There are three types of infrastructure. One is visible: roads, dams and bridges. The second is invisible: broadband internet provisions and the entirety of our cellular infrastructure. Both are still vital in building our present. The third form of infrastructure is one being rebuilt in order to be repurposed for future use. I explained in J-Curves and Agglomeration:
The U.S. Postal Service is a key component of the eCommerce economy. Packages are just 5% of its shipping volume but eCommerce accounts for nearly 30% of the agency’s revenue. Partnerships with vendors like Amazon (or providers like FedEx and UPS) provide a majority of its package volume but small businesses and direct-to-consumer brands rely on USPS’ pricing. Raising costs on retailers may lead to more attrition. […]
By raising prices to combat Amazon’s growing influence over the economy, disrupting the postal economy is no different than digging up paved roads before a period of heightened freight transit. [2PM, 1]
The U.S. Postal Service is all three. When an American institution is 250 years old, it may as well be the ground that we stand on. The service has contributed services and innovations that we don’t readily attribute to it. Consider its contribution to the middle class: the U.S. Postal Service is one the country’s biggest employers with nearly 330,000 career employees and an average salary of $50,000. They are building the future of eCommerce, a still-nascent industry.
Critics of the USPS will cite cost of labor as a reason for the service’s obsolescence. A common refrain is “Why couldn’t Amazon takeover the service?” Consider that in the fourth quarter of 2019, eCommerce was just 11.9% of all retail. Amazon constituted right under half of that volume. And without the postal service, Amazon would not exist. The market costs of shipment subsidized a number of Amazon’s operations, allowing it to capture market share.
“The Ground We Stand On”
The postal service began before the founding of the United States. Benjamin Franklin was fired from his role as postmaster due to his involvement with the American Revolution. Just one year later in 1775, the Continental Congress appointed Franklin the Postmaster General of the “United Colonies.” His tenure left a mail system that offered service between the then-colonies and Great Britain. By 1802, the first African-Americans to work for the Postal Service were enslaved mail carriers. Senator James Jackson of Georgia, Chairman of the Committee of the Senate on the Post Office Establishment, once wrote:
… The most active and intelligent [slaves] are employed as post riders. By travelling from day to day, and hourly mixing with people […] they will acquire information. They will learn that a man’s rights do not depend on his color. They will, in time, become teachers to their brethren.
Within two months of Senator Jackson’s proclamation, African-Americans would be banned from the postal service, lasting from 1802 to March 1865, just one month before the conclusion of the Civil War. This disbarment ended by congressional decree.
No person, by reason of color, shall be disqualified from employment in carrying the mails. (13 Stat. 515)
The next decades would see an unparalleled push for African-American financial stability. Nearly 800 would serve as postal employees prior to the 20th century. More than 200 African Americans are known to have served in the high rank of postmaster prior to the conclusion of Reconstruction and the Progressive Era (1863-1920). Of them, nearly 20 were women. The postal service has always been politicized.
Soon after, the U.S. Government expanded on the postal service’s role in democratizing America, both literally and figuratively. President Theodore “Teddy” Roosevelt expanded on this with the Square Deal in 1902, communicating a fairness policy in hiring and leadership. The result was momentous for many. Roosevelt stated:
It is and should be my consistent policy in every State, where their numbers warranted it, to recognize colored men of good repute and standing in making appointments to office. […] I can not consent to take the position that the door of hope – the door of opportunity – is to be shut upon any man, no matter how worthy, purely upon the grounds of race or color. [2]
Today, 21% (or nearly 70,000) of the agency’s employees are African-American. However, the postal service was consequential beyond matters of social equity. By 1823, the U.S. Postal Service and the U.S. Government established 80,000 miles of “post roads” to help carriers navigate new rural areas. By 1860, these roads connected nearly 28,000 post offices. Today, the postal service maintains nearly 40,000 post offices, clearing 212 billion letters and mail to 144 million homes.
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Save the @USPS.There is no institution more critical to the next phases of our commerce economy.
Today, the service is tasked with another generational shift: supporting online retail. The pandemic shifted the American consumer towards online retail, this while reducing the number of units shipped. As such, companies like UPS and FedEx have responded by hiking prices. In response to USPS’ distress, FedEx recently stated:
The COVID-19 pandemic has negatively impacted mail volumes and mix resulting in a further decrease in revenues and negative financial impact for the USPS. Additionally, the USPS continues to experience budgetary uncertainty as well as increased political debate regarding potential privatization or restructuring of its operations.
Cost inflation is the most concerning obstacle ahead for digitally native retailers. Without the treatment that the United States’ oldest civilian service afforded Amazon in its infancy, it will be more difficult to build more businesses of Amazon’s scale. The economics were difficult enough as is; these added costs will only add pressure to pass along costs to consumers, many of whom are facing down one of the most economically vulnerable periods since 2008. We should consider the postal service an investment into our present and future and a monument to our past.
If our economy is to begin addressing the shortfalls caused by the overwhelming contraction in the traditional retail industry, it will need the support of the postal service. For eCommerce, their service is the industry’s last mile for thousands of direct-to-consumer small businesses. The postal service uniquely sits at the intersection of our physical roads and our digital infrastructure. There isn’t a direct substitute and we shouldn’t wait to find out the hard way. Save the USPS. We will need more companies like the successful hundreds that were built on its 250 year old infrastructure. That includes Amazon.
By Web Smith | Editor: Hilary Milnes | Art by Alex Remy | About 2PM
