The U.S. Postal Service is in trouble. The financial vulnerability of the Postal Service is not a new development. The nonpartisan Government Accountability Office has cited Postal Service finances as a high-risk concern since 2009. This GAO assessment is based on basic math and obvious trends: First-class mail volume has declined due to email, while Postal Service labor costs continue to escalate.
After peaking in 2001, first-class mail volume declined 43% by 2017 due to the increasing use of electronic communication such as email. Since COVID-19 hit, the volume of mail delivered by the Postal Service has drastically declined further. Businesses have cut back on sending advertisements and bulk mail, — the agency’s main source of revenue — leaving it on track to run out of money by as early as September without congressional intervention.
During debate over the $2.3 trillion Coronavirus Aid, Relief and Economic Security Act in March, House Democrats were seeking $25 billion in subsidies, $11 billion in loan forgiveness and a $15 billion loan for the Postal Service. The final CARES Act legislation provided the Postal Service with a $10 billion loan, while calls for a much larger handout have fallen on deaf ears.
More than three-quarters of Postal Service expenses are for employee compensation. That includes salaries for employees along with health and pension benefits for retirees.
The Postal Service is legally required to deliver all mail to all postal addresses, in all regions, at a flat rate, no matter how far it must travel. The Postal Service’s accessibility and affordability are especially important to rural communities.
While some may argue that the Postal Service is becoming obsolete as an increasing number of services become digitalized, there’s still a large number of people, especially in rural areas, who rely on mail because they have poor or no internet service. The Federal Communications Commission estimates that more than 14.5 million people in rural areas do not have access to broadband. In fact, 18% of Americans still pay their bills by mail.
Meanwhile, 20% of adults who take medication for a chronic condition get those medications by mail order, according to the National Community Pharmacists Association. Even private shipping companies like FedEx and United Parcel Service use the Postal Service. One of the arguments many people make against the Postal Service is that there are other companies offering the same services. What most people don’t realize is that deliveries on the local level are regularly handed off by these companies to the Postal Service, which actually completes the delivery.
The Postal Service isn’t just a public service — it’s a lifeline, especially for people living in rural areas.
Fixing the problems
The disaster confronting the Postal Service goes far beyond anything it could have been expected to anticipate. Yet it is also the case that the Postal Service would have been in a much better position to withstand the COVID-19 crisis if Congress had enacted reforms years ago, as many recommended.
Congress should work on a plan to lift unsustainable mandates on the Postal Service. Congress has ignored the problems hamstringing the Postal Service for too long. The opinion of some in Congress is the Postal Service should be privatized, while President Donald Trump believes the post office undercharges Amazon. But the fact remains that the Postal Service is something we still depend on. It’s clear Congress needs to do something to fix the problem.
The elements of such reform are already familiar from multiple studies and analyses of the system, as well as from the provisions of previous proposed legislation: an end to mandatory Saturday mail delivery (which could save $2 billion per year, according to the Postal Service); greater regulatory latitude to set prices and develop new products; and shifting retiree health benefits to Medicare.
The congressional solution to the Postal Service problem is simply to slash jobs, close rural post offices and put an end to the six-day delivery schedule. While this certainly would save money in the short term, the damage to the long-term economic fabric could be substantial. The ripple effect of closing rural post offices would be felt by both private and business mail customers for years.
The U.S. Constitution gives Congress the power to establish a post office, and Congress needs to take responsibility for fixing the Postal Service so it can continue to deliver mail and packages through rain, sleet, snow, heat and the COVID-19 pandemic.
Comments? Email firstname.lastname@example.org.