The USPS's primary revenue source is as a Spam delivery service. That basic problem is why it has refused to modernize. Anything with any significant value is already sent via Amazon, FedEx, DHL or UPS, or hand-delivered (in the case of really valuable stuff).
The USPS has to be reformed and it needs a new purpose in life, other then stable government job for people. There needs to be significant value that others cannot meet. The reformation that is needed is being blocked.
For example, how about allowing me to pay $5 a month to not have you deliver crap into my inbox? Or to fully digitize the process, so I don't have a recycle bin full of crappy products, alumni magazines, and pizza coupons that I don't need or want.
Oh. And stop selling my data to third parties as well. Looking at you NCOA database.
Your first sentence isn't even true and you can go right here and read the table that shows their revenue sources:
https://about.usps.com/newsroom/national-releases/2019/1114-... To spoil it for you: in 2019, First-Class Mail and Shipping and Packages made significantly more revenue than Marketing Mail. Yes, USPS needs some new revenue streams. They do provide significant value that others cannot meet, which is daily mail delivery to anywhere in the USA. But yes, they need to find other unique services too.
You don't need the personal attacks, and in this case, I suspect that you definition of spam is anything marketing, while ny definition is anything that is sent in bulk to large number of people, or is uninteresting to me:
"irrelevant or inappropriate messages sent on the Internet to a large number of recipients."
A non-trivial percentage of "first class" mail is actually spam. The difference is in quality of service (delivery times for first class is significantly faster in some circumstances then marketing).
I do agree that that there is value in daily mail delivery, but my point is that the value needs to be enhanced, rather then just continue in what it is today. Cut service where it doesn't make sense (go to every other day), encourage people to use email, which is way less wasteful, and less harmful for the environment, focus on rural routes.
The chart doesn't show the relative volumes of mail. For every priority mail package at $14.95 that same $14.95 buys HUNDREDS of pieces of junk mail.
The terrible thing - you CANNOT opt out of the junk mail, at least in the past (hopefully this has changed).
I have no interest in the USPS as a result. What type of business that is supposed to be providing a service FORCES its future and current customers to kill trees for junk mail that will go into the trash.
If the govt didn't allow for spam filters on email, email would be dying too.
> The chart doesn't show the relative volumes of mail. For every priority mail package at $14.95 that same $14.95 buys HUNDREDS of pieces of junk mail.
Volume has nothing to do with revenue, which is precisely what the original poster pointed to and was being refuted:
> The USPS's primary revenue source is as a Spam delivery service.
Fair point - but the perception is that marketing is a majority of the mail even if it's not a majority of the revenue. And since you can't get out of EDDM mailings you are stuck with these. It wouldn't be that hard to red dot or something your box so the carrier knew you didn't want the junk mail.
You can opt out of junk mail. It is an annoying process that involves finding multiple places to opt out, and takes a few months to take effect because all this shit has a lengthy production pipeline. But it is doable. I get a lot less junk mail than I used to, and if I was willing to put a little more effort in I’d get even less - I had it pretty close to zero in my old place.
What are you talking about? There is a volume column right in the chart. It shows that for every piece of first class mail there is roughly 1.5 pieces of marketing mail
Fair point - I was responding to the comment that USPS was / wasn't a spam delivery service. The perception is that (even through revenue is relatively low) the USPS does spam.
And with EDDM you cannot get out of this spam blast.
Even marketing mail sent through first class that's presorted will only get you about 30 letters for $15 at $0.46 per letter [0], so still not sure what the original author is talking about regarding 'hundreds'.
"...any significant value is already sent via Amazon, FedEx, DHL or UPS"
And then those things are handed off to the USPS for "last mile" delivery to the millions of rural addresses that UPS and FedEx don't delivery to directly with their own vehicles.
USPS serves some very critical purposes, and ensuring mail 'works' for all citizens, even those with deep rural addresses, is one of them.
I came here to say this. I grew up in an extremely rural area. It's still extremely rural, forty years after I move away. When I was a teenager there was one grocery store, no department stores, no electronics stores, no restaurants. Just the grocery store, the feed store, the auto parts and hunting goods store, and mile upon mile of pasture.
And the post office. The mail came every day. Sending a letter to anywhere cost $0.25, just like your were mailing it from New York City. It was, literally, a lifeline.
