low-wage labor than competitors such as FedEx.
The incoming president, who has signaled that creating good jobs will be central to his economic agenda, should include bringing back Postal Service jobs lost to outsourcing among his priorities. The Trump administration and other would-be privatizers simply assume the answers to the key questions of whether a privatized service would be more efficient and whether allowing the market to set prices would make people better off.
Even with textbook competitive markets and in the absence of externalities, Kenneth Arrow and other economists have demonstrated that you can never assume that free markets maximize well-being because people have different tastes and inherited advantages, among other reasons. A competitive market can only be said to be Pareto optimal, meaning that no one can be made better off without making someone else worse off.
The real issue is whether the Postal Service should reflect egalitarian democratic values or profit-maximizing free market ideals. A functioning democracy serves as a counterweight to unequal resources even in a capitalist society, and voters may prefer a Postal Service with more equal pricing and services than would occur in an unfettered marketplace. In addition to the fact that a postal network does not operate in an environment where it is easy to assume that private-sector competition will lower prices and improve quality, there are many areas of society where most people prefer government or nonprofit providers over for-profit ones, including education and health care Quilantan ; KFF Often these are areas where it is important that those providing the services be motivated by a sense of responsibility more than personal gain.
Like public schools and hospitals, the Postal Service is a concrete reminder that while for-profit companies may make the best smartphones, civic-minded institutions are better suited for many other purposes, especially when public trust is paramount.
Another common refrain is that government services should be targeted, not universal. This allows small-government advocates to stake the moral high ground by offering to take better care of those who really need it while reassuring vulnerable but influential groups. Comedian P. Despite these attempts at sabotage, most Americans, including Republicans, value government services. Rather than trying to shrink government on the false assumption that the private sector is always more efficient, we should consider expanding government entities—like the Post Office—that have proven their worth.
Note: This is a corrected version of the report as of Feb. The original discussion of USPS board nominations incorrectly stated that all current board members were Republican. It also failed to note that a Democratic board member whose term had recently expired would remain on the board for an additional holdover year.
The author would like to thank Sarah Ryan, Jim Sauber, and David Williams for taking the time to share their expertise; Krista Faries for skillfully editing an unwieldy report; and Melat Kassa for excellent research assistance. The author is alone responsible for the views expressed and any errors remaining in the report. In both regression results reported here, the dependent variable is the natural logarithm of inflation-adjusted annual earnings. In Appendix Figure B, the baseline is the earnings of male, white, non-Hispanic NH workers without a high school diploma.
A log-linear model is used to estimate percentage differences from baseline earnings, controlling for education, hours worked, age, year, and, in some cases, gender, race, and ethnicity. Confidence intervals are wider for postal workers than for other government or private-sector workers because sample sizes are smaller, especially for subgroups such as postal workers with advanced degrees.
Confidence intervals that cross the zero line indicate that differences in earnings from the baseline are not statistically significant.
Postal Reorganization Act , Pub. Thus, earnings are earnings from March through February Amounts are inflation-adjusted based on a not consumer price index CPI-U because reported pay is backward-looking. Changes in the accounting treatment of retiree health benefits did spur many private-sector employers to cut these benefits or begin prefunding them to minimize the liability on their books Munnell, Aubry, and Crawford Likewise, state and local governments must estimate how much they would need to contribute to prefund benefits within 30 years, but they are not required to actually make the actuarially determined contribution GASB Anderson, Darryl J.
Arkin, James. Arrow, Kenneth J. Baertlein, Lisa. Baradaran, Mehrsa. Barro, Josh. Berman, Ari. Berman, Russell. Biden-Sanders Unity Task Force. August Bivens, Josh. Economic Policy Institute, October Blake, Aaron. Block, Geoffrey. Lawfare , May 1, Blom, Kirstin B. Congressional Research Service, Report no.
R, January Bogage, Jacob. Postal Service Battered by Coronavirus. Bogage, Jacob, and Josh Dawsey. Brennan, Megan J. Postal Service Stimulus Needs. Broadwater, Luke. Broadwater, Luke, and Hailey Fuchs. Brookings Institution Brookings. Annual Report Bui, Quoctrung, and Margot Sanger-Katz. Why the Recession Could Actually Help. June 18, Burnson, Patrick. Butler, Stuart M.
Butler, Stuart, and Peter Germanis. Campaign for Postal Banking. Postal Banking: Know the Facts. May Cato Institute Cato. Cato Institute website, accessed November 30, Cep, Casey. Chandler, Adam. Cheney, Kyle. Cheng, Andria. Christensen, Michelle D.
