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.
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.
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.