The United States Postal Service’s manufactured fiscal crisis need not lead to the end of the public postal system.
According to the dominant narrative, Amazon.com is the trailblazer of online retail in the 21st century; the United States Postal Service is a floundering, outdated public agency. Fittingly, most media coverage of the recent deal between the two to start offering Sunday package delivery paints it as a “lifeline” for the ailing USPS. But the current crisis offers the possibility for a transformative overhaul of the postal service — a transformation for which postal workers appear increasingly willing to fight.
The USPS is, indeed, ailing. In the fiscal year that ended on September 30th, it reported a loss of $4 billion. And these numbers were an improvement compared its record loss of $16 billion in 2012. In October, chief financial officer Joe Corbett announced the agency has a dangerously low cash reserve — only five days of operating cash on hand — leaving the agency highly exposed to risk if the economy takes even a slight downturn.
Many look at the USPS’s financial woes as an indication that their business model has simply been rendered obsolete by the advent of email: ”Nobody sends letters anymore!” Superficially, this seems plausible: the USPS has suffered revenue losses due to the decline in first-class mail volume. But parcel mail volume is actually on an upward trajectory, and will likely continue to go up as more people shop online. (If the Amazon/USPS partnership proves successful, other companies whose shipping traffic helps make up the $186 billion e-commerce market will likely pursue Sunday delivery, a potential windfall for the postal service.) Blaming the financial woes of the USPS on the internet alone isn’t sufficient.
Another oft-heard refrain — especially from those looking to privatize the postal sector altogether — is that labor costs are draining the agency. Labor does account for 80 percent of the postal service’s expenses (more than for its private sector counterparts, FedEx and UPS). The USPS is the nation’s second largest civilian employer, right behind Walmart, and is comprised of unionized public employees. So naturally, the benefits these federal workers receive are a target of suspicion. Cushy union jobs are making the USPS inefficient, so the refrain goes; hand over the sector to private entities and that’ll be that.
All this red ink is, indeed, attributable to retirement and healthcare costs — but only because Congress is forcing the agency to grossly mismanage its own pension funds. The current USPS crisis was manufactured in 2006 when the Republican-controlled Congress passed the Postal Accountability and Enhancement Act, and President Bush signed it into law.
The PAEA mandates that over the course of just 10 years, the USPS must pre-fund healthcare benefits for the next 75 years of retirees. That means diverting $5.5 billion annually to a fund set aside for future retirees — workers who haven’t even been hired yet. And this on top of the normal cost of covering current employees and retirees. No other entity, public or private, is required to do this. Worse, the USPS might be overpaying: the PAEA calculates future liabilities based on the assumption that the rate of health care cost inflation will average around 7 percent, whereas the actuary industry standard is closer to 5 percent.
This pre-funding mandate is the principal reason the USPS is in the precarious position it’s in today. Without it, the postal service would be comfortably out of the red, even turning an operational profit.
It’s worth remembering how the USPS as we know it today came to be: the Postal Service is one of the few government agencies explicitly enshrined by the Constitution, but in 1970 it was transformed after one of the biggest wildcat strikes in American history. The walkoff dealt with a number of grievances: from low wages and almost non-existent benefits, to unhealthy and unsafe working conditions, to being denied the right to collectively bargain, to the unfair treatment of black workers. In the spring of 1970, members of the National Association of Letter Carriers Local 36 in Manhattan struck without authorization from union officials. The strike spontaneously spread all over the country, inspiring more and more workers to join. The mail delivery system came to a screeching halt, causing the stock market to fall and prompting Nixon to call in the National Guard and declare a national state of emergency.
The result? The Postal Reorganization Act of 1970, codifying fair wages and working conditions, anti-discrimination measures, and the right for workers to collectively bargain. It also established what we recognize now as the defining features of the USPS: “the obligation to provide postal services that bind the Nation together through the personal, educational, literary, and business correspondence of the people” and to “provide prompt, reliable, and efficient services to patrons in all areas and… all communities.”
Since then, of course, labor’s fate has declined precipitously. Such massive work stoppages have all but disappeared, and the bargaining power of public sector unions and organized labor generally has eroded.
Since 2006, USPS management’s approach to dealing with financial stress has been decidedly anti-worker and in line with those in Congress who would privatize the sector. Postmaster General Patrick Donahoe and the Board of Governors have shrunk the workforce of the USPS by nearly 150,000 since 2006 and closed hundreds of branches. Last spring, management announced POStPlan (Post Office Structure Plan) to begin reviewing more than half of the country’s post offices for potential cuts in staffing, hours, or outright closure.
The postal unions — who, until recently, have presented a weak front in opposition to these policies — maintain that this kind of attrition is no way to preserve the postal service. Rank-and-file members were also enraged that the POStPlan consolidates USPS staff in ways that openly violate specific terms of workers’ contract.
