Making the USPS Irrelevant One Disastrous Decision at a Time!

The viral post office | Viral post, Post office, Postal policeBy now, it is apparent that the USPS has utterly failed in its primary job of delivering the mail.  That the US PS has been failing for my entire life is a topic the politicians do not want to discuss.  That the business model the USPS is based upon has never been a profitable one, the overhead is disastrously expensive, and the labor costs beyond exorbitant are also not topics the politicians ever want to discuss.  They prefer smoke and mirrors, purple squirrels, and Hollywood celebrity scandals to actually doing their jobs.  But, I digress; last week, the USPS announced that postal service would revert to the slowest it has been since the 1970s, and the cost for that dismal service is going to increase dramatically.

All weekend the reasons for the USPS being in this fix have been stewing in my mind, and I would like your insight as I discuss the main reasons why the USPS is in such bad shape.  Feel free to disagree.  Feel free to comment.  Feel free to ask questions and research further.  To my mind, the most damning problems to the USPS come from the following areas, too much overhead, labor union expenses, business model, and no clear political place in government.Save the US Postal Service! By a zillion dollars comics | Politics Cartoon | TOONPOOL

Labor Union Expenses

Let’s get something clear, the labor unions in government are living high on the hog of taxpayer forced taxation and mandated union dues.  Consider the following comment from Representative Dennis Ross.

“UPS (Union) – about 66% of their total operating costs are labor. FedEx (non-union) – about 45% of their total operating costs are labor. USPS – 80-82%.”

Here’s the rub in comparing UPS, FedEx, and USPS; they are not apples and apples; it’s more like apples to rocks.  Why?  Because UPS and FedEx must show a profit to shareholders at the end of the year; thus, anytime USPS runs into an unprofitable situation, they rely upon USPS to fill the gap.  FedEx operates slightly differently based on its business model. From observation from living in extreme rural areas, it does not appear to rely upon USPS as often to cover the gaps in service.

However, the labor costs at USPS continue to run extremely high, and the excuses for these labor costs continue to run thinner and thinner every year.  Looking at six specific USPS explicit labor union-negotiated labor costs:

      1. Compensation levels – What each employee under the collective bargaining agreement is paid.
      2. Work rules – How often an employee works, who they report to, uniforms, and a host of other processes and procedures, which can and do increase business operating costs.
      3. Contracting – Includes independent contractors, contracts for retail locations, pickup locations, and much more.
      4. Network differences – Differences in the network affect the labor involved in delivery, sortation, transportation, and retail portions of an end-to-end movement.
      5. Capital intensity – Differences in capital requirements affecting the amount of non-labor costs needed to provide services offered.
      6. Congressional requirements – Congressional requirements focus on the aspects of the Postal Service that add more labor costs influencing capital spending.

Hence, if we take Rep. Ross’s statement as accurate, Congress is to blame for some of the added expenses the USPS incurs and the hidden taxes the taxpayer pays to interact with the USPS.  This is why the place in government is such an influential portion of this discussion.  Congress has been pushing the costs of regulating the USPS onto the taxpayer as a hidden tax since the USPS was started. This is unacceptable, especially since the taxpayers did not have a voice in allowing the USPS to become unionized, tripling labor costs year-over-year.P.S.E Context of PA: SWOT Analysis of the United States Postal Service

Please note, when discussing labor costs tripling, we are not just discussing wage earners’ take-home pay.  Labor costs, as shown above, include those six items, plus a host of labor union contracted benefits, plus retirement benefits, plus administrative staff to handle these benefit packages, the regulatory burdens, the reporting burdens, and much more.  Thus, while comparing UPS, FedEx, and USPS is unfair and illogical, the labor costs are pretty close to accurate even though they cannot be compared due to business model, Congressional reporting, and quasi-governmental meddling by politicians.  Any company with 80-82% labor costs will be struggling with labor problems and turning a profit.  Labor costs, fed by a labor union, are a reality that needs rectification and addressing.USPS 2011

Outdated Business Model

2009 the USPS paid a lot of money to have their business model reviewed, and the result was an excellently written document that outlined two potential steps for the USPS to take.  Where is the USPS in adopting either of these actions in 2021; nowhere!  Why has the USPS not taken any action on this document since 2009; Congress!  Item number six in labor costs continues to rear its ugly and monstrous head, and the problem is not so much on USPS; although they indeed share the blame, Congress continues to drag its feet and refuses to scrutinize the government appropriately.Several logos, mottos have represented USPS through the years | PostalReporter.com

When discussing the USPS business model, the industry is discussing “optimizing the last mile” in the supply chain.  That last mile is where the USPS has traditionally filled in the gap and made the final customer delivery.  However, USPS is inefficient, costly, and labor-intensive.  Yet, until science fiction realizes a Star Trek-like replicator in every home, optimizing the last mile is the discussion we need to be having, and solutions are available!

