Struggling Post Office Scraps Saturday Service

February 19, 2013

Postmaster General Patrick Donahoe stunned the nation when he announced the U.S. Postal Service (USPS) will discontinue Saturday delivery starting on August 1. The move seeks to reduce expenses and avoid any additional government subsidies, says Michael A. Schuyler, a fellow at the Tax Foundation.

  • USPS has witnessed a decline in demand, which has triggered multibillion dollar losses every year since 2007.
  • It also defaulted on $11.1 billion in payments to the U.S. Treasury and has maxed out its $15 billion credit line with the federal government.
  • The falloff in demand for "snail mail" is largely attributable to increasing utilization of the internet in delivering correspondence; however, the Internet does boost the demand for delivery of packages for goods ordered over the Internet.
  • Total mail volume fell by 25 percent from 2006 to 2012, while First-Class Mail -- the agency's cash cow -- experienced a 30 percent volume decline.
  • The USPS projects that eliminating Saturday service will save roughly $2 billion annually by reducing the need for mail carriers on Saturday.

The announcement actually contradicts Congress' mandate that mail be delivered six days a week. However, given the dire financial outlook of the mail carrier and the lack of political will in Congress to pass any substantial postal reform legislation, the unilateral USPS announcement has been met warmly by Congressmen on the postal service's oversight committees.

Schuyler says that Congress must quit micromanaging the USPS in order for it to adapt to a new business climate. Many arguments are made against the elimination of Saturday delivery service. However, eliminating Saturday service is a necessary step toward ensuring the operational longevity of the U.S. Postal Service.

Source: Michael Shuyler, "Saturday Mail Delivery Soon a Distant Memory?" Tax Foundation, February 12, 2013.

 

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