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Op-Ed: Postmaster General DeJoy must
change course – and fast
[The Center Square] Ross Marchand
Postmaster General Louis
DeJoy certainly gets more press than his predecessors. Some of the early
commentary was downright bizarre and accused him of attempting to rig a
presidential election (spoiler: he didn’t). Some media even blamed DeJoy
for killing baby chickens. But now, the head of the United States Postal
Service (USPS) is facing legitimate criticism over the degradation of
service standards and piloting of postal banking services. |
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 DeJoy certainly won’t be fired tomorrow, and President Joe
Biden is more or less stuck with him until more (Trump-appointed) members of the
USPS Board of Governors see their terms expire. But in the meantime, the
Postmaster General can reverse course and implement real reforms that get the
agency back on track. His job, and the fate of the USPS, depend on common sense
reform.
In the early days of the pandemic, DeJoy was roundly (and unfairly) criticized
for trying to consolidate the USPS’ overbuilt mail collection and sorting
infrastructure. The Inspector General and Government Accountability Office had
documented for years that the agency had too many mail collection boxes and
redundant sorting machines, and the new Postmaster General took flack for trying
to solve that problem instead of passing the buck to his successors. At the same
time, a perfect storm of mass employee quarantining and a shift toward package
delivery left the USPS struggling to maintain delivery speeds, and consumers
waited longer than usual for their mail to arrive.
But now that delivery speeds have rebounded, DeJoy has inexplicably decided to
make mail slowdowns a more permanent feature of the delivery system. Currently,
the USPS is in the process of changing the 1- to 3-day service standard for
first-class mail to a 1- to 5-day service standard. The assumption baked into
this proposal is that any damage to the agency’s reputation and resulting loss
in patronage will be more than offset by cost savings.
But as the National Postal Policy Council notes, “[t]he Postal Service’s own
estimate (which in past cases have materially overestimated the actual cost
savings it experienced) is that the net effect of the service standard
degradation would be an annual increase in net income of $169.5 million … That
equates to only 0.23 percent of the Postal Service’s annual $73.1 billion in
revenues.” Given that roughly 40% of first-class mail could slow down by up to
two days, these meager cost savings are just not worth it.
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Rather than doubling down the USPS’ resources on fast, efficient mail delivery,
the agency seems determined to branch out into … banking. Washington Post writer
Jacob Bogage recently reported that the USPS “quietly began offering
paycheck-cashing services at several East Coast post offices last month,”
allowing consumers to trade their checks (worth up to $500) for Visa gift cards.
It’s unclear what the USPS thinks it can offer consumers that banks and other
private check-cashing businesses cannot. Plenty of banks have started offering
accounts with low/minimal fees, zero required deposits, and easy check-cashing
capabilities. According to the Cities for Financial Empowerment Fund, there are
now more than 100 bank and credit union accounts that meet the low-fee national
standards developed by the organization. Sure, around 5% of households remain
unbanked, but most of these households do not cite high fees or deposit
requirements as primary reasons for staying outside the system. And even if the
USPS was able to charge lower fees than everyone else, revenues wouldn’t be able
to match the expenses required to verify checks. Check fraud is a rapidly
growing problem, one that the USPS is hardly equipped to deal with.
Instead of trying to slow down the mail and veer off into banking, the
Postmaster General should double down on reliable first-class delivery. A big
part of that entails getting costs under control and auditing middle-mile
highway contracts that have led to surging transportation expenses. Cracking
down on out-of-control delivery contract costs could save the USPS $1 billion
per year. Additional, out-of-the-box ideas such as pursuing retail partnerships
for mail drop-off and pick-up services and allowing more temporary mail carrier
hires to meet seasonal demand would enhance service while keeping costs under
control.
With renewed focus on the mail and less focus on banking services, the USPS can
keep on delivering for the American people.
Ross Marchand is a senior fellow for the Taxpayers Protection
Alliance. |
