Like a daily dose of Christmas, my heart pumps a little harder when my eyes alight on an envelope with my name on it. What an absurdly low APR I can get by simply applying for this Discover card! You mean to tell me that when I buy one pint of ice cream at ShopRite, I get one...free? Surely this must be some sort of holiday! But no -- it is every day. It is the beauty of the United States Postal Service, illuminating my days with its paper presents.
What a gray existence it would be without such tiny reminders of corporate generosity.
But such a day might well come as the USPS, the modern incarnation of a 227-year-old monolith of letter handling, struggles to stay afloat in this less than favorable economic climate.
The USPS is an unusual business entity. Though it might appear to be a federal agency (I thought it was), it was established as separate from the United States government under the Postal Reorganization Act of 1970. That act abolished the United States Post Office Department, which was part of the cabinet, and created the United States Postal Service, a corporation-like independent agency with an official monopoly on the delivery of mail in the US.
The USPS is operated entirely on its own revenue, which was about $65.7 billion in 2011. A modest number, to be sure -- but probably enough to run most businesses on.
But revenues can't keep up with expenses at the USPS, which lost $5.1 billion last year, and another $3.2 billion in the first three months of 2012, up from a loss of $2.2 billion during the same period a year earlier.
So what's killing the USPS? A general decline in mail in the years following the economic downturn and consistently high (as in, 80%-of-the-company's-budget high) labor costs have undoubtedly had an effect.
But a majority of the blame rests on a feature of the Postal Accountability and Enhancement Act (PAEA) of 2006, which requires $103.7 billion to be paid into a fund to provide for the health benefits of future retirees by 2016. That's future retirees only, while the USPS is still required to pay for the health benefits of people who are actually working, right now, and gearing up for retirement.
The healthcare benefit payments required by the bill have become so unwieldy that many are asserting that the USPS would have no financial problems without them. In a September 2011 letter to Congress, Ralph Nader pointed out that by June 2011, the USPS “saw a total net deficit of $19.5 billion... [which] almost exactly matches the $20.96 billion the USPS made in prepayments to the fund for future retiree health care benefits.” In other words, Nadar contends, without the retirement payments, the USPS would have been about $1.5 billion in the black.
Unfortunately, there looks to be no change in the Postal Service's fortunes. Solutions to the agency's fiscal woes come frequently in the shape of service cuts (operation hours have already been cut at 13,000 low-traffic offices, and Saturday service is due to stop in two years), and rarely ever include alterations to PAEA mandates outside of delaying payments.
Additional fixes have come in the form of dismantling the USPS and giving mail delivery over to private companies, and speculation as to the possibility of putting as much as 2.5% of USPS employees into a form of semi-retirement, where they would receive an annuity and part-time payment. Other possible plans involve raising rates beyond inflation, possible plans to allow the USPS to expand into other markets, and using retirement-fund surplus (presumably meaning the $82 billion the USPS inadvertently overpaid into the Civil Service Retirement System and Federal Employees Retirement System between 1972 and 2009) to provide retirement incentives for those who are eligible.
As it stands, the $3.2 billion the USPS has already lost in 2012 is attributed primarily to putting aside money for this year's $11.1 billion payment to the retirement fund. Mail volume fell some 4.1%, while package shipping revenue was up 13% over last year. The Postal Service expects to default on 2012 payments unless Congress acts soon.
So help the Postal Service, Congress. If not for us, then at least for the children who are going to be born, grow up, and retire on the money that you're strangling the USPS with today. The alternative, some suggest, is the failure of the entire US mailing industry, which depends on the USPS -- and a loss of some $1 trillion in annual revenue and 7 million jobs. Quite the impasse.
Me too, @drivewaygirl. I think I mentioned before that it always bothered me during the 2010 Census that all of the vast amount of paper that was mailed (beside the fact that it was mailed at all and not digitized on site and stored immediately in the Fed servers) was that FedEx did all the pickup and delivery. The USPS may have avoided a deficit in 2009 and 2010 just from the volume of overnight deliveries the Census Bureau gave FedEx!
That's a perfect example of failed collaboration. Both the Post Office and the Census Bureau -- not to mention, I suspect, taxpayers -- would have benefited from a partnership.
There's a certain pleasure in getting a hand-written card (can't remember the last time i got a letter) in the mail, although I would not miss the bills.
