Postal Service's finances improve, but not fast enough
The U.S. Postal Service, which has lost money in 19 out of 21 straight quarters, today reported that its financial situation is improving. But it warned things would deteriorate further unless Congress takes action.
In the quarter ending October 1, the USPS lost $354 million, an improvement compared with a year earlier loss of $1.3 billion. Gains in package deliveries helped offset declines in other businesses. The organization shaved $574 million in costs through by cutting 22,800 employees through a voluntary early retirement program. More effective marketing helped as well.
According to the Postal Service, its assets of $40 billion were outweighed by its $63 billion in liabilities. First Class mail, its most profitable business, saw its volume slump by 4.6 percent, while the surging popularity of e-commerce pushed up shipping and package revenue by 10 percent. But the Postal Service continues to be hobbled by a requirement that it pre-fund its retiree health care costs for 75 years.
Many ideas have been offered over the years to bolster the finance of the USPS including the sale of surplus property, offering banking services to customers that lack traditional accounts and the ending of Saturday delivery. The proposal to scale back service caused such uproar that the USPS withdrew it.
“It’s no secret that the U.S. Postal Service faces dire financial difficulties that threaten its survival,” said Senator Tom Carper (D-DE), co-sponsor of a USPS reform bill pending before the Senate that’s opposed by postal unions. “While things have improved modestly in recent months, this American Institution needs long-term, comprehensive reform to address its fiscal challenges and that reform can only come from Congress.”
Under the bill sponsored by Carper and Sen. Tom Coburn (R-OK), the Postal Service would get $6 billion back that it overpaid to the Federal Employees Retirement System and would change how future payments are calculated. It also would open the door to ending Saturday delivery after 2017 and threatens 100,000 postal jobs, according to the American Postal Workers Union, which described the bill as a “disaster.”
Critics of the USPS have long argued that the pre-funding issue is a red herring designed to divert attention away from the decline in First Class Mail volumes caused by the rise of online bill paying. In fact, a 2012 Government Accountability Office report argues that USPS should continue to fund its retiree health costs in advance and that stopping this arrangement would require larger payments in the future.
Both the USPS and postal unions, however, have disputed the GAO’s conclusion.