As economic stimulus, the USPS is an incredible deal

Photo by  Graeme Pow .

Photo by Graeme Pow.

I haven't written about it on here before, but I've had pretty harsh things to say about the USPS over the past few years. As someone who frequently extols the virtues of urbanism and is bothered by the outsize subsidies associated with rural life, it irks me that I pay the same to ship a letter as someone who lives 50 miles from the nearest post office. Perhaps more importantly, I'm just not convinced that first class mail delivery is a strictly necessary government service in the year 2013. This was all no big deal as long as they were profitable, but now they're losing billions a year.

The Postal Service is on track to lose about $10 billion this year. And to be fair, a big part of the reason for that is a Congressional mandate, unique to the USPS, that they pay their future retirees' health benefits out to 75 years in the future. They tried to save a few billion dollars a year by cutting Saturday service, but that was quickly squashed by yet another Congressional mandate, this time requiring that they maintain six-days-a-week service.

But in a time of continuing high unemployment, maybe we need to look at this from another perspective. To get that perspective, let's look back a few years. As the job losses caused by the financial crash of 2008 were peaking, we passed a $787 billion stimulus package to save and create as many jobs as possible, and according to the CBO it was somewhat successful: as many as 3.3 million jobs were saved. Taking that number as a given, this means that each job cost at least $238,000. This was spread over three years, and for various reasons its misleading to say each job actually cost that much, but we'll just accept it for now.

By contrast, the USPS employs about 522,000 people (though that number is declining rapidly) who earn an average of about $50,000 a year and get some pretty nice federal benefits. Good middle class jobs, in other words. If the Postal Service loses $10 billion this year and keeps all of their employees, it'll cost taxpayers about $19,000 per job saved. If we got that kind of return on the 2009 stimulus we could have put every unemployed and underemployed person in America back to work, and then some.

How many federal workers do you know whose wages are mostly covered by user fees? Photo by  komunews .

How many federal workers do you know whose wages are mostly covered by user fees? Photo by komunews.

Now, part of the point of the stimulus was to keep people employed long enough for the economy to get back on its feet, not to subsidize those jobs year after year into infinity (which is part of why the $228k per job number is misleading). To get to that level of spending, though, we'd have to subsidize the USPS at its current loss levels for over 10 years. At a time where unemployment is still over 7%, is deficit reduction still such an imperative that we can't afford to keep the Postal Service afloat as it reorients itself over the next several years? Can we really hope for such a good employment deal in any other spending package?

Some people might argue that the USPS isn't like other federal organizations--they're a business, not a public service organization or entitlement like Medicare, so its not the taxpayer's responsibility to shore them up when they get in trouble. But if they were really a business, could the US Congress mandate that they, and they alone, spend billions of dollars on costs that won't be incurred for another three quarters of a century? If it wasn't a public service, could Congress force them to provide their services six days a week, no fewer?

Maybe I'm overlooking something obvious, but I don't see how our lives would be significantly worse as a result of dropping to five-, or even three-day-a-week first class mail service (letter-type mail, not larger packages). We're forcing them to deliver every day because we find it convenient, that's all. We have the power to override the business decisions of the Postal Service for the sake of our convenience and we exercise that power, so as long as we retain that power the responsibility flows both ways. They have to do as we say, but when that gets them in trouble it's on us to bail them out.

I'm not proposing that we preserve employment into perpetuity--it's pretty clear that the USPS is on its way out eventually, or at best will be a much, much smaller organization in the not-too-distant future. In particular, I think we should be discussing whether six-day service is necessary anywhere, and especially where it's most expensive to provide. But anyone who's experiencing any kind of righteous indignation about Postal Service financial losses needs to look first to their Congresspersons, and themselves. Then they need to look at the unemployment number and think about whether this is really the best time to be laying off more people from well-paying, useful work. Even if its not strictly necessary.