This is the critical piece. It's provided as a government service to absolutely _everyone_, for a low price. Like you said, the fact that you can send a letter to any US state or territory for the same price, and it gets there in a few days, is a miracle, and arguably one of the remaining functioning bits of American government. What happens to people in small towns who rely on the mail for prescriptions? Or important paperwork? "Sorry, ma'am, but since the post office was privatized, we'll need an extra $30 to deliver your insulin. But if you subscribe to our Super Shipper Preferred program, you can save 10%..." Imagine losing all connection to the outside world because your city wasn't deemed profitable enough. That's some Gilded Age hell right there.
I live in a rural area. The nearest USPS delivery is at a post office 11 miles away. UPS and FedEx deliver to my front door. It has been the same in two other rural areas I've lived in. New Mexico, California and Arizona. I've never lived in a place that USPS delivered to that UPS and FedEx did not.
UPS and Fedex can be 3x the price to deliver to remote areas. I work for e-commerce company and we ship Usps to certain zip codes with USPS. I am sure USPS loses money on these shipments especially to Alaska where the surcharge can be up to $30 with UPS.
Possibly, but at astronomical rates. But almost certainly not, if they were well out of their routes or extremely far-flung, because there would be no ROI and private entities exist exclusively to generate profit. The postal service is a constitutional public service to benefit our citizens.
The major problem the USPS has is the 2006 law requiring them to prefund employee pensions at the time of retirement, which no other business has to do. Changing that to normal accounting alone would substantially transform their finances.
A secondary problem is that Congress will interfere with decisions to reduce service in unprofitable areas but not officially subsidize it. This makes the post office appear to be unprofitable because we see the cost of having service in rural areas but don’t directly record the costs to the people who live there and the business which otherwise would not happen without that service.
>The major problem the USPS has is the 2006 law requiring them to prefund employee pensions at the time of retirement, which no other business has to do.
This is a common talking point, but is factually incorrect.
(1) The USPS hasn't made any of those payments since 2013. Their current financial woes aren't caused by the requirement since their not making the payments.
(2) Pensions are required to be fully funded. In practice that's a bit more theoretical than actual, but the USPS isn't being treated any different.
>The agency would be in a much stronger financial position had Congress not passed the Postal Accountability and Enhancement Act (PAEA) in 2006, which “requires the Postal Service, which receives no taxpayer subsidies, to prefund its retirees’ health benefits up to the year 2056,” on a 50-year basis.
> According to the Institute for Policy Studies (IPS) in 2019: “If the costs of this retiree health care mandate were removed from the USPS financial statements, the Post Office would have reported operating profits in each of the last six years.”
>“[N]o other entity, private or public, has to make” such provision for future health benefits of current and future retirees so far in advance. Private companies also can change their health benefits without an act of Congress, unlike the Postal Service. “Current reserves of $47.5 billion could be used to pay expected pay-as-you-go retiree health care costs 10-15 years into the future,” IPS noted.
>The 2006 law also bars the Postal Service from obtaining other revenue by providing “nonpostal services,” such as offering banking services or opening cafes at post offices. And it also limits the ability of the Postal Service to raise rates beyond the rate of inflation.
(1) Book profit: it appears that they're arguing if you ignore pension cost the USPS is profitable. But that's a meaningless point. Its like saying if you ignore what they spend on gas then they'd be profitable. Obviously you can't just ignore costs when calculating profit. These pension obligations are real costs that have to be accounted for.
(2) Cash flow: This is where pension prefunding comes into play. The USPS is running out of cash and if they didn't have to save it would take them longer to do so. But since they're not actually making the payments the law doesn't impact their cash position.
The USPS has about a 100 billion dollars in pension liability that they can't pay. And they haven't actually made money in like 15 years. Tax payers are on the hook for that and the amount they're on the hook for goes up by billions every year.
From the postmaster general:
>. In order to ensure that we had sufficient liquidity to fulfill our primary statutory mission of providing universal postal service, we were forced to default on $33.9 billion in mandated prefunding payments for RHB for the years 2012 through 2016. Additionally, we did not make $6.9 billion in payments due to OPM in both 2017 and 2018 for normal costs and amortization of RHB, Civil Service Retirement System (CSRS), and Federal Employees Retirement System (FERS) unfunded liabilities. Without these defaults, the deferral of critical capital investments, and the aggressive management actions described above, we would not have been able to pay our employees, our suppliers, or deliver the mail.
