Commentary

The Infected Postal Service

By Edward L. Hudgins
November 7, 2001
The U.S. Postal Service has been criticized for acting too slowly to protect its workers and the public from anthrax-laden letters. Congress and news media that received infected envelopes seemed to act quickly, shutting down buildings and testing staff. So, shouldn’t postal officials have immediately tracked Sen. Tom Daschle’s contaminated mail back to the postal facility through which it had to pass rather than waiting to do so until two postal workers lay dying?

To be fair, the Postal Service is learning to deal with unprecedented threats on the run. But while no given USPS official is necessarily negligent, the organization’s apparent missteps in meeting the anthrax challenge should not come as a surprise. That’s because the bureaucratic structure of the USPS makes it difficult for it to meet its customers’ needs, much less to meet terrorist threats.

So how does the Postal Service deal with its customers? Its largest customers — the commercial mailers, who account for nearly half of the mail volume — have complained for years that service is neither timely nor consistent. Worse, the Postal Service does not maintain an adequate service-performance measurement system for such mail. A private business that did not monitor the needs of its customers would lose them. Further, the USPS wants to raise rates for commercial mailers for the third time in just over a year. It also wants to raise the price of a stamp from 34 cents to 37 cents. By contrast, when airlines and hotels face low customer demand, they lay off workers and cut their prices to attract customers.

Overall, Postal Service efficiency is poor. It has invested billions of dollars in cutting edge equipment. But actual productivity has risen only about 11 percent in total over the past 30 years. In 1970 nearly 80 percent of postal revenue went to cover labor costs. Today the figure is still around 76 percent. No wonder it continually needs to raise rates.

Why such a poor performance? The government monopoly Postal Service’s first- and third-class mail service is not subject to competition. Further, the USPS pays no taxes, is not subject to most government regulations, and has regulatory authority that it sometimes uses against private companies offering services where competition is allowed.

Further, its bureaucratic structure creates a corporate culture that breeds inefficiency and mistakes. For example, managers have few incentives or opportunities to act in innovative ways, and every incentive to cover their butts. The top-down decision-making process means managers can do little without approval from higher-ups and usually must wait for others to act or face tough fights within the organization. Yes-men managers often move up the career ladder, much to the frustration of resourceful managers who rock the bureaucratic boat. Managers who do a poor job often keep their jobs, which frustrates the workers under them.

On the Postal Service’s labor front, union leaders usually look out first for their own power and position. They often protect lazy, incompetent, or even violent workers, much to the chagrin of managers to whom I’ve spoken and to fellow workers who must take up the slack. One former worker complained to me that he and his coworkers are discouraged when they offer ideas on how to make the mail move faster or more efficiently. After all, efficiency could mean less need for workers and union bosses.

Worse, unions have a cottage industry filing complaints often over imaginary grievances. The total backlog of cases waiting to go through the costly and time-consuming arbitration process reached nearly 100,000 in 1998. Thus labor and management, like a dysfunctional family, usually deal with one another as adversaries.

Private companies have owners and shareholders who profit from innovation and lose from bureaucratic lethargy. Managers and CEOs thus can be fired for not performing and receive raises and promotions when they find ways to service customers better and thus increase revenues. Companies that fail to meet customer demands can go bankrupt. By contrast, the Postal Service with its special privileges is institutionally flabby, like a football team that rarely plays an opponent and doesn’t worry about players being cut or coaches fired.

While a private company might not have caught an anthrax attack quicker than did the Postal Service, it would not be surprising if the USPS’ institutional problems contributed to its slow reaction. Collegial and open communications between workers and managers, which might have led to quicker actions, are not the norm at the USPS.

After the Sept. 11 attacks the Postal Service started to hemorrhage and is expected to ask Congress for a multibillion-dollar bailout. But what it needs is to be transformed into a privately owned, non-monopoly enterprise, following the lead of postal services in other countries. The postmaster general, Congress, and all those in mail-related industries can use the tragic anthrax situation as an opportunity to move the Postal Service in the direction it needs to go to survive, which would be good for Postal Service workers, managers and, most importantly, the customers they serve.

Edward L. Hudgins is director of regulatory studies at the Cato Institute.