Say No to Unions

The United States Postal Service may stop delivering mail by the end of this year.  If it cannot find a way to balance its bursting budget, employees will not be paid, and fuel tanks on delivery trucks will not get filled.

The reasons why USPS is in so much trouble are twofold.  The first culprit is the ridiculous requirements of the postal workers union's contract, which prevents cutting labor regardless of the financial consequences.  To comprehend how devastating to a business this can be, one must only look at the following comparison:

"Labor represents 80 percent of the agency’s expenses, compared with 53 percent at United Parcel Service and 32 percent at FedEx, its two biggest private competitors."

This calculation is startling.  Especially given the reality of the internet age.  More transactions are occurring online everyday.   In fact, postal deliveries are down 22% over the past 5 years, and are projected to continue declining.

Given these statistics, any semi-intelligent business person would recommend cutting labor costs.  But, because of the postal workers union's "no lay-offs" clause, it is impossible to rectify the situation.  What irritates me the most about this scenario is that the people in these unions would rather see their entire enterprise fail, then any of their coworkers laid off.  Do they not get that if the post offices all close, everyone will be jobless?

Archaic laws limiting the ability of the post master general to implement cost controls is also partly to blame.  Without the ability to raise stamp prices, alter delivery schedules, or add other services to the failing offices, his or her hands are tied.  It would take an act of Congress to change the law, and we all know how likely that is in this divided political climate.

(Source of stats:  NYT:  Postal Service on Verge of going broke, shutting down, by Steven Greenhouse, 9/5/2011)
 ___

The situation at USPS reminds me of the drama that unfolded in Wisconsin recently.  Teachers went to bat for the benefits promised in their ancient contracts, without taking into account today's dire economic reality.  Private sector employers cut the kind of benefits promised to many union members over a decade ago.  By refusing to cooperate, and modify clauses that would hurt everyone a little, union members are making choices that have the potential to hurt everyone a lot.