united states postal service USPS workers are covered by collective bargaining agreements, which greatly reduce business flexibility. Collective bargaining agreements specify certain salary increases, cost-of-living adjustments, and percentages of employee health insurance premiums. They also govern how disputes are settled, and the company’s financial condition is never taken into account. Indirect subsidy, competition from private companies, unions, and changes since Benjamin Franklin’s time have all had an impact on USPS employees.
Indirect subsidy
The Postal Service gets a huge indirect subsidy because of its unfunded pension system. The Postal Service has a history of self-funding, and the agency has also struggled against larger political currents. Progressives discounted the salience of self-funding and defended the post as a public service. Postal services have expanded beyond letter-writing and package delivery to include banking, telephone and telegraph services.
The USPS also has a legal monopoly over mailboxes and the delivery of non-urgent mail. They are exempt from vehicle registration requirements, parking tickets, and local and state fuel sales taxes. And the postal service pays its corporate taxes to a special fund in the U.S. Treasury. This is an indirect subsidy, but it doesn’t appear to be as big as some might think.
Competition from private companies
Many Americans are worried that the Postal Service will not be able to compete with new private companies. While there is some evidence that the Postal Service can compete with more efficient and technologically advanced companies, the U.S. government has been losing money in recent years and may not be able to compete with all the new competitors in the postal market. That said, there are several reasons why competition is good for consumers.
One reason for the decline in the Postal Service has to do with under-funding. In addition to the lack of funding for capital investment, many federally owned businesses have poor cash flow. For example, the USPS, like Amtrak and the air traffic control system, has limited access to debt and equity markets. The Postal Service is severely constrained by projected liquidity constraints, which limit its ability to compete with the private sector.
Unions
The united states postal service has nine collective bargaining agreements with seven unions covering around 550,000 career employees. Collective bargaining agreements govern pay, many benefits, and conditions of employment. One recent agreement is the acceptance by the APWU of a lower-paid category called “Postal Support Employees.” The APWU’s acceptance of this category was in exchange for promises of new work. Other craft unions have similarly lower-paid categories without the promise of new work.
The APWU, like other unions, represents postal workers and is responsible for fighting for dignity and respect on the job. It also fights for decent wages, a safe working environment, and public postal services. Unionized workers are part of the larger labor movement that represents all workers, regardless of sector. However, it is critical to remember that postal workers are not the only ones impacted by the USPS’s contract negotiations.
Changes since Benjamin Franklin’s time
The Postal Service has come a long way since the founding fathers established the system in America. Franklin’s early efforts to improve the delivery system were largely successful, as his postal service expanded beyond Philadelphia to other colonies, including Quebec and Newfoundland. The first profits of the colonial postal service were made in 1761, when the British ceded New France. Benjamin Franklin helped make these changes possible by providing uniform accounts for all postmasters in the colonies.
While in office, Franklin was tasked with making the post office more accessible for the common man. He reduced postage prices and expanded postal services to all colonists. He also abolished the practice of free newspaper distribution. The post office now offers all newspapers for a small fee. Unlike today’s postage service, Franklin never maintained a monopolistic power over the mail service. And, unlike today’s post offices, he did not patent any of his inventions.
Cost of service
In the past, the USPS has charged much more for mail delivery to rural areas and less populated areas than it does for the same mail in the more populous New York City. Today, USPS charges the same rate for both types of mail, making it easier for small businesses to compete with larger ones. The reason for the difference between rates is due to the universal service obligation, which forces postal service to charge more for mail in less populated areas, but the same rate for mail in the more populous New York City.
As a self-financing public service, the USPS cannot raise prices or cut services without losing revenue. The united states postal service is required by law to deliver mail to every household six days a week, but the sharp decline in mail volumes has not translated into a similar reduction in the USPS’s costs. For example, the pandemic has resulted in a dramatic decline in marketing mail. However, these factors do not offset a recent rise in costs for the USPS.
