After dismal holiday financials, Congress needs to return to postal policy

Strategic changes will preserve not just the Postal Service’s core mission but also an industry that accounted for fully 7% of US GDP in 2022, and the millio...

The U.S. Postal Service (USPS) ecosystem is more than a delivery network; it’s the engine for a mailing and shipping industry that generated $1.9 trillion in sales and supported nearly 8 million jobs in 2022. Even with today’s technology, USPS continues to be a lifeline to Rural America, and critical infrastructure for the country, whether sustaining us through COVID or delivering tens of millions of ballots on time. It is precisely because of how important the Postal Service is to our economy and our country that Congress must once again consider responding to the USPS’ serious challenges.

This fall the Postal Service reported $6.5 billion in losses for fiscal year 2023. Expenses are up, revenues are down, and nearly 9% of mail and package volume was lost. The forecast for 2024 is equally disheartening, with an expected loss of $6.3 billion. In the postal first quarter, its most lucrative because of the holiday season, net results barely budged despite major price increases, with volume continuing its decline. Mail has been hit particularly hard. These financial results are especially dismaying because they come at a time when the Postmaster General’s ambitious plan to upgrade and modernize the postal system – the Delivering for America Plan — was projected to break even.

The Postal Service’s core strength is its last-mile network, delivering mail and packages to more than 160 million addresses every day, 6 days a week. American consumers, businesses and even competing delivery companies expect the Postal Service to have predictable and affordable rates as well as reliable speeds. For rural and remote communities which have fewer brick-and-mortar stores nearby and are often not served by those competitors, the Postal Service becomes their only delivery option. Postal success is predicated on both mail and packages; neither can sustain the system alone.

USPS cites inflation for much of its rise in expenses, but postal price increases vastly exceed inflation. From August 2021 (when postal pricing limitations were eased) through yet another increase in January 2024, mail prices went up by a total of 27.4%, but the consumer price index only increased by 16.9% during that same time frame. In other words, the Postal Service is now imposing price increases twice every year, totaling more than 180% of inflation, and businesses and consumers are struggling to keep up.

This burden further incentivizes companies to move from mail to digital transactions and advertisements, or to simply mail less. Some may leave the Postal Service entirely rather than continue to adapt to relentless postal price increases. It is particularly hard on small businesses, nonprofits and charities. The Postal Service’s plans to break even relied heavily on growing its market in packages but package volumes are simply no longer accelerating as they did during the pandemic, largely because of a return to in-person retail and activities. Ultimately, excessive price hikes are pushing mail volume down and package growth is not making up the difference.

The Delivering for America Plan is ambitious, but its results have fallen short. The Postal Service says more time is needed, but the question is how much more time is needed and will it even succeed? Americans can’t wait in the meantime.

The latest financial report is an alarm bell for needed change at the Postal Service. This does not mean a bailout, but precise changes Congress can make to preserve vital delivery services for America. It was only last year that the Postal Service Reform Act (PSRA), landmark bipartisan legislation, was passed, removing nearly $60 billion from the USPS balance sheet and adding transparency.

Unfortunately, the results are the results, and there is more to do. Examples of surgical changes to the Postal Service’s operations and long-term financial viability include granting more flexibility in its investments to improve returns and restoring billions of dollars in overpayments to the Civil Service Retirement Fund. There are also conversations worth having about modernizing the authority of the Postal Regulatory Commission (PRC), designed to be USPS’ regulator but so far failing to check the excessive price increases that threaten the Postal Service.

Strategic changes will preserve not just the Postal Service’s core mission but also an industry that accounted for fully 7% of US GDP in 2022, and the millions of jobs it supports. As the numbers released at the USPS Board of Governors meeting on February 8th showed, there is clearly more work to do to secure the Postal Service’s path for the future.

Art Sackler is executive director of Coalition for a 21st Century Postal Service.

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