For nearly 15 years, we have heard about the United States Postal Service running in the red. Politicians have wrongly claimed that this is due solely to mismanagement, and that the USPS should be privatized. Certainly management could be improved. However, the real driver of these losses occurred almost immediately after Congress passed the 2006 Postal Accountability and Enhancement Act (PAEA). PAEA instituted an annual inflation-based cap on postage increases to create stability in postage prices. PAEA also required the Postal Service to prefund its retiree health benefits at a rate of about $5 billion a year. The prefunding requirement has been principally responsible for financial losses at USPS for the past six years.
In recent months, COVID-19 has only exacerbated the problem, causing the USPS to lose even more money due to the slowdown in economic activity.
Historically, the Postal Service’s financial woes have led to mail service cuts, which created many problems for small businesses and small towns.
Between 2012 and 2015, the Postal Service shuttered more than half of its mail processing facilities. New service standards killed overnight first-class mail.
All of these closures have been mandated in the call for a leaner, more fiscally sound post office. The problem with this solution is that mail service continues to decline at unprecedented rates.
Why should we care? Because this disproportionally affects Buffalo, Kaycee, Story, Clearmont and other rural areas nationwide. It simply isn’t profitable for profit-driven delivery companies to provide this level of service to sparsely populated areas. Service cuts diminish local rural economies in many ways, including sluggish cash flows from checks in the mail.
With the advent of private parcel services, email and even social media as methods for communicating, the postal service can feel obsolete at times.
But this is a mistake. The USPS still handles over 40% of the world’s mail volume amounting to over 158 billion mail pieces each year. And residents of rural areas like Johnson County rely more heavily on the post office due to our isolation.
Many area businesses rely on the USPS for delivery of packages and mail. Additionally, lack of universal Internet and telephone access combined with an older population on fixed incomes creates a greater reliance on the postal service for communication and commerce.
Slower delivery may force small businesses, the elderly and those with disabilities to turn to more costly delivery methods that, quite frankly, don’t have the post office’s ability to reach customers in the “last mile.”
This additional expense will hurt local businesses at a time when they can least afford it.
However, allowing the USPS to go bankrupt and be privatized is not the answer. Requiring USPS employees to use Medicare upon retirement rather than double funding a duplicate retirement system would go a long way to fixing the post office’s woes.
It is not a taxpayer bailout, as has been claimed. Medicare taxes have already been paid for postal workers who would enroll in the system. This plan would stabilize the USPS until Congress can adopt longer-term solutions, thus avoiding the necessity of a taxpayer bailout in the near future.