And if you need an example of why you should always rely on government to get it right, well, just consider the latest concerning the mandated use of
food ethanol for fuel:
The AAA says the Environmental Protection Agency and gasoline retailers should halt the sale of E15, a new ethanol blend that could damage millions of vehicles and void car warranties.
AAA, which issued its warning today, says just 12 million of more than 240 million cars, trucks and SUVs now in use have manufacturers’ approval for E15. Flex-fuel vehicles, 2012 and newer General Motors vehicles, 2013 Fords and 2001 and later model Porsches are the exceptions, according to AAA, the nation’s largest motorist group, with 53.5 million members.
“It is clear that millions of Americans are unfamiliar with E15, which means there is a strong possibility that many may improperly fill up using this gasoline and damage their vehicle,” AAA President and CEO Robert Darbelnet tells USA TODAY. “Bringing E15 to the market without adequate safeguards does not responsibly meet the needs of consumers.”
Hey look buddy, the ideological agenda waits on no one and if you’re among those driving the 228 million “other” vehicles, tough nuts.
The government has said 15%. Nuff said.
BMW, Chrysler, Nissan, Toyota and VW said their warranties will not cover fuel-related claims caused by E15. Ford, Honda, Kia, Mercedes-Benz and Volvo said E15 use will void warranties, says Darbelnet, citing potential corrosive damage to fuel lines, gaskets and other engine components.
Gee, I wonder if anyone will question the “fairness” of this.
Anyone doubt who will pick up the tab for this, Mr. and Mrs. Consumer?
So how did the great Wal-Mart protest go?
According to the Bentonville-based company, roughly 50 people who are actually on Walmart’s payroll joined today’s “walkout” nationwide. The protest organizers say “hundreds” participated. Even if 1,000 took part, that’s still less than 1/10 of 1% of Walmart’s 1.4 million associates.
If you can’t find 50 disgruntled employees in an organization of 1.4 million, well, you’re a refugee from the real world.
But look at that last number. 1.4 million people have jobs because of Wal-Mart. Then there’s the downstream effect – suppliers, etc. My guess is you’re looking at an organization responsible or at least partially responsible for 3 to 5 million jobs in this country.
And yet it is under attack.
Now, there were protests at Wal-Mart stores. But what should be clear is they weren’t protests by Wal-Mart’s vast majority of associates.
The “organization” which organized this flop, “OUR Wal-Mart”, is calling it a clear success. I mean what else would they call it? The fact that it only drew 50 employees in protest (50 who I assume are now ex-employees) seems to have been waived away for the fact that there were some protests.
Woo – hoo.
So who were the protesters? You’ll enjoy this:
Seems strange then that, according to organizer OUR Walmart’s website, the group speaks for actual Walmart employees. In the “About Us” sectionof its website, this not-for-profit describes its mission as follows: “We envision a future in which our company treats us, the Associates of Walmart, with respect and dignity. We envision a world where we succeed in our careers, our company succeeds in business, our customers…” (Italics mine.)
OUR Walmart was listed as a subsidiary of the United Food and Commercial Workers Union (UFCWU) in a 2011 Department of Labor filing. While the union disputes that the two organizations are one and the same, one thing is certain: The organizers of today’s protest represent not Walmart employees, but employees of grocery stores that compete with Walmart.
Oh, I’m shocked, shocked I tell you. Members from a union that represents the workers of stores that compete with Wal-Mart? Ah, of course – OUR Wal-Mart.
[W]hile the anti-Walmart movement claims to be about helping Walmart employees get better health care, improved working conditions, higher pay–not to mention preventing our children from the temptation of petty thievery—it’s really primarily about stopping the threat of cheap groceries–the same ones that go a long way towards helping cash-strapped Americans put food on the table.
Emphasis mine … and the reason, as mentioned yesterday, is this model works. It appears, at least superficially, that all but 50 Wal-Mart employees agree. Given the consumer reaction to the protests (uh, nil, nada, zip – didn’t slow down sales a bit), it’s rather hard to understand how any sane person could call the protests a success. But then no one said those who put together OUR Wal-Mart are sane, did they?