>Due to the factors outlined above, we do not have sufficient cash to meet all of our existing legal obligations, fully pay down our debt, and maintain a sufficient level of liquidity to ensure continuity of postal operations and meet our universal service obligation.
> it appears that they're arguing if you ignore pension cost the USPS is profitable. Its like saying if you ignore what they spend on gas then they'd be profitable. Obviously you can't just ignore costs when calculating profit.
You're skirting the primary issue. This "cost" is manufactured and is a burden that no other entity (private or governmental) even comes close to having to bear. It's all in the submitted article but here's more. From [0]:
>Passed by a Republican-led Congress and signed into law by President George W. Bush, the PAEA gave the Postal Service new accounting and funding rules for its retiree pension and health benefits. Up until 2006, the USPS funded those obligations on a pay-as-you-go-basis, pulling out of its pension fund and adding to it as retirees' costs came in. But the PAEA required the Postal Service to calculate all of its likely pension costs over the next 75 years, and then sock away enough money between 2007 and 2016 to cover most of them.
>This is one of those ideas that sounds responsible on the surface but is actually pretty nuts.
>Consider your average 30-year mortgage. What if you had to set aside a few hundred thousand dollars right now, enough to pay the whole thing, even if you were still going to make payments over 30 years? No one would ever take out a mortgage. That's the whole point: the costs only come in over time, and the income you use to pay them comes in over time as well. It works exactly the same for retiree pensions and benefit funds. Which is why, as economist Dean Baker pointed out to Congress, pretty much no one else does what the PAEA demanded of the Postal Service.
>Meeting Congress' arbitrary mandate required putting away an extra $5.6 billion per year. "It is equivalent to imposing a tax of 8 percent on the Postal Service's revenue," Baker said. "There are few businesses that would be able to survive if they were suddenly required to pay an 8 percent tax from which their competitors were exempted."
Then, citing a quote form the Postmaster General that contradicts your position, you said:
> This is where pension prefunding comes into play. The USPS is running out of cash and if they didn't have to save it would take them longer to do so. But since they're not actually making the payments the law doesn't impact their cash position.
But they made payments from 2007 to 2012 (at the expense of modernizing). The Inspector General is pretty clear on this (emphasis mine) [0]:
> Eventually, the burden became too great, and the USPS began defaulting on the PAEA payments in 2012. But the damage was done. The Postal Service lost $62.4 billion between 2007 and 2016, and its own Inspector General attributed $54.8 billion of that to prefunding retiree benefits. Without the PAEA, the Postal Service wouldn't be doing stellar. (Though you could plausibly blame many of its remaining struggles on the Great Recession.) But it probably would've spent at least part of the last decade making comfortable profits.
> "The Postal Service's $15 billion debt is a direct result of the mandate," the Inspector General wrote in 2015. "This requirement has deprived the Postal Service of the opportunity to invest in capital projects and research and development."
And from [1]:
>The deep hole of debt that is currently facing the U.S. Postal Service (USPS) is entirely due to the burdensome prepayments for future retiree health care benefits imposed by Congress in the PAEA. By June 2011, the USPS saw a total net deficit of $19.5 billion, $12.7 billion of which was borrowed money from Treasury (leaving just $2.3 billion left until the USPS hits its statutory borrowing limit of $15 billion). This $19.5 billion deficit almost exactly matches the $20.95 billion the USPS made in prepayments to the fund for future retiree health care benefits by June 2011. If the prepayments required under PAEA were never enacted into law, the USPS would not have a net deficiency of nearly $20 billion, but instead be in the black by at least $1.5 billion.
Side note: Admittedly, these are opinions pieces but appear to be well sourced (especially [1]). If you have any numbers or quotes that contradict these then by all means provide them.
It's not manufactured. They are making promises that have a net present value of X dollars. That's a real cost they are incurring and it has to go on their profit/loss statement.
