Restructuring the U.S. Postal Service

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The U.S. Postal Service (USPS) is a large business enterprise operated by the federal government and paid for by American taxpayers. It has more than 600,000 employees, along with a legal monopoly over letters and mailboxes. This policy is an anomaly for a nation whose general stance is to support open competition in the markets. Even so, the USPS has been losing billions of dollars a year for more than a decade. Its financial challenges stem from falling mail volumes and its high cost structure, the latter of which is partly due to Congressional impositions placed on the USPS: Congress limits the USPS’s pricing flexibility, requires it to provide expansive employee benefits and engage in collective bargaining, and denies it the power to close low-volume post offices and reduce delivery frequency.

Congress should reform the U.S. postal service with the goal of leveling the playing field and opening our postal markets to greater competition and innovation. It should follow the example of European lawmakers, who have responded to similar challenges in their postal markets by privatizing their postal services and encouraging competition. Similar reforms will give the USPS the flexibility it needs to cut costs and diversify, while at the same time improving quality for consumers and providing equal treatment to businesses across postal and package markets.