The Postal Service began its first ever rural delivery in Arizona in 1896. A lot has changed since then. Today, it is yet another example of a government agency failing to address its underlying problems and it is looking to consumers, businesses, and Congress for more money. In the end, it is rural Arizonans that could be among the hardest hit.
Overstaffed and overpaid postal labor makes up 80% of total postal costs. The Postal Service has the same number of employees it did when there was twice the mail volume in its network — it is no wonder that postal productivity is at a 40‑year low. The previous Postmaster General DeJoy made the problem much worse by converting almost 200,000 flexible, part‑time employees intended to assist with peak volume during the holidays to permanent, career status at roughly double the total compensation (wages and benefits). Meanwhile, USPS leadership continues to tout its “Delivering for America” plan as a transformational strategy, even though it has led to higher prices, slower delivery standards, and worsening financial performance.
As a result of its operational failures, the Postal Service is on track to lose more than $100 billion over the next decade, yet its only solution is to demand more from the very people it is supposed to serve. In fact, in just the last couple of weeks, the Postal Service has outlined a number of ways it wants to raise costs to cover these shortfalls.
For starters, the Postal Service has proposed that its regulator, the Postal Regulatory Commission, no longer review or approve postage rate increases for first class mail, despite the fact that USPS holds a monopoly on delivering it. If the Postal Service isn’t permitted to do this, it wants to simply raise postage rates by 22 percent.
The Postal Service has also announced that it wants commercial package shippers to bid on access to its postal delivery network for “final mile” delivery to homes and businesses by areas as small as a zip code. This stands in contrast to the current system where private carriers typically transport packages most of the distance themselves before handing them off to USPS under negotiated rates and established workshare agreements meant to keep shipping costs predictable and affordable. Many of those access entry points are located in rural America, and for many of those rural areas, there are no true alternatives to the Postal Service because UPS and FedEx charge significantly more to rural customers. This essentially means the Postal Service wants to capitalize on its significant market power in rural areas to increase prices for rural customers.
Consider mail delivery to the Supai village at the bottom of the Grand Canyon. It presently requires a roughly 2.5 hour, 8-mile mule trek. Yes, an 8-mile mule trek. Residents get essential items, including food, pharmaceuticals and Amazon packages. This new proposal could cause that route to be ended or significantly increase delivery costs along with other less exotic routes in rural Arizona.
What makes this even more troubling is that USPS continues to insist that its financial problems stem from “external pressures,” rather than its own refusal to modernize or streamline operations. Instead of rethinking its bloated labor structure, outdated work rules, or inefficient transportation network, USPS repeatedly chooses the easiest and most harmful path; raising prices on captive customers.
No private‑sector business could survive with this mindset. If a company lost half its volume, it would right‑size its workforce, invest in automation, and redesign its network. The Postal Service does none of these things because it doesn’t have to. Its monopoly status shields it from the consequences of mismanagement.
The Postal Service is also asking Congress for financial relief to address pension and workers’ compensationshortfalls. Yet USPS has again failed to explain how it will take any steps to reduce labor costs. Instead, using logic that would make George Orwell proud, the Postal Service simply claims that it has to spend tens of billions to duplicate more efficient private sector capacities rather than focus on its core advantage — final‑mile delivery to over 165 million homes and businesses six days a week.
There is also a broader economic impact that USPS refuses to acknowledge. Every time the Postal Service raises rates, it harms small businesses, nonprofits, newspapers, magazines, and rural communities that rely on affordable mail service. These are not optional luxuries but essential communication and commerce channels. When USPS hikes prices without cutting costs, it accelerates the decline in mail volume, which then becomes the justification for yet another round of price increases. It is a death spiral of the Postal Service’s own making.
At a time when Arizonans are vocally complaining about the cost of living and the Administration is taking action to address affordability, the Postal Service has provided yet another example of a tone‑deaf government agency looking to perpetuate itself at the expense of those it is supposed to be serving. Until USPS is required to control its costs, modernize its operations, and focus on its core mission, no amount of price increases or congressional bailouts will fix its problems.
George Landrith is the President of Frontiers of Freedom a public policy think tank and an expert on Postal Service policy.
Be the first to comment