The U. R, October Francis, and Garrett Hatch. Reforming the U. Postal Service: Background and Issues for Congress. R, August 25, IN, last updated January Coalition for a 21st Century Postal Service C Cochrane, Emily, and Hailey Fuchs. Vogel, and Jessica Silver-Greenberg. Cohen, Marshall. Coll, Steve. Confessore, Nicholas. Davidson, Joe. Davis, Lois M. Santa Monica, Calif. Dawson, Chris. Dayen, David. Denmark, Frances. Department of Labor DOL. Accessed December 11, DePillis, Lydia.
Dobbs-Allsopp, Will. Durkee, Alison. Edwards, Chris. Postal Service. History of k Plans: An Update. November Epstein, Reid J. Fandos, Nicholas, and Emily Cochrane. Fandos, Nicholas, and Jim Tankersley. Federal Reserve. Report on the Economic Well-Being of U. Households in , Featuring Supplemental Data from April Ferrara, Peter J.
Social Security: The Inherent Contradiction. Washington, D. Free the Mail: Ending the Postal Monopoly. Fisch, Jill E. The FedEx Story. Robert Warren. Fox, Liana. The Supplemental Poverty Measure: United States Census Bureau, Report no.
P, September 15, May 15, Haggerty, Neil. Herb, Jeremy, and Jessica Dean. Hickey, Robert. Senate Hearing , July 25, House Committee on Oversight and Reform. April 9, Center for Responsible Lending, August updated September Hudgins, Edward L.
Hutkins, Steve. Save the Post Office website, January 2, Save the Post Office website, September 14, Jacobson, Louis. John, Richard R. Postal Service to be Managed Like a Business. Amazon appears to be getting a deep discount compared with published USPS rates, which raises questions about whether the USPS is earning a reasonable return on the deal.
The USPS is getting increasingly entangled with private businesses. That would be fine if the USPS were a private and unsubsidized firm, but it is not.
That is not a level playing field and it creates fairness problems and distortions. The USPS is becoming less of a mail company and more of a package company.
The postal and package markets may change dramatically in coming years as new technologies and upstart companies disrupt the major players. Amazon is pressing ahead with its own delivery systems while Uber-style delivery firms may grow in importance. Congress should privatize the USPS, repeal its legal monopolies, and give the company the flexibility it needs to innovate and reduce costs. We should allow entrepreneurs to compete in the postal industry.
Privatization may sound radical to some Americans, but a privatization revolution has swept the world since the s. Governments in more than countries have transferred thousands of state-owned businesses to the private sector. Many academic studies have examined these reforms, and the results are clear. In his book looking at hundreds of reforms, finance professor William Megginson concluded, "Private ownership must be considered superior to state ownership in all but the most narrowly defined fields or under very special circumstances.
This is true even for natural monopolies. With regard to postal reforms, Europe has led the way. The European Union has pressed its member nations to open their systems to competition, and some nations have privatized their main postal companies.
The Netherlands privatized its postal company in the s and then opened postal markets to competition in Britain opened postal markets to competition in and privatized the Royal Mail with share offerings in and Germany began privatizing Deutsche Post with a stock offering in and opened its postal markets to competition in However, European postal markets are no nirvana. They face the same challenges as the U.
But traditional postal firms universal service providers or USPs are making large changes. A report by the European Commission about the continent's postal markets found: Most European letter markets still have high USP market shares, but competition is growing.
The Commission report noted, "the high concentration in the addressed letter market is declining. In , in eight countries at least 15 per cent of the postal market was comprised by non-USP postal operators.
At least six out of these eight countries had end-to-end competition" An example of a private competitor to a USP is CityMail in Sweden, which delivers mail to more than half of the nation's households every third day. Most branches are in other businesses. Postal and delivery markets are changing rapidly, and private companies have more flexibility than government bureaucracies to deal with the new challenges.
With the rise of the Internet, the claim that mail is a natural monopoly needing special protection is weaker than ever. The USPS has suffered huge declines in demand for its most profitable product, first-class mail. In a similar situation, private businesses would try to change direction and enter new markets. In Europe, traditional postal companies are expanding into parcel and express services.
The Commission report found, "to compensate for lower scale economies, postal operators have made the pursuit of economies of scope as a key target. That makes sense for the competitive environment of Europe. But for the USPS, it cannot diversify as freely as private businesses can, nor would we want the USPS entering other industries and unfairly competing with private businesses.
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