Not surprisingly, a union’s hand is found in a movement deceitfully claiming something that isn’t true and trying to cause problems for a company that employs a huge number of Americans and is responsible, at least partially, for the jobs of a huge number more.
And, watching these shenanigans, you can’t help but believe that unions are desperate – very desperate. Here’s a company which is offering the same products as their union stores offer at significant discounts and that’s an obvious threat to their continued employment. So they think nothing of starting a “movement” that is union backed and likely union financed to undermine that company by enticing workers, who apparently aren’t at all as disgruntled or as upset as this group has claimed, into a job action that’s guaranteed to be against their best interests and that would likely get them fired.
50 heeded the siren song and are likely now trying to figure out how to claim unemployment compensation.
And, they have the UFCWU and their apparent inability to think critically to thank for their folly.
Hey, maybe they can go apply at the union stores. I’m sure they’re hiring, huh? I’m equally sure they’re more than eager to hire someone who walked off their last job.
Jordan Weissmann has a piece in The Atlantic entitled “Who’s Really to Blame for the Wal-Mart Strikes? The American Consumer.”
While I will admit that the demands of the American consumer being partly responsible for the wage scale paid by Wal-Mart, I frankly see no consumer liability in that responsibility. Wal-Mart saw a need, constructed a model and has successfully fulfilled that demand. And last I checked, no one has twisted anyone’s arm or marched them into Wal-Mart and made them take a job.
The American consumer’s role? It is like us saying “you can have open borders or you can have a welfare state, but you can’t have both”. You can demand the lowest prices or you can demand “mom and pop” be saved and pay their workers more (but then you have to commit to voluntarily doing business and paying higher prices) but you can’t have both.
Weissmann is essentially claiming that the consumer is to blame for impending strikes by demanding lower prices. Lower prices mean lower pay and because Wal-Mart isn’t paying a “living wage”, it’s employees are striking. Again it’s a part of the left’s disingenuous”fairness” argument.
But by now, that low-price, low-wage model has become the industry standard among discount retailers, or at least close to it. The median retail worker earns $14.42 an hour, but at big box chains, the pay is significantly lower (the notable exception being Costco, which commendably pays its employees a living wage). Walmart, for instance, says it pays full time sales associates $11.75 an hour on average. But independent analysis peg the figure much lower, closer to $9. According to IBISWorld, that puts it a bit behind companies like Home Depot and Lowes, but ahead of its nearest competitor, Target, which has managed to put a more fashionable face on the same abysmal pay for its workers.
First a “living wage” is different for different people. If husband and wife are both working, the one working at Wal-Mart may be supplementing the higher wage of the other spouse. Who is to say what the Wal-Mart employee earns isn’t sufficient to live quite well on? If it is a teenager living at home, what’s a “living wage” to him or her? What, in fact, the Weissmann’s of the world are claiming is that any wage paid to anyone should be sufficient to “live on” based on whatever arbitrary standard they choose to apply. My reaction? None of your business – everyone goes to work and accepts the wages they do for their particular reasons. If they aren’t satisfied, then they can leave.
That brings us to point two, if you don’t like the pay at Wal-Mart, seek a job at another employer. I doubt that most “big box” companies look at their employees as permanent. Wal-Mart and others are, for many, a stop on the way (for experience) to higher paying jobs. If it’s not, if it is all someone is qualified to do, then that’s their problem, not Wal-Mart’s and not the shopping public’s. My suggestion is to seek out further training or schooling elsewhere. But it isn’t the job of the public to subsidize your wages just because you think you’re worth more than you really are.
Wal-Mart doesn’t exist to pay a “living wage”, whatever that is. It exists to serve it’s customers and turn a profit. It is that profit that allows them to provide what is demanded by their customers and to pay their employees. If wages are too low, workers will likely look to an alternative for employment. Yet, somehow, Wal-Mart remains fairly consistently fully staffed.
