Home > Postal Opinion/Editorial

PostalMag.com

 
PRIVATIZING THE POSTAL SERVICE
By W. Floyd Vaughn, Postmaster of Clemmons NC and
Adjunct Professor of Managerial Finance at High Point University
To proponents of privatizing the United States Postal Service, I offer the following advice: Be careful for what you ask and check the water before you take a plunge. Before you discount what I have to say, take the time to read this article to its end. Then, disagree if you wish but at least you will ponder a few facts before you decide.

Currently, every US citizen (or international visitor) within these 50 states (including territories and far flung military outposts) can send a greeting card or personal message that remains secure from prying eyes and pilferage to any other resident or visitor for the same nominal cost of 34 cents. Doctors, lawyers, merchants or chiefs can send private information, advertising, company secrets, and even documentation for receiving a patent for that same low rate. If youíre a welfare mother, asking for help from your elected representative (even from the President of the United States), or a child trying to send a wish list to Santa Claus; your letter is just as important and will get the same devoted attention as a high-rolling corporate executive who may be sending an order or a check for a new 2 million dollar yacht. These messages may be forwarded as many times as necessary to reach the addressee, for free.

Letís take a look at some alternative methods of communication. A local phone call is free but long distance may be cost prohibitive for the economically challenged. No matter the cost for the phone call, it requires that you have phone service which averages close to a dollar per day nationwide. If you canít afford regular phone service, you could use a pay phone for about 35 cents (more than a stamp) or you can infringe on a neighbor who just may listen in on your conversation. Or, you could use your employerís phone. Your lost work time and tying up a company phone line for a couple of minutes will only cost your employer a little bit. Iím sure they wonít mind (or monitor your call).

Some email service is free. The only catch is that you need a computer, or at least the use of one, that has an Internet connection. You could use a computer at your public library but you may have to wait your turn and the drive or bus ride to get there is still more expensive than a stamp. Some ISPs offer free Internet service but you have to buy that darned computer. Surely, an initial investment of a few hundred dollars isnít too much to ask poor folks to pay, just so they can stay in touch with loved ones. But wait, millions of US adults are still "off-line" and many are completely computer illiterate. Do those people not have any right to communicate?

Okay, so letís privatize the Postal Service anyway. Iím sure we could find some fool who would have their company deliver a letter to your military child stationed in Germany, Japan or Korea for the same fee that they would charge to take a letter across the street in Boston. Well, maybe not.

But even if some great company can replace the Postal Service, you have to consider the business model. A private company means owners (stockholders) who demand a profit. Stockholders would not accept a break-even organization like the United States Postal Service. A modest 12.2 percent profit would match the average stock market investment over the past 75 years. Surely, some genius CEO could figure out a way to save 12.2 percent over night. That way postage wouldnít have to be increased to make the required profit.

Now, how much would this genius CEO have to be paid? I doubt that we could find anyone for the paltry $161,200 paid to the current PMG/CEO. National CEO salary averages indicate that we might find someone for this job for just under $3 million per year (plus a handful of stock options). Additionally, subordinate executives would require a commiserate remuneration about 3-6 times their current salaries. Well, maybe we could raise postage rates just a few pennies.

Oh, lest we forget. federal, state and local governments expect to receive billions of dollars each year for vehicle licenses, gasoline, property and sales taxes. Did someone mention federal corporate income tax? Thatís a mere 39% of taxable income. Add all these together and our new private postal service will only have to charge about 80 cents to clear the 34 cents per stamp thatís currently required to break even. Thatís not so bad.

Insurance shouldnít be a big problem. Lloydís of London could provide this new postal corporate venture with liability insurance for a tidy sum of several hundred million dollars each year. Sorry, a private company just cannot be "self-insured" like the USPS.

A privately owned postal company could also experience problems with unionized workers. If unions and the US Postal Service canít reach a pay agreement, that disagreement is now taken to binding arbitration without any threat of strike. Of course, it would be perfectly legal for unions to strike or boycott a privately owned mail delivery company. Do you think customers would miss their 6-day a week mail delivery if unions had to strike for a few weeks (or months) to force a pay raise at the end of each 3-year contract? Local strikes in big cities are also possible to obtain locale pay for high cost area employees. Iím sure that mail could be stored and delivered after those matters were worked out.

All in all, I think your vision of a private postal service is a bit myopic at best. And at worst? You figure it out.

 

Terms of Use  |  Privacy Policy

Copyright PostalMag.com, All Rights Reserved