The Postal Service continues to hemorrhage money at a rapid pace.
Some have suggested that the Postal Service should move into non-postal ventures such as supply chain management and banking to help shore up its finances. Others have suggested the Postal Service expand its shipping business into other areas, such as shipping alcoholic beverages.
The Tax Foundation recently released a report examining the case for the Postal Service venturing beyond its current duties. In short, the report concludes that this would not be a good idea.
Some of the reasons cited by the report for problems with these commercial ventures included:
- Career postal workers’ compensation packages (wages and, more so, benefits) are high relative to those of comparable workers in the private sector. Those above-market costs decrease the odds that nonpostal ventures will be profitable.
- The Postal Service is often willing to except low margins on products and services. This creates more of a problem in a competitive commercial market.
- There is concern that non-postal ventures would distract Postal workers and managers from their core mission of handling mail.
- A series of failed non-Postal ventures in the 1990s suggest that while postal managers are highly skilled at moving the mail, they are much less adept in non-postal areas.
- The shortage of positions on the Postal Service’s Board of Governors highlights Washington’s inaction on filling the positions at a time when they are most needed. The report suggests that because Congress has let the Postal Service down in this area, it might do so in new, non-postal business ventures as well.
- Politics – underscored by the above point, if the Postal Service were to venture into a successful, non-postal business, the innate desire for Congress to begin meddling with the business model and forcing the Postal Service to increase prices or reduce service levels would likely begin to hinder the profitability and viability of the business.
For more details, see the full report: The Strange Case of the Postal Service’s Disappearing Board and the Warning It Provides.