Like it or not (and the complainers usually don’t) that’s the model. It works. It provides consumers what they demand.
But that’s not what the fair police want, you see. And that’s where you see this sort of an argument:
There are many reasons why pay in retail is often paltry. Among them, it’s a low-skill industry with high turnover and a lot young workers. But the sector’s utter lack of of union presence certainly plays role. And for that, we can thank both Wal-Mart and Washington. From its earliest days, Wal-Mart has taken fiercely antagonistic stance towards organized labor, keeping its stores union free by using every ounce of leverage Congress has given employers — so much so that, in 2007, Human Rights Watch called the company “‘a case study in what is wrong with U.S. labor laws.”
In essence what Weissmann is arguing is workers should be paid more than their worth in a competitive labor market (low-skilled young workers with little experience). It’s a matter of “social justice” – that nebulous term used to justify intrusion into markets because they “care” (with your money, usually). And their go-to vehicle for achieving this “social justice” and upsetting a business model that favors the consumer is the union. Other than grow fat and demanding, that’s what unions are there to do.
See Hostess and GM for how that usually ends up.
But to his point, there’s a reason Wal-Mart is “fiercely antagonistic” toward unions. That’s because unions would wreck the model they’ve so painstakingly put together over the years, the one which their customers demand. Customers don’t show up there because they love Wal-Mart. They show up because they get more for their hard earned money.
Unionize, demand wage and pension increases and all the other concessions that put GM in the poor house and Hostess out of business and you’ll find one thing to be true – Wal-Mart’s customers will go to Target. Or Kohls or some other “big box” retailer.
But they’re not going to pay higher prices. They like the model. It works for them and their situation. And they will seek out the next best alternative when and if they see prices go up at Wal-Mart.
So, perhaps it is time for those like Weissmann to figure out what Wal-Mart is – it is a store that offers deep discounts on thousands of items that its customers demand. Oh, and by the way, it also has employees who are paid according to that customer driven model. The workers have choices, if they’ve prepared themselves – work at Wal-Mart to gain experience and move on, or go do something else. For those who haven’t prepared themselves for anything else, it isn’t the customer’s job to subsidize their wages just because they believe they should get more even if they haven’t earned it.
But for those who can’t let this go, I have an idea. Each and every Wal-Mart store ought to establish at least one check-out line which is for those who want to pay the highest retail price found for the items they’re going to purchase. Wal-Mart could research that, have the cash register price the items according to that research and at the end the Wal-Mart associate could say to the person, “and you over-paid by $53.00, have a nice day.”
Wal-Mart would then promise to take the difference between their prices and the premium prices and apply it to the pay of all Wal-Mart associates.
How’s that for fair? And people in that line wouldn’t have to feel like hypocrites when they diss Wal-Mart for it’s presumably low pay while they continue to buy at the store.
Of course, that particular line would likely to look like something out of a Halloween display, all covered in cob-webs and the like.
Amazing, but not atypical of a lot of thinking in this country these days:
The union that brought the 85-year-old baker of Twinkies and Wonder Bread to its knees is holding out hope that a buyer will salvage chunks of the company and send the union’s members back to work, even as Hostess Brands Inc. gears up for a fire sale.
While Hostess has said the shutdown would result in the loss of more than 18,000 jobs and place the fate of more than 30 American brands in jeopardy, union President Frank Hurt said he believed there was “more than a good chance” that a buyer quickly would swoop in to buy the profitable parts of the company and give his union’s members their jobs back.
Give them “their” jobs back?
See, if I was a buyer, the last people I’d hire are those whose inability to think beyond what the union demanded they do that caused a company to liquidate and “their” jobs to go away. Because I’d not want to give them the chance to gum up the works at my company. So I’d ensure that they understood that “their” jobs went with Hostess.
By the way, Frank Hurt isn’t hurting. He’s still got his six-figure job with the union that “their” jobs, since gone, helped pay for.
