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U.S. Postal Service: Nine reasons why it’s in trouble
The U.S. Postal Service is facing serious financial troubles that could force it to reduce the speed of delivery or shutter rural post offices. Congress failed to address the problem last year and has not gotten closer to a solution so far this year.
Storified by Digital First Media· Mon, Feb 04 2013 10:32:02
The U.S. Postal Service is facing serious financial troubles that could force it to reduce the speed of delivery or shutter rural post offices. Congress failed to address the problem last year and has not gotten closer to a solution so far this year.
Below, major reasons why the Postal Service is in trouble.
The Postal Service is a huge business.
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(AP Photo/Pat Wellenbach)
The Postal Service serves the 3.7 million square miles in the continental United States plus Alaska, Hawaii and numerous territories. Its network of 31,509 retail locations is larger than those for Wal-Mart, McDonald’s and Starbucks combined and it has the second-largest civilian workforce in the country.
But many of its business decisions are made by Congress.
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(AP Photo/J. Scott Applewhite)
Though the Postal Service does not receive any federal money – it runs entirely on its own profits – it must get Congress’ permission to change rates, reduce services or change its operations. It cannot ship beer and wine, like its private competitors, or offer services like local fishing licenses without congressional approval.
A law requiring pre-funding retirement benefits is a major cost.
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Postal employee Chester Reed, 95, is hugged by a co-worker during his retirement celebration in 2010. (AP / Gabriel Luis Acosta)
In 2006, Congress passed a law that requires the Postal Service make annual payments of nearly $5.5 billion for future retirees. The Postal Service say the pre-funding is straining its budget, accounting for 70 percent of its losses last year. Even some supporters of pre-funding say the requirement has made it harder to restructure.
The Internet has also dramatically changed its business.
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(AP Photo/Oscar Hidalgo)
The rise of email and electronic bill-paying has cut the use of first-class mail, while catalogs and magazines have been replaced by websites. The volume of mail handled by the Postal Service dropped 22 percent between 2007 and 2011. On the bright side, more people are getting packages shipped because of e-commerce.
Restrictions on raising stamp prices also hurt revenue.
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(AP Photo/Carlos Osorio)
Under the 2006 law, the Postal Service can’t raise prices on first-class or standard mail by more than the Consumer Price Index, a measure of inflation which doesn’t take into account the actual costs of delivery, such as fuel prices. The Postal Service raised the price of a first-class stamp by one cent in January, but it’s still just 46 cents.
Postage prices are lower in the U.S. than in other countries.
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(AP Photo/Canada Post via The Canadian Press)
A first-class stamp in Canada costs 63 cents. In the United Kingdom it’s the equivalent of 94 cents. Some commentators think raising the price of a first-class stamp in the U.S. could address the Postal Service’s budget problems and that price hikes are inevitable. Others argue that higher stamp prices could hurt business.
The Postal Service has a plan to address its financial problems.
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Postmaster General Patrick Donahoe. (AP Photo/J. Scott Applewhite)
Postmaster General Patrick Donahoe wants to reduce door-to-door service in favor of centralized neighborhood mailboxes, have the Postal Service run its own health care system, get some money back from the pre-funded retirement plan and phase out Saturday mail delivery except for packages.
It could face opposition, however.
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(AP Photo/Orlin Wagner)
Greeting-card company Hallmark has hired a Washington lobbying firm to press Congress to preserve six-day mail delivery. The Postal Service hopes to cut $2.7 billion per year from its budget by dropping Saturday mail delivery. Private competitors UPS and FedEx also spend millions lobbying Congress each year.
And it’s not clear what the new Congress wants to do either.
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U.S. Rep. Darrell Issa, R-Calif. (AP Photo/Harry Hamburg)
The Republican-controlled House and the Democratic Senate couldn’t come to agreement last year on how to fix the Postal Service’s problems. Some observers think that bigger issues like the deficit and immigration could lead lawmakers to punt on the issue and make only small fixes this year.
Here’s an in-depth look at the problems from PBS NewsHour.
How Should U.S. Postal Service’s Financial Problems Be Fixed?pbsnewshour
