The United States Postal Service Task Force was created through an executive order by President Trump to fix the Postal Services’ finances. They issued their long-awaited report with their findings and recommendations.
A bailout of taxpayers will be needed if the USPS doesn’t right its finances at some point. The Task Force shared this concern saying that the USPS is on an “unsustainable financial path” losing money every year for over 10 years.
“The USPS’ current business model has become outdated due to changes in technology, markets, and customer needs and preferences. It is unsustainable and must be fundamentally changed if the USPS is to avoid a financial collapse and a taxpayer-funded bailout,” the report stated.
The report also pointed out that a large part of their financial troubles come from its outdated business model which “was sustainable in an era where mail volumes and revenues grew alongside population and economic growth.” However, with the shift to digital correspondence, revenues are falling.
The Task Force made several recommendations to help USPS reverse this path they’re on.
Retiree Health Benefits
Many think USPS’ financial problems would disappear if the pre-funding requirement for USPS retiree benefits was removed by Congress. The report addressed this and noted, “USPS has been the one civilian entity that is statutorily required to pay OPM directly for the cost of its retiree health benefits.” USPS has defaulted on these payments to maintain normal operations.
The Task Force, despite popular opinion, does not think USPS should change this. The report states:
“The Task Force does not believe that this general policy [funding retiree health benefits] should change or that the liability for USPS retiree health benefits should be shifted to the taxpayers. The Task Force believes that this obligation, including the $43 billion in pre-funding payments that the USPS failed to pay into the Postal Service Retiree Health Benefits Fund and the unfunded actuarial liability for retiree health benefits, must be restructured with the payments re-amortized with a new actuarial calculation based on the population of employees at or near retirement age.”
Here are other recommendations the Task Force had instead.
Labor Costs and Pensions
Recommendations were made with respect to the USPS labor model. “The USPS has over $126 billion in unfunded worker liabilities stemming from its pensions ($43.5 billion), retiree health benefits ($66.5 billion), and the federal workers’ compensation program ($16.4 billion).”
The Force recommended that the Postal Service remove employee compensation from collective bargaining. The report said:
“Doing so would enable the USPS to address the costs and complications with its current labor system and allow for better workforce planning and cost control within its rapidly evolving business model. In the meantime, the USPS should take immediate action where current statutory authority exists, including, but not limited to, aligning collective bargaining agreements with these principles USPS should not be afforded protections and rights not enjoyed by other federal employees.”
They also think Postal Employee salaries should be more closely aligned with the private sector.
The Task Force said USPS should have authority to change market-based prices for both mail and package items that aren’t considered “essential services”. They say that the pricing has not been set for profitability in mind.
The group also says USPS should look at new revenue opportunities, one of which is franchising the monopoly it enjoys on private mailboxes.
The report states, “The legal mailbox monopoly remains highly valuable. AS a means of generating more income, the mailbox monopoly could be monetized.” According to the report, this could work because, “As [mail service providers] and package delivery companies continue to expand offerings to multiple parts of the value chain, it is reasonable to expect a willingness to pay for access to USPS mailboxes. By franchising the mailbox, the USPS could expand its revenue and income opportunities without necessitating any change to its current mail products.”
Essentially, USPS would let other companies pay a fee to put packages into mailboxes to expand revenue. “This could be done by retaining the mailbox monopoly and allowing regulated access—for a fee—to certified private companies. These ‘franchises’ would be granted access to the mailbox for the delivery of mail and small parcels,” the report said.
Eventually, something must give if the Postal Service is going to survive. They can’t keep losing billions of dollars every year and expect to stay the same.