The Obama Administration and House Republicans don’t agree about much, but both say the U.S. Postal Service, which reported a $5 billion loss last year—largely because it is expected to prefund its future retiree health-care benefits—should do away with Saturday letter delivery to save money. That probably makes sense at a time when postal operations around the world are rolling back service as mail volume dwindles. Jim Sauber, chief of staff of the National Association of Letter Carriers, doesn’t agree. He argues that it would be disastrous for the USPS to do this. Bloomberg Businessweek recently spoke to him about the economic case for preserving Saturday delivery. (This interview has been edited and condensed.)
Devin Leonard: The White House wants to end Saturday letter delivery. So do the House Republicans and the USPS. How can they all be wrong?
Jim Sauber: We think they’re making a mistake. This network is an asset that makes the Postal Service unique. Nobody else delivers regularly on Saturday. If you talk to the newspaper, the weekly newspapers, or if you talk to direct mailers, you talk to CVS Caremark (CVS), they all want Saturday delivery.
But the Postal Service still wants to deliver packages on Saturday. Are letters still that important in the age of e-mail?
Sure they are. Letter mail revenue accounts for the vast majority of the Postal Service’s revenue. And direct mail is growing. People who use direct mail especially like Saturday delivery, because it’s the time when people do their shopping.
Wouldn’t the Postal Service save money by no longer going to every address on Saturday? That’s expensive.
Yeah, but you have these economies of scale. One of the reasons package delivery through the Postal Service is so inexpensive is they use a shared network. The marginal cost of delivering that extra package is minimal because you’re already going to the house with all sorts of other mail. That gives the Postal Service an advantage in the package business.
You’ve said you don’t think the USPS is correct in saying that ceasing letter delivery on Saturdays would save $2 billion a year. Do you think they’re willfully misleading the public?
I’m not going to question their motives. Maybe they really do believe it. We do know that historically, getting rid of Saturday delivery is something they’ve wanted to do for 50 years.
They’ve been talking about it since the 1960s.
Exactly. It’s like a longtime dream, to get rid of Saturday delivery. It makes managing the Postal Service harder. I guess they just want to make it easier for their managers. I don’t know.
I’ve got to push back a little on that. If they’ve lost more than 25 percent of their volume in five or six years, don’t they have to shrink the network?
And they have. Since 2007, they’ve eliminated 200,000 jobs. That doesn’t mean you have to end Saturday delivery. The rate of decline in volume has stabilized considerably. It’s like this weird conventional wisdom on Capitol Hill that the Postal Service must be right-sized, as if we hadn’t done anything in the past six or seven years. They’ve eliminated a lot of jobs and cut labor costs considerably through the collective bargaining process. So it’s not like we’re sitting around doing nothing.
Some people are going to read this and say, “This is just the National Association of Letter Carriers trying to protect its members’ jobs.” Why is that wrong?
It’s not wrong. We are trying to protect members’ jobs. We don’t apologize for that. That’s our role. Our members count on us for that.