The U.S. Postal Service occupies a unique position in the government and in the business world. The Post Office was once a department of the U.S. Government and was operated as a government entity entirely. In 1970 Congress changed this, believing that a semi-privatized structure would enable the Postal Service (as it would then be called) better to function and to develop alternative management methods. However, the Postal Service remains a government entity in most respects. The Postal Service is overseen by the Postal Rate Commission (Carson, 1985, p. 584). The rate commission can recommend rate increases for the Postal Service, but Congress has the final say.
Rate increases have been levied by the Postal Service about every three years since it was created by Congress in 1970. The Postal Service has more than 750,000 employees today, and labor costs represent about 83 percent of its expenditures. The average salary and benefits of postal workers now total more than $40,000 a year, nearly double the total of average private sector employees. Much of this differential has been attributed to the generous benefits package negotiated over the past 20 years by the postal unions. Direct benefits for postal workers total $5 an hour, compared with $2.15 in the private sector. Postal employment levels have been difficult for management to control because workers are virtually guaranteed lifetime employment under their labor agreements. At the same time, the workload for the Postal Service continues to rise. It handled 161 billion pieces of mail in 1989. Expenditures are also quite high, standing at about $38 billion per fiscal year.
The Postal Service has generally tried to deal with rising costs through rate hikes, and each escalation of postal wages and mailing rates has been accompanied by assurances from postal management that the increase would soon enable the Postal Service to get a grip on costs. In 1990 Postmaste...