Updated, Why is the U.S. Postal Service in so much trouble?
Editor’s note - Please see the end of this psot for a correction to the Aug. 27 story.
Right now, Congress is considering a request from the U.S. Postal Service (USPS) to allow an end to Saturday mail delivery and closing post offices on Saturdays.
And in an effort to dig itself out of debt, the USPS also has plans in place to eliminate 150,000 postal jobs by 2016.
Over the last three years, the USPS has already eliminated thousands of jobs.
It’s probably difficult for most people to understand why the postal service is in so much trouble – it’s a government agency, right? Why can’t the government give it more money?
Well, besides the fact that the country is still digging out from a recession, the fact is the U.S. Postal service is not a government-funded agency. It is responsible for its own costs and revenues.
At the same time, however, it is mandated to provide certain services. Like the first regulations governing telephone service – whose purpose was to ensure everyone in the country had access to affordable phone service – the post office is supposed to serve Americans of all economic levels.
It is supposed to accomplish this goal and be profitable.
There have been several news reports on the degree to which email and other aspects of the Internet have taken business away from the postal service – in particular, there’s been a huge drop in the volume of first-class mail – but a report written by Jen Wieczner for the Marketwatch section of the Wall Street Journal shines a light on much more fundamental and much more financially devastating problems.
In “10 things the post office won’t tell you,” Wieczner points out that the U.S. government requires a financial commitment from the Postal Service well beyond similar requirements for federal agencies; the USPS is mandated to make payments to pre-fund health care benefits for postal retirees 75 years into the future.
This requirement was established in the Postal Accountability and Enhancement Act of 2006.
Wieczner reports that of the $11.6 billion loss reported by the Postal Service for the first three quarters of 2012, nearly 80 percent or $9.2 billion is due to the pre-funding of these benefits.
This story also reports that for the first time since the 2006 mandate, the Postal Service did not pay its $5.5 billion bill (due Aug. 1) and it will likely default on the Sept. 30 bill, as well.
Currrently, there is $44 billion in the fund, and the Postal Service wants to let that fund grow with interest – without causing any problems for retirees, according to this story. Wieczner writes that the Postal Service pension fund is more than 100 percent funded, compared with 42 percent for all federal pension funds.
This excellent news report also outlines strategies being suggested for boosting the USPS revenues (such as adding banking services), delves into the surprising portfolio of real estate owned by the postal service (and the private investors who have benefited financially from it), how “junk mail” helps pay the USPS bills, and exposes the tie between the federal budget and postal service revenues.
To read the full story, “10 things the post office won’t tell you,” click on this link http://www.marketwatch.com/story/10-things-the-postal-service-wont-tell-you-2012-08-27?pagenumber=1
Posted August 27, 2012
CORRECTION, posted Sept. 4, 2012 -
In the original post of this story (Aug. 27, 2012) I stated: “Over the last three years, the USPS has already eliminated thousands of jobs and replaced many ‘non-performing’ post offices across the country with vending machines that dispense stamps and packaging and provide other limited services.” An inquiry from a reader prompted me to seek verification of this information. According to local U.S. Postal Service spokeswoman Christine Dugas, the self-service kiosks (or Automated Postal Centers) were placed about 10 years ago in locations where there was a high volume of business, in order to reduce customer wait times. They are often placed in lobbies where the customer has 24-hour access, and they provide a wide range of postal services. Currently there are over 32,000 post offices and only 2,500 APC kiosks nationwide, Dugas said. She added that in 2011, “APCs nationwide generated $543 million in revenue through nearly 86 million transactions.” Dugas noted that since 2006, the volume of first-class mail has declined about 25 percent, and this has caused serious problems covering operating costs, but the kiosks are not related to the financial losses. Dugas added that the Postal Service’s proposal to close 3,500 post offices across the U.S. is currently on hold.
Related links: “US Postal Service Looking to close offices, drop one delivery day,” Sept. 2, 2009, Mansfield Today http://mansfield.htnp.com/2009/09/02/us-postal-service-looking-to-close-offices-drop-one-delivery-day/
“US Postal Service slasthing jobs, from the top,” March 20, 2009, Mansfield Today http://mansfield.htnp.com/2009/03/20/us-postal-service-slashing-jobs-from-the-top/
“US Postal Service processing 1 billion fewer pieces of mail this year,” Dec. 20, 2008, Mansfield Today http://mansfield.htnp.com/2008/12/20/us-postal-service-processing-1-billion-fewer-pieces-of-mail-this-year/
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