The US Postal Service Is Doing Better Than You've Been Led to Believe

Fredric Rolando
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Posted: Jul 07, 2017 9:33 AM
The US Postal Service Is Doing Better Than You've Been Led to Believe

The U.S. Postal Service is an iconic institution – based in the Constitution and older than the country itself – that’s every bit as relevant today as ever. It provides Americans and their businesses with the industrial world’s most-affordable delivery network while serving as the centerpiece of the $1.3 trillion national mailing industry, which employs 7 million Americans in the private sector.

And yet, a good deal of misinformation circulates about the Postal Service’s financial situation and, by extension, about postal legislation. After all, if you are led to believe that USPS is awash in red ink because business is dwindling, that would suggest one type of legislative response. If, however, you realize that the business model is solid but that flawed public policy needs fixing, it’s easier to understand why some legislative adjustments are needed – without breaking what works.

Given the interest Townhall's readers have in public policy, I’d like to provide some information on the financial and legislative fronts, and add a few words about USPS’s broad value to our society.

For starters, the Postal Service business is doing better than you might have been led to believe, averaging about $1 billion in annual operating profits in recent years. Halfway through Fiscal Year 2017, postal operations are $533 million in the black. That brings overall operating profits since the beginning of FY 2014 to $3.7 billion.

What’s notable about this performance is that it’s achieved without a dime of taxpayer money. By law, the Postal Service earns its revenue by selling stamps and other products and services.

While first-class mail revenue still hasn’t recovered from the Great Recession’s impact, it’s improved as the economy gets better. And with the internet driving online shopping, package revenue rose 16 percent in 2016 alone.

So the foundation is solid. Six and increasingly seven days a week, the Postal Service delivers up to 155 million addresses from coast to coast, with an average of 3,630 new household, business or organization addresses added daily to the postal delivery network. Indeed, the Postal Service delivers an astonishing 47 percent of the world’s mail.

This does not, however, mean that all is rosy. There are external matters beyond USPS’s control that need to be addressed. A key one involves the 2006 congressional mandate that the Postal Service—alone among all public and private entities—pre-fund future retiree health benefits, at an annual cost of $5.8 billion.

That is the “red ink” you hear about.

So, when a commentator contends that USPS is losing billions a year because of flawed business practices, that it can’t meet its financial obligations and, further, that taxpayers are implicated, remember this: The Postal Service is earning more money delivering the mail than it costs to deliver it. Hence, the operating profit. And, taxpayers don’t fund it.

Congressional interference, in the form of the 2006 mandate, not only accounts for the “red ink,” it’s disguising the actual profits USPS has been generating for years.

This artificial financial crisis needs to be dealt with. Mitigating the onerous – and unfair – consequences of pre-funding is one of the core legislative proposals that the Postal Service, postal unions, key lawmakers from both parties and industry groups have coalesced around.

Among other things, the bill offers a workable resolution of the retiree health pre-funding burden, achieved by maximizing participation in the Medicare program and investing the Retiree Health Fund more sensibly. The non-partisan Congressional Budget Office early last month issued a positive score, saying the bill would save the federal government billions of dollars over the next decade.

One reason so much rides on postal reform is that, beyond delivering the mail, the Postal Service benefits our society in important ways.

USPS is the center of civic life in many communities. It’s also the nation’s leading civilian employer of military veterans. And, the second Saturday in May, letter carriers conduct the country’s largest single-day food drive to help replenish food banks, pantries and shelters for the critical summer months, when most school lunch programs don’t function. This year’s 25th annual food drive collected more than 70 million pounds of food, raising the total collected over the past quarter-century to well above 1.5 billion pounds.

Every day as they deliver mail on their routes, letter carriers help save the elderly or other residents who have fallen or experienced medical problems, put out fires, locate missing children or help stop crimes in progress.

It’s no surprise that the Postal Service enjoys enthusiastic support from the public and from lawmakers across the political spectrum. Quality postal service has not been – and should not be – a partisan issue.