Zapping The Post Office

Once dependable only as an endless source of jokes, the U.S. Postal Service has just delivered its third straight year of billion-dollar profits. The service, shorn of government subsidies in 1982 to make it more competitive, hauls 630 million pieces of mail a day through snow, rain, heat and gloom of night with a savvy that has raised its on-time rate for first-class letters to a reliable 92%. Polls show that the Postal Service is rising steadily in the public's esteem. "The more a federal agency has to compete in the market, the more likely it is to behave in a responsive and customer-friendly manner," says David King, a professor at Harvard's Kennedy School of Government who has been studying popular attitudes toward Washington.

Yet the very forces that compelled the Postal Service (fiscal 1997 revenues: $58.3 billion) to get market religion are threatening to bury it. Electronic mail is zapping first-class deliveries, the system's most profitable service, and could replace 25% of "snail mail" by 2000. At the same time, post office technology continues to lag far behind that of document and parcel movers like Federal Express and United Parcel Service, which can electronically track items through every stage of their journey. UPS alone delivers more than 80% of all packages shipped in the U.S.

In fighting back, U.S. Postmaster General Marvin Runyon has gone to war with everyone from FedEx to members of Congress to some of the postal service's nearly 800,000 employees. Runyon has to improve technology--he envisions robots sorting the mail in the service's 360 mail-processing plants--cut costs more, expand service and somehow make peace with the country's largest work force. It will not be easy. Rivals say Runyon can use revenues from first-class service, in which he has a monopoly, to underprice competitors in such areas as parcel delivery. Sympathetic lawmakers have responded by proposing laws that would limit the range of postal services. Runyon is certain to raise some hackles this summer when the price of a first-class stamp rises a penny, to 33[cents]. It will be the first such increase since 1995. The price of a stamp has quadrupled since 1971 in virtual lockstep with inflation.

One group of Americans is still mad as hell at the Postal Service--its workers. The number of employee grievances awaiting arbitration rose 44% last year, a sign of mounting labor tension. The premium on efficiency has, according to the Washington Post, driven a few desperate workers in West Virginia to rig the independent audits of their on-time delivery. And in another burst of ghastly work-related violence, a Milwaukee, Wis., mail handler killed himself and a co-worker last month. Union leaders are becoming bellicose over what they call management's failure to share bonuses with workers. "The labor-relations climate hasn't improved one iota," says crusty Moe Biller, 71, president of the American Postal Workers Union, which has threatened labor disruptions if it cannot settle its current contract negotiations by fall.