By Fredric Rolando, Nov. 28, 2016, originally published by The Hill.
A Nov. 14 commentary piece castigated in advance the U.S. Postal Service’s annual financial report – which was announced the next day – by suggesting it would reflect the agency’s “failed leadership.” The author attributed the “billion-dollar losses expected” to Postal Service efforts to expand services offered to the public. He spoke of “arbitrarily high rates” set by USPS and warned of a potential “taxpayer bailout.” And he claimed that letter mail prices unfairly subsidize competitive services, such as package delivery.
Where to start?
Perhaps by noting that Americans and their businesses enjoy the most-affordable postage rates of any industrial nation, and that the Postal Service doesn’t set rates by itself. By law, that’s done by the Postal Regulatory Commission (PRC), whose members are nominated by presidents and confirmed by the Senate.
Or by observing that regular post stamps and letter mail profits do not in fact subsidize package delivery, since the prices of competitive services cover 137 percent of costs, according to a 2015 audit by the PRC.
Maybe by reminding readers that taxpayers don’t fund the Postal Service. The agency earns its revenue by selling stamps, other products and services.
Most astonishing is that in discussing postal finances, the author looks for non-existent villains everywhere but entirely misses the elephant in the room.
In fact, Fiscal Year 2016’s $610 million operating profit makes three straight years of USPS operations in the black, with a total operating profit of $3.2 billion since 2013. This stems from two ongoing structural factors: As the economy gradually improves from the worst recession in 80 years, letter revenue is stabilizing. And as the Internet drives online shopping, package revenue is rising sharply (up 16 percent this year), auguring well for the future. Record worker productivity also contributes.
There is red ink but it has nothing to do with the mail. Instead, it stems from the 2006 decision by a lame-duck Congress to compel the Postal Service to pre-fund future retiree health benefits. No other public agency or private company has to do this even one year in advance; USPS must pre-fund these benefits decades into the future. That $5.8 billion annual charge not only accounts for the ‘red ink,’ it disguises the actual profits postal operations have been generating for years.
It’s worth noting that the operating profit for FY 2016 would have been $1.6 billion had it not been for the first annual stamp price rollback since 1919. That PRC-mandated rollback, which took place halfway through the fiscal year, makes little financial sense, because USPS already has the industrial world’s lowest rates. Still, the adverse effect on postal revenues should be short term, with the PRC’s legally required review of the postage rate-setting system starting early next year.
Given that the Postal Service is based in the Constitution, is consistently rated the public’s most-trusted federal agency and delivers 47 percent of the world’s mail, I appreciate the opportunity to provide some additional perspective on this American treasure.
Six and increasingly seven days a week, letter carriers deliver to 155 million U.S. homes and businesses from coast to coast. Daily, an average of 3,630 new household, business or organization addresses are added to the postal delivery network.
The Postal Service is the largest civilian employer of military veterans in the country – nearly one of every four letter carriers is wearing his or her second uniform.
It is the centerpiece of the $1.3 trillion national mailing industry, which employs more than seven million Americans in the private sector.
USPS and letter carriers enhance the quality of life of communities throughout the country. In May, letter carriers conducted their 24th annual food drive—the largest single-day food drive in the country—collecting a record 80 million pounds of food from generous Americans to help replenish food banks, pantries and shelters.
Every day as they deliver mail on their routes, letter carriers around the country save lives, locate missing children, rescue people after automobile accidents or help stop crimes in progress.
If Congress acts on practical, targeted postal reform that addresses pre-funding, allows USPS to use its invaluable networks for some new products and services, and adopts best private-sector practices in investing the USPS retiree health benefits fund, the Postal Service can continue to provide all Americans with affordable and efficient delivery services. Fortunately, there is a strong consensus within a coalition consisting of the Postal Service, postal unions, businesses, mailers and industry groups, as well as key legislators, for such a reform package. Our coalition will work with Congress to move legislation.
Fredric Rolando is president of the National Association of Letter Carriers, Washington, D.C.