The United States Postal Service has lost over $8 billion in the past two years and going for a third year in the red. Labor — wages and benefits — accounts for 80 percent of USPS costs. Annual mail volume has dropped from a peak of 213 billion pieces of mail to a projected 170 billion in 2010.
In the words of Anthony Vegliante, executive vice president of USPS, “If the Postal Service was a private sector business, it would have filed for bankruptcy and utilized the reorganization process to restructure its labor agreements to reflect the new financial reality.” Given the USPS’s quasi-government agency status, reorganization is out of the question. Congress would prefer the taxpayer foot the bill.
Elected officials on both sides of the aisle, along with Postmaster General Thomas Donahue, are asking for reform of USPS. In general, they want to provide flexibility enabling USPS to react to market conditions.