Unions are destroying the Postal Service

CNN reports that the United States Post office is admitting a $329 million dollar loss in the first quarter of the 2011 fiscal year. That means that the Post Office is on track to lose more than a billion dollars in 2011 and they will be looking for congress to bail them out.

“The Postal Service continues to seek changes in the law to enable a more flexible and sustainable business model,” Patrick Donahoe, the Postmaster General, said in a statement. “We are eager to work with Congress and the administration to resolve these issues prior to the end of the fiscal year.”

However a cursory review of the Post Office’s problem shows that it isn’t the economy or competition to blame. The reason the Post Office is destined for bankruptcy is that postal union  labor contracts are driving them out of business.

According to CNN the post office says they actually had a $226 million net income for the first quarter if you take out the costs related to retiree benefits and adjustments to workers’ compensation liability. So three months of retiree benefits and worker’s compensation charges cost the postal service $555 million. It would be kind of hard for any business to make a profit with that expense hanging over your head.

As a result of the enormous losses the Post Office is trying to eliminate Saturday delivery and cut 40 million hours of labor costs which could save them $2 billion. But of course that might not be possible because,

“the service is currently negotiating new contracts with the American Postal Workers Union and the National Rural Letter Carriers Association, which will probably object to cutting hours.”

Object to cutting hours? Imagine how the unions will object when the Post Office is driven into bankruptcy altogether?


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