“President-elect Donald Trump has expressed a keen interest in privatizing the US Postal Service in recent weeks,” reported the Washington Post. Its news story discusses longstanding complaints about the Postal Service and potential ways to reform it.
Due to the internet and email, the USPS handles only a small fraction of the mail it used to. That results in some postal parking lots being largely empty even in densely populated areas where such lots could be sold for millions of dollars. Selling off postal assets could be used to reduce the Postal Service’s unfunded liabilities and debt, which would otherwise burden taxpayers.
The Cato Institute’s Chris Edwards says that the steady fall in letter volume mean will lead to disaster unless the USPS is privatized or radically reformed. First-class mail has collapsed from 104 billion pieces in 2000 to 46 billion in 2023. The average American receives just 37% as much mail as in 2000. The USPS has a legal monopoly over mail, but mail is a dying industry, he says:
Few people today send personal letters; banking and bill-paying have gone online, and the internet has killed postcards, invitation notes, and other types of mail. Few young people use mail, so demography is doom for an unrestructured USPS.
The USPS has expanded into package delivery, but we already have FedEx, UPS, and Amazon competing in that industry. As a government-owned agency, USPS expansion into packages or other competitive industries is problematic because it has tax and regulatory advantages over private firms.
A Trump task force in his first term found that the USPS’s business model “is unsustainable and must be fundamentally changed.” The needed change is to privatize the postal system, a reform that European countries, such as Germany, have successfully pursued.
Privatization would give the USPS the flexibility it needs to survive free from congressional micromanagement. The first Trump administration was right that a “privatized Postal Service would have a substantially lower cost structure [and] be able to adapt to changing customer needs and make business decisions free from political interference.”
You can see the cost structure problem with USPS retail locations. The company had 31,123 locations in 2023—about the same number as in 2014. Yet over those nine years, the number of USPS retail customer visits plunged 30 percent. The USPS should be closing locations, but members of Congress resist closings in their districts.
Whether Trump pursues privatization next year or not, he should push Congress to cut USPS costs and stem its chronic losses.
Edwards notes that USPS needs to close thousands of post offices that have few customers or duplicate nearby locations. The Postal Service’s own auditors determined that 42 percent of post offices don’t sell enough stamps or postal services to cover operating costs and these post officers “are often located within a few miles of another post office.”
He also points out that it would save lots of money if the Postal Service only had to deliver mail three days a week at the base price, rather than its current six days a week, given that many areas have low daily mail volumes, and people who need to send urgent communications can send emails instead. Other nations typically don’t require their mail carriers to deliver mail six days a week (or at least not for the price of an ordinary stamp — people can pay more for express delivery).
Limiting mail delivery for ordinary mail to three days per week would reduce the number of mail trucks needed and cut carbon emissions.
Edwards also recommends that the Postal Service be freed from collective bargaining and be directed to adopt private-sector compensation standards, because “USPS labor rules bloat costs and reduce business flexibility.” He elaborates on needed postal reform here, here, and here.
Edwards recommends that the Postal Service set up an online portal for citizens to recommend duplicative post offices to close. For most postal customers, driving a few more minutes to the post office would be a problem, since people typically don’t drive to the post office more than once a month.
Edwards recommends that the Postal Service close two locations right near him in pricey northern Virginia, where the land could be sold for millions of dollars:
- 6375 Seven Corners Center, Falls Church. This location is a six-minute drive from another location on Leesburg Pike. This is a vibrant commercial strip, and so the land would be quickly put to a higher-valued retail use.
- 1100 Wythe St., Alexandria. This location is a four-minute drive from another location on Washington Street. The location is high-value real estate worth tens of millions of dollars, and the large parking lot is more suited to the pre-internet era. Row houses or apartments would be a better use of this land.
As he explains, “Closing duplicative locations would save money, benefit the environment, and release land and buildings for higher-valued uses.”