Said Teamster Luigi Peruzzi, a Hostess driver in Detroit for 25 years:
“I think they [the Baker’s union]made a terrible choice based solely on terrible information from their leadership.”
Not that their “leadership” will suffer for it or anything.
If you’re at all concerned about the economy, the answer is likely “not very well”:
U.S. companies are scaling back investment plans at the fastest pace since the recession, signaling more trouble for the economic recovery.
Half of the nation’s 40 biggest publicly traded corporate spenders have announced plans to curtail capital expenditures this year or next, according to a review by The Wall Street Journal of securities filings and conference calls.
Nationwide, business investment in equipment and software—a measure of economic vitality in the corporate sector—stalled in the third quarter for the first time since early 2009. Corporate investment in new buildings has declined.
At the same time, exports are slowing or falling to such critical markets as China and the euro zone as the global economy downshifts, creating another drag on firms’ expansion plans.
Why are we seeing this happen? As it stands, most corporate spenders see no possibility of the hostility toward corporate America easing and also view whatever is to come in January concerning taxes and tax policy to likely be a lose-lose for them however it goes:
Corporate executives say they are slowing or delaying big projects to protect profits amid easing demand and rising uncertainty. Uncertainty around the U.S. elections and federal budget policies also appear among the factors driving the investment pullback since midyear. It is unclear whether Washington will avert the so-called fiscal cliff, tax increases and spending cuts scheduled to begin Jan. 2.
Companies fear that failure to resolve the fiscal cliff will tip the economy back into recession by sapping consumer spending, damaging investor confidence and eating into corporate profits. A deal to avert the cliff could include tax-code changes, such as revamping tax breaks or rates, that hurt specific sectors.
Or, as before the election, an unstable business climate persists which does not provide any incentive to expand, spend or hire. In fact, as indicated above, it is providing precisely the opposite incentives. It’s one reason the GDP forecast for the country has been downgraded again to 1.5% (Mexico, for heaven sake, has GDP growth of 3.2%).
But when you vote for the status quo, well, you get what you vote for — enjoy.
A law the country didn’t want and upheld by a ridiculous Supreme Court ruling is now beginning to have it’s predicted effect:
Some low-wage employers are moving toward hiring part-time workers instead of full-time ones to mitigate the health-care overhaul’s requirement that large companies provide health insurance for full-time workers or pay a fee.
Several restaurants, hotels and retailers have started or are preparing to limit schedules of hourly workers to below 30 hours a week. That is the threshold at which large employers in 2014 would have to offer workers a minimum level of insurance or pay a penalty starting at $2,000 for each worker.
The shift is one of the first significant steps by employers to avoid requirements under the health-care law, and whether the trend continues hinges on Tuesday’s election results. Republican presidential nominee Mitt Romney has pledged to overturn the Affordable Care Act, although he would face obstacles doing so.
That’s really going to help the job situation, isn’t it?
When is government ever going to learn that its intrusion into the private affairs of men always has consequences, and, when they are outside the legitimate function of government in a free society, the effect is usually negative.
Congratulations Democrats, you’ve done it again.
The owner of “Hands On Originals,” a well-known t-shirt company in the region, declined to print the shirts for the city’s Gay and Lesbian Services Organization (GLSO) because it would conflict with their Christian convictions.
The privately owned company is now accused of violating Lexington’s Fairness Act – which protects people and organizations from discrimination based on sexual orientation or gender identity.
An attorney for the Alliance Defense Fund who is representing the T-shirt company says:
“No business owner should be forced to violate his conscience simply because someone demands it,” he said. “The Constitution absolutely supports the rights of business owners to decline a request to support a message that conflicts with their deeply held convictions.”
But the city says:
“Hands On Originals” will be “required by law to participate in the investigation.”
“We have subpoena power and have the backing of the law,” he said. “We are a law enforcement agency and people have to comply.”
Should the company be found guilty of discriminating against the homosexuals Sexton said they could be subjected to fines.
Yes, friends, a city has a “human rights commission” which is considered a “law enforcement agency” that can force compliance with a law that would do precisely what the ADF lawyer claims it shouldn’t have the power to do.
