THE UNITED STATES POSTAL SERVICE CRISIS
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THE UNITED STATES POSTAL
SERVICE CRISIS
By Sharon Tang
INTRODUCTION
The United States Postal Service (USPS) is one of the most critical
parts of the US infrastructure and is known as a public service,
The United States providing mailing services to American citizens. It employs more
Postal Service than half a million citizens and had a yearly mail volume of 128.9
employs more than billion in 2021 (“A Decade”, 2022). USPS is one of the most popular
half a million US governmental agencies, with 91% of Americans having a
favorable view (Panetta, 2020).
Americans and has Being a government-owned agency, USPS delivers mail and
a yearly mail packages to every corner of the nation, including more rural locations
volume of 128.9 where it would not be profitable for private companies like FedEx or
billion in 2021 UPS to deliver. USPS is also crucial for small businesses to send out
packages, as their postage rates are more affordable than other
mailing services. In addition, USPS was critical for the 2020 election
through mail-in ballots and has been the primary method of
distributing COVID-19 tests across the country (Rosenberg, 2022).
EXPLANATION OF THE ISSUE
Historical Development
It is impossible to understand contemporary developments in the
United States Postal Service without being aware of its extensive
A USPS driver
history. USPS started with Benjamin Franklin, nominated as the first
delivering mail
Postmaster General over 250 years ago in 1775 (“Postal”). Later,
packages
Shutterstock
after the US expanded to reach both coasts, USPS famously delivered
letters through the Pony Express (Gallagher, 2020). Mail carriers
would travel by horseback, delivering mail from Missouri, the end of
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the railroads, to California in just ten days (Gallagher, 2020). The
year 1896 marked the beginning of rural free delivery and a
Postmaster commitment to mailing letters to all Americans (“History of”).
General –the Because of this change, rural Americans no longer needed to travel
head of a country’s to a post office to pick up mail. Instead, they could have their mail
postal service. The US’ delivered to them. Throughout the 1900s, the Postal Service
current Postmaster performed well and profited, delivering packages and becoming
General Louis DeJoy more efficient with new developments, such as the ZIP code.
However, in 2006, Congress passed the Postal Enhancement
and Accountability Act (PAEA). This act was passed to ensure the
Postal Services’ future employees were set up financially (Bogage,
2020). The action required USPS to pre-fund their employee’s health
and retirement benefits up to 75 years into the future. This was too
difficult for USPS to keep up with, as they were not generating
enough revenue to cover these benefits. USPS began to default on the
payments, pushing them back to future years and racking up debt
Postal (Bogage, 2020). To make matters worse, the Postal Enhancement
Enhancement and and Accountability Act costs were worsened with the 2008
Accountability Act Recession, when mail volume fell rapidly. Since 2006, USPS has
– United States racked up over $160 billion in debt, with $119.3 billion of that coming
federal statute on the from these pre-funding payments as a result of PAEA (Bogage,
United States Postal 2020).
Service which Along with these payments creating problems for USPS, the
required them to pre- modernization of technology has impacted profit margins for the
fund employee health government agency. USPS makes most of its revenue from first-class
and retirement and marketing mail, as the delicate nature of letters makes it possible
benefits to carry thousands in a single trip (Bogage, 2020). However, the
modernization of technology and texting services has drastically
decreased mail volume. People began to prefer sending emails and
short messages over sending letters and postcards.
The rise of technology came with the introduction of eCommerce
and the need for shipping packages. Although the increase in package
delivery has helped offset the losses in mail, it is not nearly as
profitable. A mail carrier can transport far fewer packages than
letters in a day.
Since 2007, USPS has been in a deficit, making fewer profits than
USPS recorded expenditures, directly correlated to the passing of PAEA and the rise
$4.9 billion in of technology. It recorded $4.9 billion in losses in 2021, an
improvement from a $9.2 billion loss in 2020 (Shepardson, 2021).
losses in 2021, an
Because of these losses, USPS has been forced to cut down on
improvement from infrastructure and workforce improvements, primarily relying on
the 2020s $9.2 part-time and temporary workers (Spross, 2020).
billion loss
Scope of the Problem
The situation of the USPS today presents a variety of multi-
faceted, complex problems. Below, the issues are grouped into a few
primary categories, although they are inherently interlinked: lack of
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funding, competition with other mailing services, and worker
shortage.
Lack of Funding
USPS would run USPS is currently in a funding crisis, exasperated by the factors
out of funds previously mentioned. Even though total revenue throughout the
without a pandemic increased by over $2 billion, expenditures outpaced
revenues by a factor of 1.15 to 1 (Andrzejewski, 2020). Throughout
significant
the pandemic, package delivery increased by 18.8%, but this method
overhaul in less has been unsustainable for the long-term success of USPS due to high
than five years shipping costs.
Over the pandemic, USPS has relied on governmental donations,
such as the CARES Act, to stay afloat. In 2020, a bailout from the
US government became the only way the agency would be able to pay
its employees’ salaries on time (García-Hodges, 2020).
