Nearly 30 years ago, a mail crisis in Chicago paralyzed the city’s postal service and grabbed national attention.
More than 10 million letters and parcels backed up in Chicago’s post office, bringing the entire cramped, chaotic and mismanaged operation to a halt. To clear the three-week logjam, hundreds of extra workers were brought in, first-class mail was rerouted to other Midwestern cities and senders’ permission was sought to destroy piles of outdated sales circulars.
Chicago’s 1966 postal catastrophe was widely viewed as an advertisement for sweeping reform of the old Post Office Department.
In 1971, after an illegal postal strike, Congress created the U.S. Postal Service, a government agency that was supposed to operate as a business.
Today, another postal crisis in Chicago, marked by the repeated discovery of heaps of undelivered mail and the lowest customer satisfaction ranking in the country, is once again triggering calls for change.
“I’m convinced it’s about time for another real reform of the Postal Service,” said former U.S. Rep. Edward Derwinski of Illinois, a senior Republican on the House Post Office and Civil Service Committee at the time of the last reorganization.
Just what that reform might entail is still hazy, but most proposals call for increased postal competition. Many economists believe the only way to improve service and cut costs is to end or phase out the government’s monopoly on ordinary mail delivery. Under federal law, private companies aren’t allowed to deliver letters (urgent mail is exempt) or drop off mail in home letter boxes.
Sweeping changes in the postal system would mean more than replacing a few top officials, as was the case recently in Chicago. It could spell the end of many of the nearly 700,000 jobs in the federal postal system and, more dear to most consumers, the closing of thousands of small post offices.
“We’ve got to find a way to take an honest look at the Postal Service with nothing prohibited from being reviewed,” said Derwinski, now a consultant in Alexandria, Va.
At a time when the country is linked by telephones and, increasingly, by computers, the Postal Service’s role seems ripe for debate. Less than 5 percent of U.S. mail involves correspondence between individuals.
“Nobody is going to be cut off from information,” said Sam Peltzman, an economics professor at the University of Chicago Graduate School of Business. “Fifteen years from now, there won’t be any post office worth saving except as a job machine.”
Reform proponents point to radical changes abroad, where Sweden has eliminated its postal monopoly and the Netherlands plans to sell stock in its mail and telephone agency. Britain has loosened some competitive restrictions and is considering whether to privatize its postal operation.
It’s too early to tell whether other countries have hit upon better ideas for delivering the mail, but these foreign experiments reinforce the notion among some that the U.S. is way behind on the learning curve.
“What’s going on outside the U.S. is a very intense review of postal policy and a movement towards cutting back on the monopoly,” said Jim Campbell, special counsel for the International Express Carriers Conference trade group. “The U.S. is remarkably backward in all this stuff.”
The Postal Service is no longer the dominant player in parcel and express-mail delivery, where it already faces fierce competition. The agency’s total mail volume continues to rise slowly, helped by growth in advertising mail, but future increases are threatened by technological developments.
One example: First-class business-to-business deliveries dropped by a third in the last six years as companies turned to speedier alternatives such as facsimile transmission and electronic mail, U.S. Postmaster General Marvin Runyon recently told the House Post Office Committee.
Meanwhile, postal critics are firing off warnings about the agency’s finances. Despite a statutory mandate to break even, the Postal Service has racked up losses of more than $8 billion in the last 22 years. It’s headed for a deficit of as much as $2.4 billion in 1994, far larger than the $1.3 billion expected by Postal Service officials, according to one member of the Postal Rate Commission, which reviews the agency’s proposed rate increases.
“It is my view that the Postal Service could hardly be worse off financially, and I see nothing on the horizon that will signficantly improve its present position,” William H. LeBlanc III, a Postal Rate Commission member, told the House committee.
The Postal Service’s long-run cost-cutting plans center on increased automation of mail-sorting operations, but the General Accounting Office, Congress’ investigative arm, has found that automation isn’t having much effect on operating costs.
Not everybody believes the situation is dire enough to warrant another major postal overhaul.
“I won’t deny there are problems, but I think those problems can be corrected and will be corrected,” said Moe Biller, president of the American Postal Workers Union, the nation’s largest postal employees’ union.
The agency handles over 554 million pieces of mail every business day, far more than any other nation’s postal operation. U.S. mail service is still among the best and cheapest in the world, supporters say.
