Will postage rate increases, Saturday closures, and slower delivery reduce the volume of mail the U.S. Postal Service delivers?
The answer is yes, of course. Any business that offers less and charges more can expect some of its customers to look elsewhere. And the majority of postal customers have other options. There are other ways to send holiday greetings, merchandise, or advertising. Even when advertising has to be sent by mail, the same advertising message may not have to be sent so many times. The service cuts and rate increases the U.S. Postal Service is currently considering will certainly reduce the volume of mail by ten percent, and probably more. The volume of mail has been in decline for years, and it is a decline that could easily accelerate.
Postal unions worry that the post office is already in a downward spiral, in which more service cuts and price increases will drive customers away faster than they will close the post office’s budget gap. This worry is probably correct.
But there are customers who have no ready alternative to the mail: most obviously, the government. Licenses, tax forms, summonses, census forms, and a host of other government documents travel by mail, and there is, for many of these documents, no credible alternative.
To take one example, the next census will need about one million additional employees if it is impossible to send and receive census forms by mail. The additional cost to conduct the census without mail could be about $10 billion. That isn’t enough money, obviously, to cover the postal service’s deficit, but the census is just one of many functions of government that would have to adjust.
As a more immediate example, the tax authorities very much depend on the mail. Without mail to send and receive tax forms, notices, payments, and summonses, the tax system would be in chaos. The amount of tax revenue would decline, not by a little, but perhaps by as much as a third. This would most obviously affect the Internal Revenue Service, but some state and local taxes could be even more adversely affected if the mail went away.
In financial terms, the government cannot afford to let the post office fail.
And if the mails are declining in importance to other customers, the government might well have to step in and pay a larger share of the cost of operating the post office.
That is not to say that the post office can continue in its current form. It matters little to the government if we receive mail only once a week. It is the advertisers who depend on more frequent mail deliveries. Advertisers, of course, pay the lion’s share of the costs of operating the mails. But if what they are paying is not enough to keep the system going in its current form, we might well have to cut back to one mail delivery per week.
Advertisers have for half a century been getting a free ride from the postal service, paying a fraction of the postal rates that everyone else pays, while requiring a more demanding level of service. If advertisers really cannot afford to pay enough to cover the cost of delivering their circulars on Thursdays, or whatever specific day of the week they designate, then those days of mail delivery will probably have to go away.
But my hunch is that advertisers can pay enough to keep mail delivery going for at least three days per week.
Government and advertisers have effectively written the rules that the postal service operates under. It is up to them to be willing to change the rules if they want to keep the system going.
