The Coming Post Office Bailout
Obviously, government agencies are not private businesses. They don't care about P&Ls or efficiency since the taxpayers will pick up the tab. They've never dealt with layoffs, so they don't know where to begin unless someone forces it upon them.
The odds of a multibillion-dollar rescue package went way up this week when Postal Service management reported a $2.2 billion loss for the first quarter, more than 25% higher than last year despite the economic recovery. It now appears that the $15 billion line of credit the feds have offered USPS will be used up by the end of this year, with low odds on ever being paid back.If that isn't ugly enough, the Postal Service expects $42 billion in additional losses over the next four years...
If this were a private business, the obvious response to these losses would be urgent cost-cutting to avoid insolvency. Instead, Postal Service management recently concluded negotiations offering the 205,000-member American Postal Workers Union a new four-and-a-half-year contract that will provide a 3.5% pay raise over three years, dole out automatic cost of living wage hikes after 2012, and expand no-layoff protections.