However, assistance from Congress is only a short-term solution.
There are many systemic issues with the USPS business model.
Congress does not allow USPS to close underused post offices and
facilities, and prohibits them from raising prices beyond the rate of
CARES Act –Known inflation (García-Hodges, 2020). In addition, USPS workers are
as the Coronavirus unionized, which creates pressure for the company to have higher
Aid, Relief, and wages and better benefits than private companies with weak labor
Economic Security unions (García-Hodges, 2020). These factors all amount to large
Act, this is a $2.2 costs and low to negative profit margins. Without a significant
trillion economic overhaul or governmental support, USPS cannot continue to operate
stimulus bill passed sustainably: the service is set to run out of funds in less than five
March 27, 2020, in years (Spross, 2020).
response to the In 2020, former President Donald Trump nominated Louis
economic fallout of DeJoy to try to fix the USPS when the service had just recorded a net
the COVID-19 loss of over $2.2 billion in a single quarter (Eustachewich, 2020).
pandemic DeJoy chose to cut collection boxes and overtime, and implement
mail-sorting machines to make the distribution process more
efficient (Eustachewich, 2020). However, this created massive
backlogs and delays in mail delivery, having significant political,
economic, and health repercussions. The delay caused many
Americans to not receive paychecks or other important papers and
bills on time, inciting fines. In addition, many medications
prescribed by the Veterans Administration are sent by USPS mail.
Some lifesaving medications were supposed to arrive within three to
five days of being mailed but were delayed for multiple weeks
(Bennett, 2020).
Finally, DeJoy was nominated in June 2020, just months before
Delays in shipping the contentious 2020 elections. DeJoy was accused of influencing
at a USPS facility. mail-in voting. Due to the unsafe pandemic conditions, mail-in vote
Save the Post Office was especially important this election, with estimates that upwards
of 80 million Americans would cast their ballots by mail (Love,
2020). Since Democrats were more likely to vote by mail, DeJoy,
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someone nominated by the Republican incumbent, was accused
harshly of trying to mess with election results.
Competition with Other Mailing Services
With the shift from letter delivery to package delivery, USPS’s
most significant competitors have been UPS and FedEx. UPS,
founded in 1907, currently has 46% to 50% of the US delivery market,
while FedEx, created in 1971 consists of 49% of express shipping
(“FedEx”).
Unlike other privately owned mailing services, USPS is bound by
a public service mandate. It must deliver to every address in the
country, no matter how rural, six days a week, even if it is
unprofitable. In addition, for only $0.58, a person can mail a letter
anywhere in the United States (“Mailing”). USPS also has caps on
postal rates; compared to other delivery services like UPS and FedEx,
USPS is a considerably cheaper option, especially for lighter
packages. Three-day express shipping starts at $3.01 with USPS,
compared to $12.35 with UPS and $17.82 with FedEx (Sands, 2021).
Its reliability and affordability make USPS the most popular option
for smaller business shipping.
USPS’ commitment to public service and accessibility puts it at a
disadvantage against other delivery services. So, while USPS has not
made a profit since 2007, UPS has made a net income of $2 billion
and FedEx has a net income of $3 billion (“FedEx”, n.d.). However,
USPS has made higher revenues than both companies, boasting
around $70 billion, while UPS and FedEx are $53 billion and $42
billion, respectively.
With other companies cutting into USPS’ potential profits, in
addition to the use of first-class mail plummeting, USPS is put into a
Competition problematic financial situation.
between FedEx, Shortage of Workers
UPS, and USPS for
package delivery During the COVID-19 pandemic, USPS suffered from a lack of
Wikimedia workers due to the fear of contracting COVID-19 and massive budget
cuts. Due to its high volume of routes, the remaining workers were
understaffed and overworked. To make matters worse, there was a
37% spike in package delivery during this nationwide labor shortage.
This created a massive slowdown in package delivery, causing
thousands of Americans to receive holiday packages weeks late (Katz,
2021).
Acting Executive Postmaster of Chicago Eddie Morgan, Jr. stated
that as late as August 2021, an “average of 100 to 200 full or partial
routes in the Chicago areas were not getting daily delivery”
(Heckman, 2021). This is because of two main reasons. First, USPS
typically trains new hires in four days, and new hires are not
adequately prepared for the job (Heckman, 2021). The result of
under-prepared hires is low retention, with many new hires quitting
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the job. Also, this staffing shortage forced more tenured employees
to take on multiple assignments and subsequently burn out
(Heckman, 2021). Packages were sitting for upwards of 19 days in
facilities in Chicago without being delivered (Heckman, 2021).
Since then, USPS has improved at having enough employees to
keep up with increased demand. However, it still has over 1000
vacancies in its trucking workforce, partially due to the national
shortage of workers (Katz, 2021). As stated by the United States
Chamber of Commerce, in 2021, “more than 47 million workers quit
their jobs, many of whom were in search of an improved work-life
balance and flexibility, increased compensation, and a strong
company culture” (Ferguson, 2022). This is known as the “Great
Resignation.” Because of the rise of remote work, lower-wage jobs
that require in-person attendance, such as being a mailman, have
become unpopular.
