I’ve written in the past about the financial difficulties that the US Postal Service has been dealing with. They’ve been raising stamp prices annually, they’ve closed a bunch of locations, and have been looking for more ways to save.
Despite these changes, they’re still bleeding money. They lost $8.5B in 2010, $5.5B in 2011 (that low number was thanks to legislation postponing Congressionally-mandated pre-funding of pension obligations), and $15.6B in 2012. The way things have been going, they’re projected to lose a whopping $21B in 2016.
Not good. According to Postmaster General and USPS CEO Patrick Donahoe, “Our financial condition is urgent.” And so they’ve decided to drop Saturday delivery in hopes of savings ca. $2B annually.
To make this happen, they’ve had to resort to a bit of trickery. You see, despite being an independent agency that gets no tax dollars whatsoever, they’re still under Congressional control. And Congress won’t let them drop their six-day-a-week service.
For the record, Congress is also forcing them to pre-fund their pension obligations to the tune of $5.5B annually which isn’t exactly helping their financial situation.
Anyway, to make this work they’ve decided to stop regular mail delivery on Saturdays, but to continue delivering packages. This apparently satisfies the Congressional requirement of six-day-a-week service while saving a bunch of money.
According to the USPS, this also plays to their strengths, as package delivery is growing while regular mail delivery is shrinking. Will this be enough to save the Post Office? Probably not. After all, we’re talking about $2B in savings vs. a $15B (and growing) deficit.
11 Responses to “Bye Bye, Saturday Mail Delivery”
Its the retirement health care system that is being prefunded. USPS pension is no different than other government pensions. Its the healthccare for postal retirees that is being prefunded. Health care for retirees and pensions for retires are different and treated separately. If it wasn’t prefunded by USPS then it would be exactly like every other healthcare system for retirees as nobody else (govt. or private) is required to prefund retiree healthcare. A bout 1/4 of private retirement healthcare plans are prefunded but you can bet if those private companies were losing billions that would stop fast.
I certainly don’t think prefunding retiree healthcare is a bad idea but they simply can’t afford it right now. SO they should be allowed to play by the same rules as everyone else.
What Grayson @ Debt Roundup wrote, all the way. Congress set them up to fail, and oh surprise, now they’re struggling. I don’t know this with any certainty, but I doubt that any company or organization ever has had to pre-fund ***75*** years of pensions. It’s ridiculous.
I have a soft spot in my heart for the Post Office. They employ more than half a million Americans and serve people even in the most remote parts of the country — even the bottom of the Grand Canyon!
The fact that I can hand scrawl an address on an envelope, drop it off in a box, and send it across thousands of miles for $0.46 seems sort of like magic to me.
I wish them well.
Everyone seems to blame the required pre-funding of the pension plan as a major contributor to the Postal Service’s problems. Can you imagine where the employees would be later on if the postal service continues to loose so much money and the pension plan isn’t pre-funded?? How would they ever catch up? The size of the pension plan deposits relate directly to the total salaries and hiring level. There either needs to be more revnue, less expense or a combination of both. Times change and businesses have to change with them. The postal service, for most purposes, is a delivery method of last resort.
William suggested ‘They can close half the post offices if they want to save money.’
No they cant. Congress won’t let them.
USPS wants to make various changes including closing branches to improve their bottom line but they’re heavily regulated by congress. They also aren’t allowed to raise prices on stamps faster than inflation. So they’re limited in income and forced to provide unprofitable services all in a shrinking business. Sure solution to lose money… courtesy of congress.
I propose that: If one lives 1000 feet or less they must go to their local post-office Further than that the usps
would have sheltered locked mail-boxes inside a 1000 foot
radius available. Change stamps and mailing of packages to private enterprises. Stop the very expensive retirement funds as they now are and contribute a % to
matching IRA’s. But I’m afraid the leftists would use
every effort to stop this.
Like Kevin, this doesn’t trouble me either. Almost nobody sends time-sensitive through the mail anymore.
They can close half the post offices if they want to save money.
They can also consider what someone else proposed: a freemium model: you collect your mail for free at the post office, or they’ll deliver it for a flat fee of $10 per month.
There are plenty of ideas, but most of them involve reducing the workforce in some way. But is anyone holding their breath that that will ever happen?
This does not trouble me, nor would even more cuts to say two regular times a week or something. Which probably shows how far USPS has fallen in importance in my life. I’ll admit to being part of the problem, I used to mail five to eight pieces a month and received about ten important pieces. However with bill-pay and going paperless on items I didn’t want to have sitting in my mail box or shred afterwards. I think it would upset me if the USPS went away completely, but since I depend on their services much less, this cut back does not affect me.
If the USPS gets no tax dollars, then how are they running deficits year after year?
Anyhow, solution should be simple yet harsh: they need to start laying off employees…though that would temporarily transfer costs from the USPS to other government agencies (welfare costs, unemployment benefits, etc etc)
I wonder how much money this really WOULD save the USPS, if they still have to deliver packages on Saturdays they’re still basically running their routes. I know it’s more of a psychological thing but if I see a mail truck driving by on Saturday carrying a package I’m thinking “couldn’t you just stop and give me my letter?”
This is a start, but they have a long way to go. The only way they can reverse this disastrous trend is to make congress get rid of the pre-fund pension obligation. There is no other company that does this to the extent of the USPS and congress should have no hand in it.