Monday, October 28, 2013

17 More Ways USPS Is Not Like a Real Business

Please see the U.S. Postal Service's response to this article, Layers of Redundant Management Have Been Eliminated, USPS Says.

The recent article Nine Ways the Postal Service Is Not Like a Real Business apparently struck a chord, or maybe a nerve, generating numerous insightful comments on this blog, various LinkedIn groups, and private emails.

Though the U.S. Postal Service must live off of the revenue it generates rather than on government appropriations, it differs fundamentally from private enterprises in numerous ways. Those distinctions are more than just an interesting point of discussion. They are a key to understanding the Postal Service and how it might be reformed.

So, with thanks to many Dead Tree Edition readers, here are xxx more ways the USPS is not like a real business:
  1. The concept of “investment” is nearly absent from the Postal Service, which must live from one annual budget to the next. It is not able to access private capital markets, such as the bond market, to finance major capital investments. That prevents it from making investments that would probably pay off in the long run, such as replacement of its aging, inefficient delivery fleet and more of the kind of automation that has enabled it to increase labor productivity.
  2. Similarly, the Postal Service is hamstrung when it comes to launching new products that are not immediately profitable. 
  3. The Postal Service does enjoy low interest rates on its debt because it can borrow from the federal government. But it has reached the legal limit of its ability to borrow. And much of its debt was racked up to cover subsidies to the federal budget that were dressed up as prepaid retiree health benefits and pension-fund payments. 
  4. “Real businesses are not required to invest ALL their pension assets in low interest government bonds but instead can choose to invest then in a balanced portfolio,” noted one anonymous commenter. “The difference in average returns on pension assets of the USPS and the average returns of a typical businesses pension assets amount to over $10 billion per year.” 
  5. “They are forced to deliver to unprofitable addresses,” notes Mike Seethaler, president of Raintree Graphics in Jacksonville, FL. “If a customer is too far out and too small for us to make a profit, we don’t do business with them.” In contrast, one commenter noted, USPS “is mandated to serve all areas of the country, every address, every day.” 
  6. Speaking of unprofitable customers, USPS can’t charge higher prices for customers who are expensive to serve. People who get front-door delivery pay no more than those who receive their mail curbside or in cluster boxes. When USPS has to rely on airplanes, boats, or donkeys to get mail to remote places, it can’t charge a premium for those services. And it costs you 46 cents to send a letter from Maine to Alaska, or to send it across town. 
  7. “Real businesses report long term liabilities, like retiree health benefit liability, on their balance sheet, and only report them as an expense when money is set aside to fund the liability,” wrote Liam Skye. “USPS is the only organization that is required by law to report fixed amounts of the liability as expense, whether they put the money aside to fund the liability or not!” 
  8. Unlike most postal agencies around the world, the U.S. Postal Service is legally restricted from straying outside of its core business of offering postal services. And even its delivery-related ventures can run into problems if they compete with private businesses. “Consider the fact that USPS came up with the concept of overnight mail first,” says R.E. Perry. “It made so much money for the service that USPS bought a bankrupt airline rather than continue to pay other carriers to provide that service. Complaints that private companies could be making this money led to Congress ordering the service to sell the airline, and return to paying others to move their mail.” 
  9. The Postal Service is subject to a regulatory agency, the Postal Regulatory Commission, that has no authority over USPS’s private-sector competitors. 
  10. “Another way USPS is not like a business: It is mandated by the Constitution of the United States,” wrote Kofi M. G. W. Opantiri. (Technically speaking, the Constitution authorizes but does not require Congress “to establish Post Offices.”) 
  11. It is exempt from income, sales, and real estate taxes. On the other hand, USPS is not eligible for the kind of tax breaks that incent private businesses to expand and to become more energy efficient. 
  12. “Real businesses don't have two private police agencies who have to enforce thousands of federal rules and regulation WITHOUT reimbursement,” noted one commenter. 
  13. By law, postal workers cannot strike. But impasses in labor-management negotiations at the Postal Service lead to an unusual step – binding arbitration. 
  14. Private businesses are not subject to the Freedom of Information Act. But nor do they have the power of eminent domain, exemption from many state and local laws, and some protections from being sued. “USPS considers itself above the law,” wrote “a lady veteran.” “Some of their trucks should never be on the road.” 
  15. “Not even Wal-Mart risks electrocuting its employees,” tweeted Dave Berdych, alias Dry Mail Man, referring to OSHA’s four-year investigation of electrical safety hazards in numerous postal plants. 
  16. ‏ “No real business would have this many layers of redundant management. (bureaucracy),” responded one reader, echoing a complaint often heard from postal workers. 
  17.  “Real business management incompetence is usually dealt with a demotion or termination,” wrote another. “Postal incompetence is rewarded with a promotion.” 


All Your TSP Belong To Us ! said...

Good article, nice job.

As a poster said elsewhere, postal mgmt. can't even run the USPS, let alone fix it.

Anonymous said...

I have never seen anyone mention what the cost to the USPS for all the SOX mandates that were shoved down throat. Again the only federal agency under SOX. I believe it probably cost in the billions to implement and to continue with all the reporting.

Anonymous said...