>Up until 2006, the USPS funded those obligations on a pay-as-you-go-basis,
No company is allowed to do that. All companies are required to fully fund their pensions:
>The funding requirement under PPA is simply that a plan must stay fully funded (that is, its assets must equal or exceed its liabilities). If a plan is fully funded, the minimum required contribution is the cost of benefits earned during the year. If a plan is not fully funded, the contribution also includes the amount necessary to amortize over seven years the difference between its liabilities and its assets. Stricter rules apply to severely underfunded plans (called "at-risk status").
> But it probably would've spent at least part of the last decade making comfortable profits.
You have to keep cash flow and profit clear. The prefunding requirement does not change their profitability. It changes their cash flow.
> If the prepayments required under PAEA were never enacted into law, the USPS would not have a net deficiency of nearly $20 billion, but instead be in the black by at least $1.5 billion.
Again, not in the black. They would have $20 billion dollars more in the bank but they would not be profitable. Simply put, they'd have a larger pile of cash to burn before the day of reckoning came.
An analogy would be someone jumping off a very tall bridge. They're dead the moment the feet leave the bridge. Saying that they would survive longer if they jumped off the top of the bridge is technically true but doesn't appreciably change anything. They're still dead. It will just take a bit longer and the splat at the bottom will be more impressive.
Replying to myself to correct my comment: the pension benefits funding appears to be in general - and differently from what I stated - not much different to the private sector.
The change introduced by the 2006 PAEA impacts however the funding of health care benefits of retirees, which have to be funded at 100%. This is not required of private sector companies.
Additionally, to build up this future retiree health benefits fund, a very front loaded schedule of about $5.7B yearly between 2006 and 2016 was chosen. In fact, the USPS was not able to fulfill this schedule and defaulted on multiple payments.
That's not what is required. Here is the text of the law:
> In this subsection, the term `Postal surplus or
supplemental liability' means the estimated difference, as determined by
the Office, between--
``(A) the actuarial present value of all future benefits
payable from the Fund under this subchapter to current or former
employees of the United States Postal Service and attributable
to civilian employment with the United States Postal Service;
and
They have to fund the benefits that employees have earned. Not all of the pension cost that will be accrued over the next 50 years. That requirement is the exact same as private sector pension plans.
I'm with the other poster. You don't seem to be reading (or even acknowledging) the provided sources.
>That requirement is the exact same as private sector pension plans.
This is where you are confused. The bill has to do with pre-funding of health (and similar) benefits and not pensions.
Which brings us back to your original claim:
>This is a common talking point, but is factually incorrect. (1) The USPS hasn't made any of those payments since 2013. Their current financial woes aren't caused by the requirement since their not making the payments. (2) Pensions are required to be fully funded. In practice that's a bit more theoretical than actual, but the USPS isn't being treated any different.
Point (2) is incorrect since we aren't talking about pensions. Point (1) is incorrect as per the numerous sources I provided already (including a direct quote from the Postmaster General). But here's one more:
>the 2006 law requiring the pre-funding of health benefits for future retirees — not pensions — has put a financial strain on the Postal Service and hurt its ability to turn a profit in some recent years.
>The bill has to do with pre-funding of health (and similar) benefits and not pensions.
The law did a lot including:
Postal Civil Service Retirement and Health Benefits Funding Amendments of 2006 - (Sec. 802) Relieves the Postal Service of an obligation to contribute matching amounts to its employees' civil service retirement. Provides for a mechanism and an amortization schedule regarding the handling of any surplus or supplemental liability of the Postal Service regarding the Civil Service Retirement and Disability Fund. Transfers from the Postal Service to the Treasury certain retirement obligations related to military service of former Postal Service employees. Makes Office of Personnel Management (OPM) determinations on surplus or supplemental liability subject to PRC review if the Postal Service so requests
>the 2006 law requiring the pre-funding of health benefits for future retirees — not pensions — has put a financial strain on the Postal Service and hurt its ability to turn a profit in some recent years.
Sigh, and we're back to the same confusion. Pre-funding has ZERO impact on profit. If you incur a cost today it goes on your balance sheet. The fact that the actual cash doesn't leave the company for 30 years doesn't change that.
You've just moved the goal posts. Your assertion was "Their current financial woes aren't caused by the requirement since their not making the payments."
Even though you've moved the goal posts, you're still wrong. Do you agree that having $0 available for infrastructure improvements, technology upgrades, delivery fleets, and R&D to improve efficiency for the past 14 years has had zero impact on current profit?