The resulting tide of discontent brought in a new slate of leadership at the American Postal Workers Union, who entered office in November promising to take a more active, militant approach to confronting the attacks on the postal service. Newly-elected president Mark Dimondstein, a longtime rank-and-file activist from North Carolina, delivered an impassioned speech at his swearing in ceremony, saying that the postal service needs to be part of a broad-based social movement, a “grand alliance” between the postal unions and the general public “in defense of America’s right to vibrant public postal services.”
A new bill in Congress provides a rallying point for such an alliance: the Postal Service Modernization Act put forward by Sen. Bernie Sanders (I-VT) and Rep. Peter DeFazio (D-OR) proposes both abolishing the prefunding mandate and opening the door for the USPS to expand into non-postal services.
In dozens of other countries around the world, and even earlier in US history, offering non-postal services through the post office has proven an effective way not only to diversify revenue streams, but also to create additional valuable public services. For starters, the USPS could be allowed to ship alcohol, a sensible activity that is currently under a Prohibition-era ban. The USPS could issue hunting and fishing licenses. Post offices could also notarize legal documents or serve as voting centers in our embarrassingly dysfunctional elections.
But the non-postal service with the greatest potential to benefit society is a public banking option.
According to the FDIC, almost 34 million Americans are “unbanked” or “underbanked,” meaning they rely on fringe financial services like prepaid debit cards, check cashing, or payday loans. Private banks target this demographic with exploitative practices like predatory lending schemes.
A study released in October at the Universal Postal Union’s 2013 Global Forum in Geneva shows that post offices have the capacity to boost financial inclusion not only in developing countries, but also in developed countries where the unbanked and underbanked are largely neglected. France, Germany, Italy, and especially Japan serve as good models for a successful banking service run through public post offices. With over 32,000 offices around the US, the Postal Service is well-positioned to offer such a service — especially in communities deemed too rural or too poor for a traditional bank, which continue to flee these areas.
Post offices could be a convenient place not only for the unbanked and underbanked to do their banking, but also for any American looking for a safe alternative to big Wall Street banks. Since the financial crisis of 2008, experiments like the Occupy-approved credit card and the emerging techno-libertarian currency, Bitcoin, attempt to meet this demand. But postal banking would provide a much more tangible and direct investment in the public good. Instead of using deposits for private gain, like traditional banks do, a postal bank could funnel voluntary deposits into bonds that then be used to fund public infrastructure projects.
Since the watered-down emergency stimulus package of 2009, rhetoric in the debate about economic policy has centered on austerity and deficit reduction. But our nation’s crumbling infrastructure is sorely in need of some capital: on its 2013 infrastructure report card, the American Society of Civil Engineers gave the US a dismal grade. Millions could be put to work by investing not only in the repair and renewal of our existing infrastructure, but also in new infrastructure for the 21st century: a greener energy grid and a more efficient, farther-reaching public transportation network.
So postal banking would do more than just shore up one of the country’s oldest public sector services — it has serious potential to bolster the economy by facilitating financial inclusion and employing millions of Americans. But in opposition to such possibilities stands the Postal Reform Act of 2013, put forward by Rep. Darrell Issa (R-CA) in the House and, with slight variations, Sen. Tom Carper (D-DE) and Sen. Tom Coburn (R-OK) in the Senate. This legislation would phase out door-to-door delivery, replacing it instead with neighborhood “cluster boxes” in addition to cutting more jobs, branches, and services as a part of its general downsizing scheme. The bill would also limit unions’ right to organize and bargain.
Issa is a vocal proponent of privatization, and this postal reform bill lays the groundwork for it. Allowing private companies to pick up the “first and last mile” of delivery would undermine the universal reliability that makes the USPS such a valuable public service.
The issues surrounding the fate of the USPS aren’t isolated. Similar strands run through many of the current debates over corporate education reform, environmental policy, promoting a free and open internet, and biomedical patents and intellectual property rights. Nationally, the very notion of the “public sphere” is imperiled, with many eager to dismantle it entirely.
The current grassroots effort to preserve the Postal Service has glimmers of militancy similar to those displayed by postal workers back in 1970, this time with Occupy as the cultural underpinning rather than the Civil Rights Movement. The Community Postal Workers Union, a grassroots network formed in 2012 that brings together members of the APWU, the National Association of Letter Carriers (NALC), and the National Postal Mail Handlers Union (NPMHU,) has led the charge on direct action, staging sit-ins and pickets at community meetings in post offices slated for review under the POStPlan. Last summer, the CPWU staged a week-long hunger strike on the National Mall in Washington, DC, to protest Congress’s “starving” of the USPS, and even attempted a citizen’s arrest of Postmaster General Donahoe.
If the push on the ground and the push in Washington conference rooms can be well coordinated, the idea of a National Infrastructure Bank run through the post office could seem less and less fanciful. The rhetoric of the movement will stay centered around preserving the viability of USPS in the years to come, but NALC Chief of Staff Jim Sauber maintains that postal banking is still “a very big long term goal” as they organize support for the Sanders/DeFazio bill.
The postal service need not become a dying relic. The pervasive narrative of the USPS and other public services as lost causes can give way to a reinvigorated public sector — if workers and the public will fight for it.
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