The 2009 business model review offered franchisee options as a business model — what a novel idea.  Imagine getting your mail on your commute route, no more having it delivered to an apartment box, packages waiting on a doorstep for thieves, stop by a convenient place on your regular commute route, and get all your mail.  Why not have your mail delivered to your office?  Then your office mailroom becomes an arm of the post office; it can sell stamps, handling packages, and then you do not have an extra stop at all.  Talk about an employer-based incentive!  Better still, for a fee turning over retail establishments to non-profit groups for work programs.  Guess what; that has the benefit of increasing public outreach and building communities.  Yet, the USPS languishes because Congress refuses to take up serious topics, and our tax dollars are squandered!

Place in Government

Engineering Professor Calculates How Fast The Eagle In The USPS Logo is GoingRead the US Constitution, the US Bill of Rights, other founding documents, wherein is a postal service discussed?  Find me the article claiming we need a Federal Postal Service.  Name me the reason why the Postal Service is required.  Selling stamps, that can be done using a myriad of different methods.  Sending packages, mailing letters, again, many other options are available.  Passports, hundreds of other options are available; why not put that into DMV’s across the US?  Why not simplify the Passport process entirely?

What is the reason for the USPS?  Give me the why and justify the existence for the next 20-years for the USPS.  My entire life, I have been asking why the USPS is needed, and I have been asking this since before email, fax machines, and other technological leaps.

Overhead

USPS TESSWhen was the last time the USPS had personnel layoffs to balance their accounts?  1970, under President Richard Nixon, USPS had a strike, got a unionized workforce, and, as they call it, “a living wage.”  From 1970 to 2021, there has been nothing but problems in the USPS; from retirement benefits costing too much, to labor expenses, to Congressional expenses increasing year-over-year, the overhead does nothing but balloon.  I was recently in a flagship USPS for Phoenix, AZ.  The building is a disgrace, the parking lot is neglected, the lobby is dark and missing half the materials, no forms, no boxes, everything is behind the barred and locked counter, and the retail associates are criminally negligent in their duties.  What’s worse, this was a good USPS office to visit in Phoenix, AZ.

Take an honest appraisal of your local USPS and ask yourself, are your taxpayer dollars represented in your USPS in a manner acceptable to you?  I visited a USPS in Las Cruces, NM.  The design of the building lends a bright feeling to the building atmosphere; the retail area is small and naturally illuminated.  Same problem with retail associates, but not as noticeable.  However, this was also before the latest changes from Washington, where the employees were told it was okay to work slower and charge more.More is Less at the USPS | Freeport Press

It is my personal opinion that the USPS has outlived its usefulness, and it is time for the USPS to be eliminated from quasi-government offices of the United States.  Nothing fruitful can be gained from continuing the charade of the USPS.  Congress needs to return to the states the ability to issue addresses and organize their communities and end the USPS debacle!

© 2021 M. Dave Salisbury
All Rights Reserved
The images used herein were obtained in the public domain; this author holds no copyright to the images displayed.

Benefits in the Workplace – Or, shifting the paradigm on worker compensation

While discussing the shift of employment paradigms with a fellow traveler, the question was raised that if everyone is an independent knowledge worker, what about fringe benefits and non-wage compensation.  Whether these are called benefits, perks, bonuses, fringe benefits, the end result is the same; competition in non-wage areas is employed to attract talent to an organization.  The history of benefits can be directly traced to the Federal Government requiring, by legislation and non-legislation, business organizations to compete without direct wage compensation to attract and hire an employee.  Therefore, wage compensation cannot be used to compete for talent pursuing or attracting qualified employees.  The sources for this requirement can be found in several legislated actions, the most important being the War Labor Board during WWI and the New National War Labor Board during WWII both of which carried presidential power and were not legislated.  These two periods of wartime effort formed much of the landscape found in modern employment situations; namely, classes of employment with specified wage ranges, equal pay for all sexes, the mandated eight-hour workday, the forty-hour workweek, and non-wage benefits.  Frequently, the definition of benefit is challenged, attacked, and litigated.

The dictionary holds several definitions for the term ‘benefit.’  Those with direct application are “to derive … advantage,” “a payment or gift,” and “something that is advantageous (Dictionary.com, n.d.).”  A follow-on question often asked is, “If the benefit offered does not provide an advantage to you personally, why not choose something different?”  For example, medical insurance is often offered as a workplace benefit.  However, if wages are not sufficient to allow participation, if premiums are involuntarily removed from paychecks, if employment requires membership, and if the offered ‘benefit’ is not used, is advantage really enjoyed; of course, not.  Yet, the cost of the unused ‘benefit’ is not compensated in employee wages because of wage laws and the possibility of litigation or accusations of unfair labor practices.  Although adapting a diversity of plans to meet a diversity of employee needs is preferable, the costs of customization are, frankly, exorbitant and extreme.  Yet, the buzzwords in employee benefits are always customizable, morale boosting, and game changing, as benefits are tools to compete for talent.

