New bill hopes to bring the Postal Service into the 21st century

Re-published from “The Enterprise Blog” on American.com. To read it there, click here.

While the impending U.S. Postal Service bailout (as I’ve described on this blog here and here) is much the fault of Congress, a bill currently being considered would adopt measures to stem the fiscal damage. As I describe in my RealClearMarkets article, the “21st Century Postal Service Act,” S. 1789, achieves the following:

• Allows the Postal Service to adjust by cutting costs. Since 80 percent of postal costs are related to labor, serious reforms must allow the Service to reduce those costs.
• Uses the approximately $7 billion overpayment into the Federal Employee Retirement System (FERS) to provide incentives to reduce without layoffs the Service’s workforce over the next three years by an estimated 100,000, or about 20 percent. This would be done by offering employee buyouts and early-retirement incentives.
• Requires arbitrators to consider the financial condition of the Postal Service when rendering a binding arbitration decision. (The only reasonable reaction to such a provision must be, “why was this not done before?”)
• Allows the Service to undertake a number of valuable cost-cutting measures that would have only modest effects on service. For example, allow some deliveries to be converted from front door to curbside, which the Postal Service has estimated would save up to $4.5 billion per year. It would also allow the Service to optimize its network by converting some retail outlets to window service inside a nearby drug store, for example, which would reduce the costs of providing those services in separate buildings.

Although the United States still has much to learn from international models of postal reform, such as those undertaken in Germany, Britain, and New Zealand, these proposed reforms would allow the managers of the Postal Service to operate it more like a business, which Congress has been urging them to do for decades.