You’d think there’d be a solution that could be reached well before this is escalated to the use of government coercion, doesn’t it? That is if all the GLSO wanted to do was buy T-shirts.
And, a solution was offered:
GLSO wanted “Hands On Original” to print shirts for the city’s fifth annual Lexington Pride Festival. The store offered to find another company that would honor its price – but that wasn’t good enough for the GLSO.
“Our feeling on that is, separate but equal wasn’t okay during the civil rights movement and it’s not okay now,” Aaron Baker told the television station. Baker is board president of GLSO.
That’s right, it is agenda time. This isn’t about T-shirts at all. It’s about forcing their one-way version of tolerance on someone. The irony is that GLSO appears to have absolutely no tolerance for the principles of the owners of the T-shirt company.
Which set me to wondering. Here’s a hypothetical for you. What if the owner of the T-shirt company was gay? And what if Westboro Baptist Church placed an order for 10 dozen T-shirts which said “God hates faggots” on them? What if the T-shirt shop owner refused the order because of his principles?
I’d guess no. In fact, I’d guess precisely the opposite reaction.
The T-shirt company owner wrote an op-ed for the paper explaining his point of view:
“I decided to pass on the opportunity because, as a Christian owner, I cannot in good conscience endorse groups or events that run counter to my convictions,” Adamson wrote in the op-ed.
Adamson, who has been in business for more than 20 years, wrote that he “does not expect, or even ask, people to agree with my view.”
“All I ask for people is to respect my right as an owner to not produce a product that is contrary to my principles,” he wrote.
Adamson called on people to stand up for the rights of small business owners not “to be forced into producing a product with a message that conflicts with their beliefs and consciences.”
The reaction was anything but tolerant or understanding of a differing view:
“Hands On Originals” has faced a barrage of attacks since the accusations were made public. More than 2,000 people have joined a boycott movement on Facebook. Another group is trying to buy the company’s mortgage so they can be evicted.
The Fayette County public school system placed a temporary hold on buying t-shirts from the company until the issue is resolved. The University of Kentucky is also reviewing its future business with the t-shirt maker.
Even Lexington’s openly gay mayor has condemned the privately-owned t-shirt company, telling the Lexington Herald-Leader “People don’t have patience for this sort of attitude today.”
“I’m against discrimination, period,” Gray said in a statement released to television station WKYT. “It’s bad for business and bad for the city. I support the Human Rights Commission in a full and thorough investigation.”
Real tolerance is apparently unacceptable. The hypocrisy of GLSO is palpable. And trying to use the coercive power of government is disgusting.
Tolerance isn’t a one-sided principle. If one wants people to tolerate their beliefs and lifestyle, it is incumbent upon them to do the same for others. If they actually believe in true tolerance, that is.
What is clear here is GLSO doesn’t.
More disgusting, at least to me, is the inclusion of this ridiculous city level “human rights commission” as a law enforcement agency and it’s obvious intent to force “compliance” against the conscience and principles of the owner.
There was a problem (GLSO wanted T-shirts, T-shirt company refused due to conscience), an offered solution (T-shirt company offers to find another producer at same price) which was reasonable and a rejection of that solution because the group has an political agenda and wishes to force the company to violate its principles and conscience. And which side does government take?
The side that wants to use its coercive power to force that violation.
Let freedom ring.
The invaluable Warren Meyer at Coyote blog (one of my all time favs) has a great article up on protectionism and why its something we should be avoiding.
President Obama used a lot of his state of the union address again teeing up what sounded to me like a new round of protectionism. Protectionism is the worst form of crony capitalism, generally benefiting a handful of producers and their employee to the detriment of 300 million US consumers and any number of companies that use the protected product as an input.
The example he uses? Sugar. What industry does it protect and subsidize in the end? The producers of high fructose corn syrup (HFCS). And what does the government tell us about HFCS?
It’s bad for us. Sugar would be preferable.