Can I submit some other reasons the USPS doesn't act like a business? If so, who should I email them too?

Anonymous said...

The USPS / Inspection Service / Human Resource Group is responsible for the total destruction of entire American families for personal gain. Collusion / Terrorism (policing themselves) continues to lead to suicides and executions (ie. OSC MA 93 1872 & USSC 99-565). The success of the Postal Holocaust (murderbyproxy / workplace violence) lead to the American Holocaust (population control).

Economic Oppression is premeditated and orchestrated outrageous extreme physical, medical, mental, financial and emotional stress. Psychological Warfare. Modern day genocide.
Deficit / Death fix it
The cost of justice or the cost of lying, delaying or denying justice?

D. Eadward Tree said...

In response to the third comment, feel free to email me at

Anonymous said...

Item #6 is wrong. The cost of postage is 46 cents not 49.

D. Eadward Tree said...

Thanks for pointing out the 49-cent error. I was already factoring in a rate increase that's not scheduled to take effect until Jan. 2014. Correction to 46 cents has been made.

Anonymous said...

While those points are factual: USPS remains inefficient with oversight by business inept Congress). The points offered must be changed to allow USPS to exist in the 21st century. To suggest by their very inclusion the points make USPS exempt from the laws of economics and business is denying reality.

Anonymous said...

How about the eBuy system? My delivery unit is required to buy all their supplies through this one catalog. I couldn't believe the prices when I looked at it! If we are responsible for ordering our own supplies we should be able to run down to Office Max and buy what we need instead of the inflated prices on eBuy.

Anonymous said...

The future of the post office is very bleak. Hiring PSE'S to run the post office is and already hurting productivity. Training them to learn the scheme and any other jobs such as bulk mail technician or business reply mail is a joke. They are only good on the window and giving out mail. So the bottom line is upper management is pushing us to privitazation.

Unknown said...

I would love to see a comparison of Postage between the US and the World and versus UPS and FEDEX to include all surcharges each carrier adds to the customer's cost of shipping.

Management has a hard time, terminating employees. Not due to UNION interference, but to their own failure "dot all the I's and cross all the T's" when dealing with difficult employees. Manager's need to learn that Familiarity breeds contempt! Far too many Managers are "friends" with the people the are in charge of. In my 20 years, the best supervisors I have had have been former Non Commissioned Officers. They have had the practical experience and have attended leadership courses that had prepared them to Lead folks from all walks of life.

Mark Fallon said...

Of course, absent from both lists is the Number One reason - the USPS is not a business, it's a government agency created under Title 39 of the US Code. Somehow, everyone seems to forget that. Including USPS management, the US Congress, and most mailers.

Anonymous said...

I can't agree more with items 16 and 17. Incompentence is running rampant at this place plus the "people skills" demonstrated are embarrassing.

Anonymous said...

It is easy to sit and watch, and then comment. Most people who comment on the poor management have never been managers themselves. Managers are micromanaged daily and are given very little ability to make meaningful decsions. They are provided unrealistic budgets without any input. They must deal with powerful unions. Hiring local short term labor is impossible. They can not invoke cost saving measures, such as requiring all customers to move to cluster boxes. They are prevented from crossing crafts, the union requires management to pay overtime to a carrier before management uses an employee of another craft who wants the work. And the list goes on. An overhaul is drastically required, but it must come from all levels and not just the top.

Jeff Anderson said...

Hello. My name is Jeff Anderson and I work at the Harrisburg, PA P&DC 17107. The last comment made by "Anonymous" must be from a small office or out of touch with the managerial process. I do agree with him/her that the supervisors who actually work with the workers on the floor are "micromanaged". The current union, though I am a member, is not "strong"; in fact if I am given a direct order to do something, or asked to do something against the "contract" we have with the USPS, the union's simply tells me that a "grievence" will be submitted and do as you are told. Some grievences take years to be settled. I don't see much power in that. The higher up managers (plant managers/ district managers/ managers in the offices: MDOs) make all the decisions regardless if they are right or wrong. I've proudly worked for the Post Office for 16 years and have seen the best supervisors and MDOs leave; only to be replaced by less worthy and far less knowledgeable people. Most of them moving up the ranks for better pay but don't know the operations. I believe we have had 4 or 5 Plant Managers within the past few years. They either aren't doing what te higher ups want, or they simply mess things up. The works who actually know the jobs better than their supervisors really don't have that much say as far a input. Now new people are being hired at a lower wage and without benefits; that look at the Post Office as a first job not a career. Their training is basically non existent, and they don't question anything because they actually don't know anything about how things work. The USPS is not like a business because a lot of the people that I "work" with and for, would be fired immediately in the real world of business. Thank you.

Paul Abdool said...

Great blog Dead Tree Edition. The bottom line is that "business decisions" need to be made. Some radical ones too...

Anonymous said...

The Postal Service will NEVER be like a real business. It is so full of un-business like practices it is not funny. Laws are made, that apply ONLY to the Post Office. Money is only generated BY THE POST OFFICE for the POST OFFICE. No government monies or programs fund it. When will everyone learn that, including congressional representatives? It works, just walk away and leave it alone. YOU CAN'T FIX IT!