The F Stands For “Effing”
Who knew that all it would take to get some participation up in here would be for me to go AWOL for a month? Whatever the reason, I’m glad to see another of the Weird Sisters dropping a few pearls here. I’m actually worried that I won’t be able to top the kink of a Christmas decoration depicting a guy whipping another guy, but on my word, I will try… O yes, I will try. Just not in this post.
No, this post concerns something near and dear to my heart, and to Beth’s as well: our awesome US Postal Service, which like all else that serves the overall public good rather than just one small wealthy slice of the public, is under attack from various morons, ninnies, and lying assholes these days.
Under category the last, we find this bit of toxic effluvia issuing from the pen of one George F. Will (you know what the F stands for) and appearing in the pages of the used-to-be-a-newspaper, The Washington Post. It’s essentially an ideological hit piece, and at turns, both a comically clueless and willfully dishonest paen to the concept that only activities which return a profit are a) worthwhile or b) efficient.
Let’s tackle “willfully dishonest” first.
Will starts by citing big scary numbers about USPS’ “red ink”, while carefully omitting the fact that it can all be attributed to one cause: the departing Bush Congress in late 2006 gave one final flip of the bird to the American public and passed a mandate requiring the post office to fund employee benefits 75 years into the future from revenues over the next 10 years. Yes, the USPS is currently funding benefits for workers it won’t even be hiring for another 25 or 30 years, and if not for this one purposely created problem, the post office would have shown a small profit for every year since 2006.
Will then spews out a bunch of factoids about the percentage USPS, UPS, and FedEx respectively spend on labor costs to try to demonstrate that USPS’ labor costs are out of control thanks to the evils of unionization. Of course, he faithfully omits that he counts the pre-funding of benefits USPS is forced by Congress to pay now as part of the USPS’ percentage of current labor costs. Using this tactic, he claims that 80% of USPS revenue goes to labor costs; the actual figure is 60% when Will’s dishonest accounting is thrown out. This compares to 53% labor cost for UPS and 32% for FedEx – that last figure being hardly surprising, since the non-unionized FedEx has quite a few employees earning the princely sum of $8.50 per hour, which may explain why, even though the volume of mail I’ve sent/received via FedEx is much less than 10% of what I’ve sent/received via the USPS, FedEx managed to lose or misdeliver my packages with such regularity that I stopped using their service 10 years ago.
But I digress. The big issue here is that “percentage of revenues devoted to labor costs” is a dishonest measure of efficiency to begin with. Will waves it around as though it’s the end-all, be-all, which is understandable given that the cause of his butthurt is the idea that the people who handle our mail are paid living wages because they’re unionized. Will wants to pretend that if they weren’t, the post office’s financial problems would disappear and we would also get better service. But “labor costs” considered in a vacuum are meaningless; you’d expect that a business with twice as many employees as another business would have higher labor costs, for example, and this is why Will uses the “percentage of revenue” dodge. Again, though, that’s not a measure of “efficiency.”
For comparison, I did what Will would have done if he were other than a dishonest hack, and compared USPS’ revenues, size of workforce, and daily delivery volume with that of UPS and FedEx, then calculated how much each costs in terms of deliveries to separate, unique addresses. It’s not an exact comparison, because for UPS and FedEx I can’t locate data for “delivery locations” but only for number of letters/packages delivered daily. Here’s what I found:
FedEx has annual revenues of $40 billion and a workforce of 290,000 to deliver 3.5 million letters/parcels per day. If we assume that each of those 3.5 million pieces are going to a different address, FedEx’s per-location cost works out to $44.82. Keep in mind that this is the conservative figure; if FedEx is dropping multiple packages at locations, this means that their cost per delivery location is actually higher.
UPS has annual revenues of $49.5 billion and a workforce of 340,000 (inside the US) and delivers 15 million parcels per day in the US. For that maximum possible 15 million delivery locations, this works out to $12.50 per delivery location.
USPS has annual revenues of $67 billion and 574,000 employees and delivers to 142 million delivery locations per day, at a cost of $1.86 per delivery location.
If we look at it from a standpoint of labor cost per delivery location – which we should, because otherwise we’re comparing apples to oranges – FedEx’s labor cost per delivery location is an astounding $14.34 and UPS’ is $6.63, or more, compared to a USPS labor cost of $1.12 per delivery location, thus proving that private business is a lot more efficient at hoovering money out of people’s pockets for performing essentially the same functions as evil government non-profit enterprises. Which, after all, is what Will REALLY means whenever he waxes on about the glorious “efficiency” of private business.
