November 22, 2019

The U.S. Postal System Is Self-Destructing

The ink is not dry on a recent article that I wrote addressing the issue of the losses at our postal system and the fact that our “do nothing” Congress is studying the problem. Well, today I discovered that first class postage is going up to $0.49 cents a letter on January 26th. I just flat out am confused as to where we are headed with our management of the postal system. The post office expects to lose at least $6 billion dollars this year and admits that the proposed increase will bring in an additional $2 billion dollars. The problem is that with the increased postage, first class mail will decline and so, without making additional changes, the proposed $2 billion dollar increase could still result in continued losses.

Without addressing the proposed changes to days of delivery or to the end points of the mail delivery system, it seems we are just putting off the inevitable. We will continue to run 218,000 vehicles over the same routes six days a week delivering less regular mail and possibly even less junk mail and incurring ongoing losses.

What makes this increase unique is that it is three times higher than the Consumer Price Index. The post office argues that it needs such as extraordinary price increase to offset the 27% drop in mail volume! Obviously there is no requirement at the post office for anyone to take any basic courses in economics.  What does the post office expect going forward to happen to mail volume at the higher rate? Without comprehensive reform that allows the postal system to run like a business and not a mythical tax payer subsidized government agency, the end will be coming soon. The death spiral could be a few short years away.

The only good news is that if it costs more to deliver junk mail, there may be a decrease in the volume of junk mail. In the year 2005, the United States Postal System processed more junk mail than First Class mail for the first time in its history. Approximately 30% of all mail being processed today is junk mail.

Print Friendly, PDF & Email
Written by
Donald Wittmer

DONALD WITTMER is a retired business executive who held key roles in the automotive and banking sectors. For a time, he also served as a Fiscal Agency Manager for the Detroit branch of the Federal Reserve Bank of Chicago. He received his undergraduate degree from Cincinnati's Xavier University, an M.A. in business management from Central Michigan University, and earned certification in bank operations from the School of Banking at the University of Wisconsin-Madison. A husband, father, and grandfather, he teaches part-time at the Kent Place School for Girls in Summit, New Jersey.

View all articles
Written by Donald Wittmer
Click to access the login or register cheese