Really? Be honest.
Imagine if UPS had not upgraded (other than the basics) their hardware, software, and massive delivery fleet in a decade and a half. That amount of time is an absolute eternity in the areas of automation, transport and computing. Can you imagine where UPS would be right now in relation to FedEx has it stopped investing in itself since before the iPhone was invented?
Since you missed it. Once again, here's the relevant Postmaster General quote:
> "The Postal Service's $15 billion debt is a direct result of the mandate, this requirement has deprived the Postal Service of the opportunity to invest in capital projects and research and development."
Look, you've been arguing this entire time that the issue was pensions when it wasn't. And that it was the same rules for everybody (it wasn't). The other half of your argument was that the current financial position of the USPS is unrelated to the 2006 act. Provably wrong.
But since that original argument is falling apart you've changed your position to "the USPS is currently unprofitable". Well, obviously.
You're clearly not debating in good faith so I'm done here. Good day to you.
“
If the costs of this retiree health care mandate were removed from the USPS financial statements, the Post Office would have reported operating profits in each of the last six years.”
…
“ Allowing USPS once again to pay the costs of retiree health care costs on a pay-as-you-go basis as the rest of the federal government and two-thirds of private industry currently do, is the biggest step that could be taken to assure long-term financial sustainability”
…
“ Restricting USPS retirement assets to investment in special Treasury bonds has negatively impacted returns, relative to corporate pension funds, and therefore required USPS to set aside larger sums of money to meet its financial obligations to retirees.”
USPS is actually an extremely effective lightweight parcel courier. Their rates aren't great for big, heavy stuff, but for typical ecommerce volume their rates are very competitive. They're also the only major courier who is anywhere close to maintaining their pre-covid delivery times. Outbound UPS delivery times from my area, for example, have more than doubled since March (from avg 5 bus days, to two weeks), while USPS volume is maybe a day slower on average. (avg 2.5 days up to avg 3.5)
> That basic problem is why it has refused to modernize. Anything with any significant value is already sent via Amazon, FedEx, DHL or UPS, or hand-delivered (in the case of really valuable stuff).
Hundreds of millions of people use first class mail to pay their bills, rent, etc. and for all sorts of other things where those other delivery services would be needlessly expensive. The "basic problem" is that the post office is not permitted to set prices for first class mail or vary them where they lose money with every delivery, and yet they're expected by some to be run profitably "like a business."
> The USPS has to be reformed and it needs a new purpose in life, other then stable government job for people.
Because what the country really needs right now is a greater number of unstable jobs.
No, but the person I was responding to might have been implying that.
I think it's a "stable" job, although the retirement benefits and so on that a USPS letter carrier gets, for example, are not what they once were, and the post office also relies more on "non-career employees" than they used to.
On the other hand, privatized delivery poses the same problem as private control of the internet in the absence of net neutrality. If there was no USPS to compete with, what's the stop Amazon and other major retailers from coming to agreements with delivery companies to charge higher fees for "non-partner" deliveries.
Which really doesn't seem to have helped the market capture by massive companies...with enough money behind it, it's unlikely the new private post company would be regulated.
I agree with what I think your point is, that having mail for all is a requirement of a civilization. (Sorry if this was not your point.) However, elections alone are obviously not enough to sustain a mail operation.
[Edit: I had a double-not, hopefully everyone understood my meaning before.]
How much would it cost to operate the USPS without bulk mail, i.e., with next to no revenue? I'm not even necessarily against it, but it has to be astronomical.
The question is why can’t we? Why can’t the USG print and mail out ballots using these services? I don’t think they are fundamentally less secure, and if they are than we can just have them add on the capability of doing secure delivery.
So we let private companies have the most profitable routes, our USPS serves to either deliver spam to the suburbs or perform expensive rural deliveries?
I feel like something here needs to change. I’m not really advocating for getting rid of USPS, but if the only leg it’s standing on is delivering to rural areas, I feel like we need to take a look at different options.
Who is going to deliver to the unprofitable rural area?
It certainly isn't The Market(tm), because the for profit companies have explicitly rejected it. Or are rural people supposed to just suck it up, and lose a constitutionally mandated service for ideological reasons?