The issue of shifting the employment paradigm regarding fringe benefits and non-wage compensation is a two-fold issue.  By no longer requiring organizations to invest precious capital in non-wage compensation, the business organization possesses the freedom to contract with another small business owner, i.e. the worker, as an equal.  This means that the right to control what is offered as compensation rests as a negotiation tool for contracted services.  The worker has the freedom to reject or accept terms offered to find a perfect match.  This also places the worker in a unique position to be accessible as an equal with other companies vying for business.  Being equal with other business owners provides an entirely new market for many companies vying to do business solely with other businesses.

Innovation, freedom, and empowerment are words that are bandied about often, but, when one side of the equation has had their freedoms and rights stripped in exchange for a paycheck, innovation, freedom, and empowerment are muzzled.  This is exactly what has transpired in the modern workplace.  The Federal Government squeezes employees into a one-size-fits-all mold and employers are forced into complying in exchange for favorable employment law interpretations that Labor Unions constantly and expensively attack.  The costs are passed onto consumers who are already forced into the traditional role of ‘employee’; the vicious cycle turns and the only winners are politicians and political appointees.

A paradigm is nothing more than a pattern, a mold, or method.  A paradigm shift is nothing more than changing the mold, pattern, or method.  Many paradigm shifts, especially where data is understood, refer to changing the perspective of understanding, interpreting, or analyzing.  Kuhn (1996) offers logic points that detail the paradigm shift argument while detailing how paradigms are chosen, created, and clung to.  A logic point worth considering is that rules can overturn paradigms.  The paradigm is the mold or pattern, but rules are processes that people cling to like traditions, this does not say that paradigms are not clung to, as the human psyche does not like change.  When paradigm shifts meet rules, rules rule; but, only until a crisis occurs can rules be disregarded for a new paradigm.  A paradigm is created first by thought; these thoughts become actions in a specific pattern.  The specified pattern, repeated, becomes habit, which become processes when taught to another.  Processes become procedures when written down and applied to a larger audience through training.  The training done in accordance to specifications is the paradigm molding the future.  Employment has become a pernicious and hostile paradigm draining freedoms from individuals, capital from business, and producing waste, which invites government to legislate more restrictions on personal power.

Yet, it is asked, where is the crisis that will provide the impetus for changing paradigms?  The answer lies in the current economic and government state of decay and overregulation.  Here is a conundrum of a crisis.  Businesses cannot financially afford to retain sufficient employees to satisfy consumer demands; however, businesses cannot afford the consequences of an insufficient number of employees to perform the necessary work.  Look at one of the exorbitant, non-wage costs of an employee workforce: medical benefits have quadrupled in less than four years.  This is a 100% increase in year-over-year costs for the last four years, and the forecasts say this is going to continue for the foreseeable future.  This is a crisis in employment driving a shift in paradigm thinking.  Right now the answer lies in reducing employee hours, which cramps budgets for workers, reduces payroll, and wreaks havoc.  The retail industry has reported the largest drop of employee hours, down to 30.2 for full-time employees.  This does not mean that 9.8 hours are no longer needed by those previous full-time employees, those employees simply now must either stretch their dollars farther, make more familial budget cuts, or get another job.  Putting this into greater focus, this means a stay-at-home caregiver is out of the question.  If both parents are working already and had their hours and wages cut, this means both parents are now working part-time jobs on top of reduced full-time work.  The added tax burden of the second job, does not improve the financial lot of the family, nor will it sufficiently cover the lost wages of the cut hours.  Since wages are not going to go up for less work, a second job is not going to be the value-added solution, a different answer to the paradigm must be found.  This is a prime example of lost freedom, lost ‘Right to Control,’ and lost liberty, all in the name of old paradigms.

Another fellow traveler postulated that no freedoms are stripped in the modern workplace; his argument being that sacrificing the ‘Right of Control’ is expected as a condition of employment.  The counter argument is that the employee should never have to sacrifice his ‘Right to Control’ for a paycheck.  Businesses gain and benefit from professional and credentialed knowledge, experience, efficiency, and education of those aligning themselves with a brand or business organization, and, therefore, lose nothing, but rather embellish and enlarge the scope of the organization with greater opportunity for success and profit.  The requisite of employment to disavow a person’s inalienable right to freely and rightly pursue his work in a manner subsequent to his credentialed preparation and professional experience as he sees appropriate is foundational to his basic rights.  This is the first paradigm needing to be shifted in the modern workplace.  In shifting this paradigm, much of the problems and costs inherent in human capital are reduced or eliminated entirely.

References

Benefit. (n.d.). Dictionary.com Unabridged. Retrieved May 06, 2013, from Dictionary.com website: http://dictionary.reference.com/browse/benefit

Kuhn, T. S. (1996). The structure of scientific revolutions. (Third ed., Vol. VIII). Chicago, ILL: The University of Chicago Press.

 

© 2012 M. Dave Salisbury

All Rights Reserved