They cite the proposed 10.3 percent price increase for next year-to 32 cents from 29 for first-class stamps-as the smallest boost since the 1970 reorganization and one that will take effect a year later than expected. Critics worry the modest increase will pave the way for steeper hikes down the road, but postal officials dismiss those concerns, blaming current financial woes largely on onetime costs.
In Chicago, many postal customers are counting on recent top-level management changes to fix the mail mess and bring an end to botched deliveries and poor window service. Among the three appointments last month was a new acting postmaster, the seventh person to head the district in as many years.
But some observers believe the Postal Service has simply become unmanageable. “The twin ball-and-chains of bureaucracy and monopoly are stifling,” said one regulatory source in Washington.
Beyond personnel shuffling, however, there are daunting political obstacles to postal reform. Political action committees for postal unions donated $3.8 million to federal campaigns in the 1992 elections, more than any other public-sector labor group, according to the Center for Responsive Politics, a Washington-based research group.
“The people who are affected a lot are the employees, and they form a powerful lobby group,” said Douglas Adie, an economics professor at Ohio University, who estimates that the agency pays about 35 percent too much for labor due to overstaffing and inflated wage rates.
Responded Biller: “If they want people working for $5.50 an hour, who’s going to buy your automobiles, who’s going to buy your other products?”
In the last few years, unions have successfully blocked several attempts to save money by farming out more jobs to nonpostal workers. The agency contracts out about 12 percent of its $48 billion budget, mainly to transport mail traveling long distances and to pay the private carriers who cover 30 percent of rural routes.
But the American Postal Workers Union balked at a 1988 pilot program that set up mini-post offices in Sears, Roebuck & Co. stores in the Chicago area, staffed by Sears employees. The test was canned after union leaders asked members to cut up their Sears credit cards.
Congress hasn’t debated the merits of the U.S. postal monopoly since the mid-1800s, when it enacted the statutes barring sending or carrying letters by “private express.”
At the time, it was widely believed that mail service was needed to unify the country and that private carriers wouldn’t serve remote areas. The government required monopoly profits on city routes to cover losses for frontier service, it was maintained.
Agency supporters argue along similar lines today. They contend that only the Postal Service, bound by law, would deliver ordinary mail to inner-city households and rural residents and charge the same price for any destination. The Postal Service, this argument goes, would be forced to raise prices to cover costs as more profitable business was skimmed off by competitors.
“Everybody would lust for Manhattan and shrink from the Bronx,” said Anthony Frank, who preceded Runyon as postmaster general.
Postal critics say there’s no evidence that the routes in question are money losers. Both United Postal Service of America Inc. and Federal Express Corp. advertise universal service, with Federal Express charging the same rate anywhere in the continental U.S. In any case, the government could directly subsidize service where gaps occur or require that competitors serve specific territories.
Despite all the complaints about the Postal Service and the musings over its future, recent proposals to overhaul it have stalled.
There has been no action on a presidential commission’s 1988 recommendation to repeal the monopoly statutes or on a long-standing bill by Rep. Philip Crane (R., Ill.) to turn the agency into an employee-owned corporation and gradually phase out competitive restrictions.
Several months ago, the activities of postal inspectors stirred congressional interest in the monopoly. Inspectors had audited an Atlanta-based company and found it was using alternative delivery services for mail that wasn’t deemed urgent.
The Postal Service, which sets the rules itself, requires urgent mail to arrive by noon the next day or lose its value; otherwise, competitors must charge twice agency rates or at least $3 a letter.
Some third-class mail, including catalogs with fewer than 23 pages, are also covered by the letter monopoly. In the past five years, the service has collected $1 million in reimbursements from 41 companies that ran afoul of the monopoly provisions.
Under fire from senators including Georgia Republican Paul Coverdell, Postmaster General Runyon pledged in March that postal inspectors would keep a lower profile in monitoring businesses’ mailings. The GAO now plans to study the effects of repealing the private express statutes.
Rep. William Clay (D-Mo.), chairman of the House Post Office Committee and an outspoken critic of the postal service’s performance, wants Congress to review the results of the 1970 postal reorganization. But he is adamantly opposed to lifting the agency’s monopoly.
The real problem, he said, is with management.
“It’s the only thing that guarantees the American public reasonable rates and delivery service,” said Clay. “No private business in the country is prepared to assume the responsibility of universal postal service.”
