The latest news on the U.S. Postal Service is not happy news. In the most recent quarter, the USPS saw its losses increase to $3.5 billion. The problem is that revenues continue to decline, as mail volume continues to drop dramatically — yet expenses have increased. The revenue decline is a natural consequence of the continuing movement away from physical to electronic mail. The volume of snail mail has dropped 20% in the last three years, and nearly 2% in the past quarter alone.
Another problem is the fact that Congress passed a law in 2006 requiring the USPS to pay about $5.5 billion into its employee benefits fund every year. The Post Office’s CFO is now arguing that it will not be able to pay these funds this coming year and still cover its costs.
Even after cost-cutting — including reducing work hours by the equivalent of 36,000 full-time workers — the company has lost $5.4 billion so far this year. It has estimated that it will lose about $238 billion over the next decade if it isn’t allowed to change its “business model” by doing such things as cutting Saturday deliveries and exploring “new products.”
Not mentioned is the possibility that the USPS could be privatized, given carte blanche to do as it sees fit, so long as it allowed other companies to deliver first-class mail as well.
