U.S. Postal Service at 25 Clouded future: Can it survive in digital age weighed down by high personnel costs?

July 22, 1996

ON JULY 1, the U.S. Postal Service turned 25. Of course, American mail-service goes back to the nation's birth and Benjamin Franklin. But it wasn't until 1971 that the old Post TC Office, funded by tax dollars and micromanaged by an intrusive Congress, became the quasi-public Postal Service, without taxpayer support.

It has been a rocky 25 years. Saddled with a huge work force and powerful unions, postal officials haven't cut overhead. Labor costs under the old Post Office ate up 80.3 cents of every dollar spent; today, that figure is 80.8 cents.

More than $3 billion has gone into automation, and yet this has had little impact on productivity. Employees continue to complain about a militaristic hierarchy and attitude, which isn't surprising given its size (753,000 workers and the 12th largest U.S. corporation).

Congress has forced the agency to pay $14 billion to help lower the federal deficit, and failed to give management flexibility to operate like a business. As a result, the agency is caught in a bind. It faces intense competition in a digital age but with a cumbersome decision-making structure and congressional mandates that make it tough to react in the fast-evolving information-delivery marketplace.

And yet with all these troubles, the Postal Service remains a much-used American institution. It delivers 180 billion pieces of mail annually in a timely fashion for an affordable price (the lowest of any industrialized nation).

Even as competitors eye chunks of Postal Service business, its mail volume grows -- an increase of 2.7 billion pieces of mail last year despite a jump in postage rates. Faster growth is expected this year and next.

As the Postal Service enters its second quarter-century, it remains the nation's preferred deliverer of hard copy. But it must adapt. E-mail and other computer-age innovations pose threats. It needs the freedom to commercialize and privatize activities and to shrink the work force through electronic automation.

To paraphrase Mark Twain, reports of the Postal Service's death are premature. Yet even Postmaster General Marvin Runyon concedes, "We are in a competitive world. If we don't compete, we won't exist."

Pub Date: 7/22/96

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