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The Postal Service is struggling, but not because of the mail

By Fredric Rolando,

Fredric Rolando is president of the National Association of Letter Carriers.

Would it startle you to learn that the U.S. Postal Service netted an impressive profit in the first quarter of this fiscal year? Probably so, given all that has been said about an agency supposedly bleeding billions of dollars as Americans abandon paper mail for the ease of the Internet.

Yet it’s true: Revenue from selling stamps and other products exceeded the costs of delivering mail by $200 million, the Postal Service’s chief financial officer reported in February. Much has been written about the Postal Service, an institution embedded in our Constitution and actually older than the country. It touches the lives of all Americans, and for six straight years it was named the public’s most trusted federal agency, according to the Ponemon Institute. Yet conventional wisdom about the Postal Service is strikingly misleading. I’d like to provide some context that’s rarely heard.

One prevalent myth is that delivering the mail to 150 million addresses six days a week, as more people turn to the Internet, puts taxpayers on the hook for multibillion-dollar losses. In fact, boosted by record worker productivity, the Postal Service is admirably weathering the worst economy in 80 years. In fiscal 2007 through 2010, if you subtract the related costs from the earned revenue from mail delivery (the Postal Service hasn’t received taxpayer money in 30 years), it had an operating profit of $611 million.

There is indeed red ink, but the reasons are unrelated to the mail. In 2006 Congress required that, within the next decade, the Postal Service pre-fund future retiree health benefits for the next 75 years — a burden no other agency or company faces. That accounts for 85 percent of all of the agency’s red ink since — and more than 90 percent of the $6.46 billion shortfall from the first half of fiscal 2012. Before pre-funding began in 2007, the Postal Service had annual profits in the low billions. It’s this unaffordable payment that the Postal Service is “simply not capable of making” next month, a spokesman said this week.

Some argue that letter carriers claim, naively, that if Congress simply removed the pre-funding requirement, all financial problems would disappear. This notion, repeated in The Post’s July 9 editorial, “Postal disservice,” has it backward. On the contrary, we unequivocally acknowledge the structural challenges — and if Congress fixed the artificial mess it created, the Postal Service could focus on addressing those challenges, including the diversion of much first-class mail to the Internet.

Pre-funding isn’t just bankrupting the Postal Service; it’s also forcing the agency into a panic mode that absorbs energy and resources in a desperate effort to find about $5.5 billion every September for this unique burden. Inexplicably, instead of focusing on how to best meet today’s challenges so Americans can continue to enjoy the world’s best delivery service, Congress has made its top postal priority the funding of benefits for retired workers nearly a century out.

If lawmakers address their part of the problem, the Postal Service could do what it has done for 200 years: develop a forward-looking business plan that adapts to society’s evolving needs, just as it did when the telephone, telegraph and fax machine came along. Each time the agency emerged stronger. Dismantling the network and degrading service isn’t a business plan.

Some say the Postal Service is a dinosaur. Official figures belie this, as do the millions of Americans who go without Internet service. Over the first half of fiscal 2012, even with the declining volume of first-class mail, it came close to breaking even in operational terms — which it attributes to delivering more goods ordered online. Private carriers increasingly turn to the Postal Service to deliver those packages more economically. The Internet poses challenges; it also offers opportunities.

Some say that eliminating Saturday delivery is a good way to cut postal costs. Actually, it would hurt Americans and prove highly counterproductive to achieving financial stability. Consider that when the postmaster general asked the Postal Regulatory Commission last year to back this change, the commission declined, saying the purported $3 billion savings would actually be $1.7 billion. Reducing service by 17 percent to save 3 percent of costs is an irrational business formula.

Furthermore, the cutback would disproportionately affect the elderly and rural communities — which include people who require medicines on weekends — as well as small businesses that need to send and receive financial documents.

Dropping Saturday delivery would drive customers away and decrease revenue. It would also impair the agency’s ability to capitalize on the expanding e-commerce market — a key to its future — because the best day to deliver packages is when people are home: Saturday.

When Congress returns to the issue of postal reform, lawmakers should bear in mind the truth behind these popular myths.

Read more from PostOpinions about the Postal Service: George F. Will: Privatize the nation’s mail delivery The Post’s view: Postal Reform Act is imperfect, but needed

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