So why do we continue to use it in place of sugar? Protectionism. Look at the chart he includes:
The chart says it all. With the tariff added, look at the average US cost of sugar vs. the world’s average cost.
As Meyer points out though, that’s not how this gets spun:
Food activists on the Left often point to the use of High Fructose Corn Syrup (HFCS) as one of those failures of capitalism, where rapacious capitalists make money serving an inferior product. But HFCS resulted from a scramble by food and beverage companies to find some reasonable alternative to sugar as the government has driven up sugar prices through a crazy tariff system that benefits just a tiny handful of Americans, and costs everyone else money.
Yup, the usual, convenient and usually wrong whipping boy – “market failure”.
When a tariff is involved, you’ve just moved out of the realm of real capitalism and into the realm of crony capitalism. This has nothing to do with markets failing. This has to do with the usual – government intrusion using their monopoly power of force which then distorts a market and causes users of the product whose price they chose to artificially inflate with a tariff to seek lower cost alternatives.
Remember, the same government that is claiming HFCS isn’t good for you is the one that’s also made it impossible to use a product that it claims is better for you (in relative terms of course):
For the last 10 years or so, HFCS-42 has actually traded at a price higher than the world market price for sugar, but lower than the US price for sugar. There is a lot complexity to prices, but this seems to imply that HFCS would not be nearly as attractive a substitute for sugar if US sugar tariffs did not exist (not to mention subsidies of corn which support HFCS). This can also be seen in the fact that HFCS has not been used nearly so often as a sugar substitute in markets outside of the US, even by the same manufacturers (like Coke) that pioneered its use in the US.
Or, if markets had been left alone, all indications are we’d be using lower cost sugar right now.
Meanwhile the government protects and subsidizes an industry that makes a product it says is worse for you .
The regulatory state again finds a new way to try to handicap businesses. This time it is the EEOC:
Employers are facing more uncertainty in the wake of a letter from the Equal Employment Opportunity Commission warning them that requiring a high school diploma from a job applicant might violate the Americans with Disabilities Act.
The development also has some wondering whether the agency’s advice will result in an educational backlash by creating less of an incentive for some high school students to graduate.
The “informal discussion letter” from the EEOC said an employer’s requirement of a high school diploma, long a standard criterion for screening potential employees, must be “job-related for the position in question and consistent with business necessity.” The letter was posted on the commission’s website on Dec. 2.
Job related things like a modicum of assurance, supposedly offered by high school completion, that a candidate might be able to read and write?
And if that isn’t a necessity anymore, then why do it. Of course that means no college so no studying OWS for credit, but hey, Wal-Mart may have to take you.
Many, many, many people, upon the passage of the feel good Americans With Disabilities Act warned that stupidity such as this was the inevitable and logical end game of the regulators.
As you can see, and as usual, they were right.
Maria Greco Danaher, a lawyer with the labor and employment law firm Ogletree Deakins, said the EEOC letter means that employers must determine whether job applicants whose learning disabilities kept them from obtaining diplomas can perform the essential job functions, with or without reasonable accommodation. She said the development is “worthy of notice” for employers.
“While an employer is not required to ‘prefer’ a learning-disabled applicant over other applicants with more extensive qualifications, it is clear that the EEOC is informing employers that disabled individuals cannot be excluded from consideration for employment based upon artificial barriers in the form of inflexible qualification standards,” she wrote in a blog post.
So, it is the job of the company, according to Danaher, to make these sorts of determinations because the EEOC thinks it is discriminatory to simply require a high school diploma which has always been used to filter candidates?
One assumes then that requiring a college degree would fall in the same category, no? I mean most of those who require it, other than wanting someone who has demonstrated the intelligence and perseverance to complete a prescribed course of study satisfactorily (and the sort of positive traits that relate to work that such an accomplishment brings), really have no “job related” requirements except the usual: the ability write, read and do basic math. How dare they?
