Difficulties of Regulation When Wage Costs are the Major Cost (original) (raw)

This paper analyzes the unique regulatory challenges faced by the United States Postal Service (USPS) in the context of deregulation, particularly highlighting its labor-intensive nature and the limitations imposed by external factors on its cost structure. Unlike typical capital-intensive industries, USPS operates under a system where labor costs dominate, accounting for 76% of total costs, and crucial wage determinations are influenced by external parties such as arbitrators and Congress. Through an evaluation of proposed deregulation measures, specifically H.R. 22, and an analysis of postal wage competitiveness, the paper argues for necessary regulatory reforms to harness market forces and improve operational efficiency.