M. T. Town
San Antonio, TX
The financial problems plaguing the U.S. Postal Service are problems that—despite appearing insurmountable—are ones that can be resolved. Several problems are explained and several solutions are presented. Despite the decrease in mail volume over the last decade, the USPS can turn around its losses if the government loosens political restraints it has imposed on it. This includes eliminating the $5.4 billion required annual pre-funding of health benefits for its retirees, allowing it to operate more like a business, and consolidating low-revenue postal facilities.
For over two hundred years, the United States Postal Service (USPS) has provided people with mail service. It is an essential to millions of Americans who depend on it to—according to the USPS website—“provide prompt, reliable and efficient services to patrons in all areas” (USPS, 2013). The strains of maintaining such a large footprint across the nation and having such a massive workforce means that direct costs are difficult to keep under control. This places an enormous burden on the organization financially, however this is not the sole reason that the postal service is in a lackluster financial state.
Since 2006, according to the April 2103 congressional testimony of Comptroller General Gene L. Dodaro, the total mail volume of the USPS has dropped significantly, from 213 billion down to just 160 billion in the year 2012 (Dodaro, 2013). A decrease in mail volume means a decrease in revenue, something that the organization wants to change, but has a hard time putting into action. If the trend continues downward as predicted, without some changes in its structure, then it could literally go bankrupt. Nevertheless, the USPS needs to—in the short-term—focus its efforts on consolidation of some of its financially-straining postal facilities in order to avoid becoming yet another business to request a “bailout” from Congress. This would ensure long-term stability.
In spite of these issues, the USPS is finding it difficult to change its ways due to the political constraints that seem to hamper any efforts to alter the USPS in its current form. Additionally, costs related to the Postal Accountability and Enhancement Act of 2006 (PAEA) have unfortunately placed an unfair burden upon the organization by forcing it to pre-fund health benefits for fifty years in the future, with $5.4 billion required per year in the first ten years (Carbaugh and Tenerelli, 2011). Consolidation efforts alone are not the answer, and they can only be successful if the political constraints are relaxed (allowing it to function more like a private business), and if the pre-funding requirement is eliminated.
The USPS is the only mail service that is allowed to deliver first-class mail, to include junk mail such as advertisements in what amounts to a monopoly. This has been maintained through what’s called a Universal Service Obligation (USO). The USO allows all Americans equal access to mail in terms of price, service, and days of delivery (Monday-Saturday). Currently, it is in a financial crisis that requires several alterations to make it financially stable again, and the logistical support required for the USO is just one of the many reasons that the USPS has become financially insolvent.
Since the Postal Reorganization Act was enacted in 1971, the USPS has acted as a self-sustaining entity acting mostly independent of the federal government, and it has not relied on taxpayer funds since 1982. It is not as though the problems it faces suddenly appeared overnight. As early as 2003, forecasters began to understand the need to reform the USPS. That year the President’s Commission on the Postal Service reported that many post offices were not needed to provide the USO, since many areas had retail postal outlets that could handle mail. Also recommended in the…