This is an “informal discussion letter”, better known among those who follow politics as a “trial balloon”. The EEOC has every intention of trying to make this a regulation. What they’re doing now is similar to the “public comment” portion that is supposed to give the public the ability to point out the huge downside of their proposal before they make it a regulation anyway.
Oh, and about that incentive to finish high school being lessened by something like this? Hand wave away:
“No, we don’t think the regulation would discourage people from obtaining high school diplomas,” said Peggy Mastroianni, legal counsel for the EEOC. “People are aware that they need all the education they can get.”
Are they? That explains the 8% drop out rate I guess. But look at that statement. Pure assertion on both ends of it. “We don’t think” … famous last words of the stereotypical bureaucrat. There’s never been a regulation that had unintended consequences, has there?
Jordan Weissman, writing in the Atlantic, addresses that question. Why is the USPS in such dire straits? What is it that has caused that entity to be tottering on the brink of insolvency?
Ok, not on the brink … it’s insolvent, it just won’t admit it. So how did this happen?
Weissman points first to the Internet:
In the days of yore, sending letters by mail was pretty much the most efficient way to communicate in writing. Then the Internet happened. Although total mail volume stayed relatively steady until 2006, it has dropped an astonishing 20 percent in the past five years. More important, first-class mail, the Postal Service’s biggest moneymaker, has fallen 25 percent during the past decade. That’s a huge problem for its bottom line. The agency now delivers far more "standard mail" — what most of us call junk mail — than first-class mail. According to Businessweek, it takes three pieces of junk to equal the earnings from a single stamped first-class envelope. J. Crew catalogs and pizza menus alone won’t pay the bills.
I disagree here. While the Internet certainly cut into its revenue, it didn’t put it in the shape it is now. That had been set in motion well before the Internet became a factor. The Internet has simply pushed it to the tipping point earlier than it might have arrived otherwise.
The two real culprits? Labor and Congress.
Yet even as its profits have dwindled along with the mail it handles, the agency’s labor costs have remained stubbornly high. Salaries and benefits make up 80 percent of the Post Office’s budget. By comparison, FedEx spends 43 percent of its budget on labor, while UPS spends 63 percent, according to Businessweek. Why the disparity? As the magazine put it, "USPS has historically placed the interests of its unions first." For years, it has happily negotiated contracts with generous salary increases and no-layoff clauses.
Why? Because it could.
And there had to be this belief, despite the problems, that it was never going to go out of business. In other words, it was felt it would be bailed out if push came to shove. So it happily negotiated away your tax dollars to provide generous benefits to its employees that it would never be able to afford if it were an actual business entity. Its first priority wasn’t its customers. It was the interest of its unions.
As for Congress, well the postal service we have today is the result of a 1970 law that was, as Weissmann writes, “intended to transform the mail system from a dysfunctional dumping ground for political patronage into a self-sustaining, independent agency.”
Or it was supposed to become a business.
But the politicians never really let it. The Postal Service doesn’t receive any taxpayer dollars, funding itself entirely through customer revenue. But it still has to deal with Congress as a micromanager. It isn’t allowed to shutter post offices for purely economic reasons, meaning that roughly 25,000 of its 32,000 now operate at a loss. It needs permission for rate hikes from a special regulatory commission. And for 30 years, it’s been required to deliver mail on Saturdays, even though that day is a money loser.
The Postal Service’s current woes are also due at least in part to Capitol Hill’s meddling. In 2006, Congress passed a new law requiring the agency to pay about $5.5 billion a year into a trust fund for future retiree pensions. When revenues were rising, the idea might have seemed reasonable. But the timing was exquisitely bad. Now that the agency is in the red, the pension burden has helped to force drastic measures like the ones we’ve heard about today.
The Postal Service is begging Congress to let it recoup some of those prepayments, as well as give it more flexibility to manage its business.
A primer in intrusion. An example of what such meddling does in other areas as well. Instead of telling the USPS to become more like a business and then letting it do that, Congress has chosen to interfere.
The USPS – an example of the “why” government should stay out of business. It granted itself a monopoly and is managing to run even that into the ground.