Now, to be fair, both UPS and FedEx operate on a different model than USPS – it does cost more to move things cross-country and deliver overnight, just as it costs more to move large and heavy parcels. But the fact remains that neither of them are able to cover the ground USPS does for 6 – 13 times the labor cost.
Will also throws around claims of how great privatized mail systems are working in other countries. I looked into that as well, and found that most of the countries that conservatives claim have privatized their mail systems simply haven’t. What they’ve done is lift the government monopoly on first class mail, allowing private carriers to compete in providing first class mail service. This is true of both the UK and Sweden. Other countries conservatives claim have privatized have only partially done so, as in Germany, whose service is 69% private. The only example I came up with for a fully-privatized postal system is the Netherlands, where you can send a first class letter from one side of the country all the way to the other side 100 miles away for only 50% more than what we pay for first-class postage from Miami, Florida to Nome, Alaska (first class postage rate for the Netherlands is $.62).
So if a privatized mail system in a country smaller than most US states and more densely populated than any other on earth costs almost 50% more than what we pay, how would a privatization of our mail service compare? There aren’t any vast, sparsely populated areas in the Netherlands which are more expensive to serve like we have here. A private system can only work in the US if it’s mandated to cover unprofitable routes as well; otherwise you end up with companies cherry-picking the areas that cost the least to serve and so yield the highest profits, and either neglecting the less profitable or unprofitable areas completely or charging exorbitantly for service in those areas. This is why both UPS and FedEx send about 25% of their shipments via USPS for “last mile” delivery – because the post office is already going down that rural route in Wyoming, and it’s uneconomical for UPS or FedEx to go there themselves.
Here we come to the comical in Will’s hit piece, where he suggests that Wal-Mart could take over the role of the local post office. Because as we all know, if there’s anything more appealing than standing in line at the post office, it has to be going to Wal-Mart and standing in a line there.
All of the preceding ignores that the entire USPS deficit for the current year could be solved with a $.03 increase in first class rates or by a lower first class increase coupled with a bulk rate increase. The seemingly insurmountable projected deficit of $14.5 billion forecast for 2012 would raise first class rates another $.09 – that’s if we did nothing else – no repeal on the benefit pre-funding farce, no increases on bulk rate, no closing of distribution facilities or community post offices, no cut-back to 5 day delivery. Taken together, if the post office addressed the deficits with only an increase in first class rates, we would be paying $.56 instead of the current $.44. That’s a large increase percentage-wise, but hell…at $.56 for delivery in 5 days or less to any address in the US, that’s still a hell of a bargain – and it’s less than almost any other first-world country pays for first class mail currently. Note that it’s still less that what the Dutch pay in their fully privatized system to serve their postage-stamp-sized country. At $.56, our cost for first class mail service would still be less than every country I looked at other than Brazil (at $.39, the only country currently cheaper than the US for mail service), Poland ($.46), New Zealand ($.47), Israel ($.46) the Czech Republic ($.53) and Mexico ($.52). All the other European countries, Canada, Japan, and Australia are already charging more than what we’d have to charge to keep our system just as it currently is.
So it is indeed discouraging to hear the discussion I heard on NPR day before yesterday, in which NO ONE bothered to point out any of the above facts, but instead both host and guests just solemnly intoned that “the USPS is broken,” “mail service is a dinosaur,” “they haven’t kept up with the times,” and etc. None of that is true. What is true is that with falling volume on first-class mail, there is no doubt that some tweaks need to be made. But don’t let anyone fool you – none of them would require cutting back delivery to 3 days per week, or closing mail distribution centers in remote areas, resulting in delivery slowdowns of 2 days or more. Those things aren’t necessary if the post office is allowed to do what any other business would do in the same situation – raise prices.
I fear this is all too late. What will come next is the gutting of the postal service – as the mail is slowed down and deliveries per week are cut back, the morons who elected the morons who created the problem will conclude that the morons they elected are correct – government can’t do anything right, because look at the post office. It costs more than it used to and we’re getting less in return. Unfortunately, being morons, they will conclude that the answer is to turn the whole enterprise over to some private company, who will likely provide even worse service for double – or more – the price we pay now. Imagine Comcast in charge of delivering your mail, and you get an idea of just how bad it could be. And then there’s the issue of legally certified mail, ballots sent by mail, and other things of that type. I’m sure Koch Brothers Delivery Services, Inc. will make sure those ballots are handled correctly. Of course, they’ll also be paying employees a sub-living wage to maintain profit share, which will further ensure that we’re getting the best possible service. And then, all will be right with the world and George Effing Will will finally be happy, as some worthy investor is profiting from a service where the revenues used to go to support the lazy layabouts who delivered our mail, and their families.