Wednesday, November 17, 2010

Social Value of Mail

Last week the Postal Regulatory Commission announced on its website that it has funded six studies examining the social value of mail.     The Commission's studies provide a couple of snapshots as to the impact of the Postal Service on the markets and communities that it serves.   The summary of the studies are as follows:

  • SJ Consulting will quantify the benefit of the Postal Service’s rural services by measuring the percent of population affected by Delivery Area Surcharges and determine if there is a cost basis for the Delivery Area Surcharges by the two major parcel carriers and the benefits from the Postal Service having a more frequent delivery network in rural areas.
  • Urban Institute will measure the Economic Effects of Post Offices by researching available data and providing an impact analysis of the presence of post offices on real estate values, business activity, and employment through sampling the impact of about 125 closed post offices.
  • Urban Institute will research the role and benefits of Price Leadership of the Postal Service from lower priced postal products such as parcels or expedited services, money orders and post office boxes to determine the competitive advantages the Postal Service offers with these products compared to its competitors.
  • Urban Institute will quantify the benefits of the Postal Service to Community Security and Public Safety by researching Postal Service and NALC data, and Metropolitan Police Department crime data to measure the impact on crime in the District of Columbia by changing retail service hours and postal carrier routes, considering neighborhood characteristics, and Postal Service personnel training regarding community security and public safety reporting.
  • Leong Consulting will quantify the benefits of the Postal Service’s Disaster Response, Emergency Preparedness, and Safety including its role in neighborhood safety, as a first responder and as a communications network in an area devastated by natural disaster by estimating the “savings” to government agencies from Postal Service performance of these duties and assess the Postal Service’s role in the Nation’s preparation for bioterrorism, including neighborhood safety, and the Cities Readiness Initiative (CRI), the Bio-Detection System, and the Custom-Trade Partnership Against Terrorism (C-TPAT).
  • Leong Consulting will also quantify the Essential Services for the Unbanked Population provided by the Postal Service using publicly available data from banking industry organizations and consumer advocacy groups and assess the value of Postal Service products provided to the unbanked population and identify other areas where the Postal Service could offer useful financial-type services, particularly to those receiving hard-copy checks.

The studies that the Postal Regulatory Commission funded are examples of studies that are necessary in order to fully develop a postal market policy and the business model that the Postal Service should follow and the regulatory structure under which the Postal Service should operate.  Many of these studies could help clarify questions about whether the Postal Service could continue to provide the benefits that it provides the nation if it operated as a private sector corporation, a government corporation operating under standard business law, the current model, or as government department.    Similar questions need to be asked about the impact of regulatory policy on the social benefits and economic impact of the Postal Service and private sector participants in the postal market.  

Beyond the broad questions of business models and regulatory frameworks, these studies can help Congress understand more fully the impact of changes in the operating model, including changes in how retiree obligations are calculated, the network of sortation facilities and sortation plans for single piece and bulk-tendered mail, and the retail strategy including the types of products and services that a Postal Service retail outlet can offer, and the mix of contracted and corporate facilities used to provide service that will be necessary to ensure that the Postal Service finally becomes financially self sufficient and the risks to the economy and the nation's communities if it does not.   


Anonymous said...

how about a study where you do not pay out any bonuses to anyone if the USPS shows a deficit for the year. There presently is a wide difference of opinion between the prc and the employees of the USPS as to the capabilities of Jack Potter.(I wonder why)

Anonymous said...

you know, the usps wouldn`t have so much costs if they let the people they have do the work they contract out....i.e. i work at a p&dc, new lighting was put in, done by contractors,while the usps maintenance at our building, where there are many, watched.our parking lot needs the spaces painted badly, as you don`t see them anymore.i asked the maintenance about it and was told the usps was putting the job up for contracting bid.we have the people to do it.they just re-painted some areas as we took on a whole zone of carriers and had to redo a lot of spots, but stopped at that.don`t get it, use the people you have.

Mark Jamison said...

These studies offer an important alternative way to look at both the value of the postal network as well as the concept of the post in general.
The model of semi-autonomous corporate entity that was first described by the Postal Reorganization Act and refined over the years, especially by PAEA has never been a good fit. The current model has a fundamental disconnect between revenue generation and service required by the universal mandate. Additionally, the system did not really have the proper economic incentives and controls to operate effectively. Consequently decisions were made with respect to building a rate structure, utilizing automation and building and maintaining the network that often had perverse or dissonant goals.
There really are only two choices for a postal model, either the Postal Service moves to a primarily privatized corporate structure that perhaps has elements of regulation one might find with a utility or the Postal Service returns to the guiding vision of the Founders with a recognition of both the social and economic values embodied in the idea of universal service.
If we view the idea of the post as a social and public good and if we view the network that supports the post as a fundamental piece of the national infrastructure then we can begin to realize a vision of the Postal Service that is sustainable, even with the ongoing changes in mail composition and electronic diversion.
This model would allow for the preferential treatment offered to non-profits, a social good; it would allow for efforts to help sustain and support print journalism, a social and public good; it would allow for the utilization of the network as a provider of government to government services, a public and economic good that would provide efficiencies and savings across federal, state and local jurisdictions.
A transition in this direction is not as difficult to imagine as one might think. Currently mail volumes are sufficient to sustain the basic network. Improvements to the current rate system, a more balanced attention to revenue generation and collection and a more responsive and progressive management system with a redefined and clearly defined mission would yield immediate improvements in the income statement. The deficits the Postal Service currently face are less a function of operations than they are of unrealistic contribution schedules for health and retirement contributions.

Mark Jamison said...

Congress has it in its power to create proper funding mechanisms and regimens that accurately reflect the Postal Service's obligations. The urge to politicize this and term rational adjustments as bailouts ought to be avoided. So too should the urge to dismantle the existing model without making a distinct and concrete choice of what the new mission will be.
Those who are ideologically predisposed towards the privatization arguments ought to be careful. The first casualty of such a move would be the direct mail and direct marketing industries who receive preferential and subsidized rates for access to a network they could never recreate.
Recognizing the public and social good engendered in a post based on the fundamental premise of universal service is also the best and surest way to recognize the greatest economic good of the Postal Service.

Anonymous said...

I urge Jim Bramlett to check his facts before going on a crusade against the Postal Service. It wouldn't take any a lot of his time to discover that most if not all of his 10 ways to stop postal service losses are in progress or in the hands of Congress. Jim's ideas are valid but they certainly aren't new or groundbreaking. Lastly, Jim do some howework, USPS operates on it's revenues and has since the Postal Reoganization Act of 1970. We are not subsidized by taxes; although we are a line item on the budget appropriations bill and Congress would like the American public to believe we receive tax dollars it just doesn't happen. Maybe you would like to ask Congress where all the money has been going for the past 20 years.