Is there a middle ground? I'm sympathetic to this, but at the same time I'm also sympathetic to not having a USPS in order to deliver only with unprofitable routes and to deliver spam mail.
Nothing. It’s a manufactured problem by people wanting a lucrative government contract. The very premise is absurd. No one complains that the fire department doesn’t turn a profit. Doing things that the private sector won’t has always been a core function of government.
I'm not saying it should be replaced with a government contract - just like, don't do it anymore. If you need to send something via the mail you just do it like you would send a package.
I really have a hard time justifying paying for the USPS when 90% of my mail is junk mail that I don't want. the other 10% I can probably live with not getting. I understand your point about the fire department, but I find value in that so I don't care if it turns a profit - but if I'm not getting value from the USPS and the argument is that someone who chooses to live 50 miles from the nearest town isn't able to get mail... it just isn't compelling to me.
I think I'm questioning the need for that. Right now it certainly does't actually deliver to everyone's house. If you're too remote they make you pick up at a USPS location or somewhere else.
Presumably the states, striking up deals with preferred carriers; a good number of states already do something like this to prepay postage for USPS ballots.
You have hit on the EXACT reason that the USPS is so critical. There are huge areas of the US which are not serviced by other private delivery services. And even in areas where those services do reach, I imagine the cost is extremely high.
People in Barrow, Alaska deserve access to mailing services as much as people in NYC. Without that, there is no reliable way to contact everyone in the US for the purpose of the Census, Voting (where mail-in voting is available), Jury Duty notifications, Selective Service, etc.
There are critical government services that still must be run over "snail mail" and to pass that off to a private institution which will not be able to service all areas equally will lead to more inequality.
From that article, it's not clear what USPS is getting the blame for here. Reading between the lines, it sounds like a startup asked them to reroute their customers' mail to them, and USPS said "no we don't do that"?
They ultimately found a way around it but shut down due to lack of sign-ups[1], so it seems like USPS saved themselves some time.
Any time I read something like this, the safe assumption is that this is how they’re telling their investors that the problem wasn’t a couple of recent business school grads trying to get rich quick parachuting into a business they don’t understand:
“[we] knew that the USPS would not be able to work out its own problems, so perhaps naively, we hoped to partner with USPS to provide an alternative to the physical delivery of postal mail to a subset of users, hoping this would spur further innovation and cost savings.”
> That basic problem is why it has refused to modernize.
Probably because as a chartered non-government company they have a politically appointed Postmaster General who takes their orders from the POTUS. No company is required to fund pensions for 75 years. No company has their prices set by Congress. And no company has been a bigger political football than the USPS.
> it needs a new purpose in life, other then stable government job for people.
I believe they have tried in the past, oh what's that, blocked because Postmaster General doesn't want it.
There is huge value to the USPS, but it should be publicly funded (to whatever extent necessary) and should have serving the public as its mission, and should not be treated as a business.
Next you’ll ask for roads, schools, public transit, and the military to turn a profit! Public goods need not be revenue neutral, although efficiency efforts are palatable. The “profit” is the utility value it provides.
I actually tend to agree with you about the USPS. The thing is, it seems like a lot more could be done by the USPS. An obvious example would be postal banking, where they could serve as a bank that would provide services to all, especially those who struggle to get accounts at commercial banks. I've also heard perhaps wilder ideas—for example, what if they got into other logistics-heavy spaces like food delivery? In Finland, they apparently piloting a program to mow people's lawns.
At a subsidy of 10 cents per envelope shipped, the US government is funding a $7.5 Billion / year worth of marketing operations for private companies and scammers of all sorts.
Also, according to those stats less than 10% of the mail throughput is used for the benefit of the citizens. Where you informed on this before engaging?
See:
https://www.insidesources.com/outbox-vs-usps-how-the-post-of...
The USPS has to be reformed and it needs a new purpose in life, other then stable government job for people. There needs to be significant value that others cannot meet. The reformation that is needed is being blocked.
For example, how about allowing me to pay $5 a month to not have you deliver crap into my inbox? Or to fully digitize the process, so I don't have a recycle bin full of crappy products, alumni magazines, and pizza coupons that I don't need or want.
Oh. And stop selling my data to third parties as well. Looking at you NCOA database.