My volume of junk mail has noticably declined as my email spam has climbed. With less junk and relatively few bills -- I get most of mine online -- I've come to look forward to getting the mail. The stuff in it is usually interesting (cards, invitations, proxy statements).
Lots more going online now, bills, statements, etc. Almost all I get in my mailbox is junk mail. Will the USPS be able to come up with a digital mail solution in time? Already have some of my stuff going this way with Digital Postal Mail.
USPS has many chances to pull itself out of the hole, but it did nothing during the past decades. Like everyone, USPS saw the change coming after the innovation of email. The mail delivery doesn't have a future, the future belongs to the parcel delivery. But USPS did almost nothing to push itself forward in the right direction. It sat there, looking UPS and Fedex surpassed itself in parcel delivery.
The only asset left now in USPS is its real estate property holding, including Postal Stations/Branches, and processing facilites. It will be a real gem for UPS, FDX, or any real estate investor.
I like to get postal mail much more than email. There is always a more personal touch in it. However, nostalgia alone won't assure survival. It's sad to see the failure to adopt to the changing needs of the customers and resistance to change could most likely bring about the downfall of USPS.
E-mail has eaten into the profits of the USPS, but its not like they haven't tried to do anything about it. The USPS was pretty much barred from venturing into non-postal services by Congress, which includes the internet. It's one thing to stubbornly resist expansion, but its another thing entirely to be barred from expansion by congress, forced to put away full retirement benefits for the next 75 years worth of employees in 10 years time, and to continue to be required to do it while there is a considerable market shift. The USPS would have the funds and the flexibility to correct its business model and address existing problems if it wasn't burdened with these inane congressional stipulations.
Great article in the Economist about this this past week, or week before, about how the USPS has a great plan for cost cutting and reform but need an antipathic congress to ok it. The postal service is run so poorly because it is tied to a political system that wants it to slowly die.
Our congressmen can't seem to run anything properly, so why should the post office be any different? They mandate the service, condone the union, set crazy rules and then compalin when they need funding. This half in half out of government system we have devloped clearly doesn't work well. We need to make a change.
The Post Office is a business. It should be allowed to put cost reduction programs in place. So in the least, Congress should allow them to run as a business.
Agreed. The Post Office has this weird structure of part government, part business -- just look at the .com suffix on the web address. So then just let it run itself like a private business, or else treat it like a government agency, and make sure it gets the mailing business from all its sister agencies.
Maybe the big threat to the Postal Service was the greed of card makers. You know why I started sending ecards and evites? Not to save 44 cents in postage -- to save $5 bucks or more for a stupid greeting card. What's up with that?
Great idea. And maybe it could help Green Mountain, too -- load up on some K-cup dispensers for people with an aversion to wings but want to stay awake in those boring lines.
Postal doesnt appreciate or monetize its unique history.
They recently almost closed and then reduced hours at the first Franklin Post Office in Philly.
This could be a major money maker with paid tours etc.
Also, some of the smaller commericial package companies used to piggyback off the U.S. Postal service. Some of those business relationships could be rekindled.
Why doesnt the Post Office start its own version of email that would make both virtual and real deliveries of photo proofs, ad sheets etc.
Heinrich, as with many issues in this country, policymakers ought to have an open and honest dialogue with citizens and basically say, "hey, how about we privatize this post office thing." Let them make their case and let the usps make its case and let us vote on it.
If having your grandfather lie to you while his cronies implement unconstitutional, detrimental and often perverse policies behind the scenes represents "upfront dialogues," then why don't we resurrect Reagan and install him as zombie in chief until we're all zombies. He was practically a zombie for his whole second term, if not more, so the precedent has been set.
Joey the challenge is when it "left" the government it still operated like it was a government office with civil servants, pensions etc. It was forced to operate like a corporation with stockholders it would be run very differently. The wages would be cut the pensions eliminated and replaced by contribution plans and the workforce and offices reallocated. The postal service needs to stop being in a quasi space to be successful, it needs to be a government function or be privatized. Existence in between will not be successful.
@impactnow, if the USPS went private, it would need to lay off a good part of it's workforce---those too indoctrinated in the old skacky ways. It would still need to pay pensions for all the folks currently under the plan even if it freezed the plan going forward. And it would still need to pay a decent wage to attract new decent staff. Pprivatization is no magic bullet.
I don't think privatization is necessarily better than a government agency. But anything has to be better than the weird hybrid the post office is right now.
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