Congressional Action
The crux of USPS’s problems was the passage of the Postal
Enhancement and Accountability Act. As stated previously, the act,
created in 2006, required USPS to pre-fund their employee’s health
and retirement benefits up to 75 years into the future. This cost
billions annually and kept USPS in a steady deficit for the next 13
years (Spross, 2020).
Congress quickly realized the impacts of the PAEA and passed a
few bills that attempted to remedy its effects. The USPS Fairness Act
tried to bring the postal service back on track in 2020. This bill was
passed in House 309-to-106. All 232 Democratic representatives and
87 Republicans voted for the account (Spross, 2020). One of the
provisions of this bill was that it would have struck down the PAEA.
However, this bill was never passed in the Senate.
The 117th Congress passed HR 3076, the Postal Service
Reform Act of 2022. Sponsored by Rep. Maloney, Carolyn B. (D-
NY), this law repealed the requirement that the USPS annually
prepay future retirement health benefits (Maloney, 2021). It instead
Postal Service
proposed a Postal Service Health Benefits Program where employees
Reform Act of 2022
are connected with health carriers for benefits (Maloney, 2021). The
– this law repealed
bill also states that USPS may enter into agreements with agencies
the requirement that
“to provide certain non-postal products and services that reasonably
the USPS annually
contribute to the costs of the USPS and meet other specified criteria,”
prepay future
(Maloney, 2021).
retirement health
benefits Other Policy Action
Former President Trump passed an executive order on
“Encouraging Buy American Policies for The United States Postal
Service” on January 14, 2021 (“Executive”, 2021). This executive
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order further encourages the USPS to use American products in its
supply lines.
IDEOLOGICAL VIEWPOINTS
Conservative View
Former President Trump has recently been vocal against the
United States Postal Service. President Trump tried to block a $25
billion stimulus package to USPS before the 2020 election, stating
that “[Democrats] need that money to have the post office work so it
can take all of these millions and millions of ballots. But if they don’t
get those two items, you can’t have universal mail-in voting because
they’re not equipped to have it,” (Ray, 2020).
In this case, however, President Trump is an anomaly in the more
conservative viewpoint. Conservatives generally support USPS,
although they may be more likely to favor solutions that reduce its
size and influence. Some conservatives believe that the best way to
solve the USPS crisis is to allow it to privatize. However, others
disagree, such as Rep. Glenn Grothman (R-WI), stating “that the
Founding Fathers explicitly empowered Congress to establish post
offices and post roads,” (Shaw, 2020). Post offices double as meeting
spots and hubs of life, especially in smaller, more rural communities.
Liberal View
Liberals, on the other hand, are likely to favor solutions that
increase aid for USPS. Liberal policy focuses more on the social
implications of USPS, such as ensuring all Americans have speedy
postal service no matter the cost and guaranteeing mail-in voting
gets processed.
Prior to the 2020 election, the liberal members of Congress
pushed for more protections on the postal service. This was partially
in response to President Trump’s accusations of mail in voting fraud,
but also to ensure that all Americans were able to vote in the election
without a fear of contracting COVID-19 at an in-person polling site.
USPS is an agency
that typically
received no AREAS OF DEBATE
funding from the
United States Increase Congressional Funding
government. The USPS is an agency that typically receives no funding from the
US government. It instead funds its operations through the money it
makes from customer purchases (Powell, 2020). However, as
discussed earlier, the COVID-19 pandemic, increased package
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demand, and decreases in mail volume have made it difficult for
USPS to break even.
Throughout the pandemic years, Congress has given donations to
USPS to keep the agency running and paying for their employees.
These include the CARES Act, where Congress provided a $10 billion
emergency stimulus (Powell, 2020). USPS also received $50 billion
in financial aid in 2022 to stabilize the agency (Reuters, 2022).
Whether the government should continue to aid USPS for years
to come is an open question, especially if the current aid is
insufficient to keep the agency afloat. The current federal budget is
already tight, and many critics believe any extra spending should be
reduced. Others believe that the social benefit that USPS will bring
through its operations will be worth it.
Political Perspectives on this Solution
Conservatives are against increasing funding, as they believe it
would be an unnecessary financial burden that the federal
government will have to uphold. In addition, conservatives believe
that by funding USPS, the government is inherently politicizing an
USPS is one of the agency that should remain impartial.
most popular US On the other hand, liberals believe the agency will become more
governmental effective by funding it further. Additionally, liberals believe that any
agencies, with 91% money that the government gives to USPS will be returned through
social benefits to the average American citizen. Without the
of Americans
donations, the USPS would not be able to function, and important
having a favorable mail—like ballots and paychecks—would not be delivered on time.
view
Raising Prices
Postmaster General Dejoy’s plan to restructure USPS in 2021
proposed “longer delivery times for some first-class mail, shorter
hours for some post offices and more expensive postal rates,”
(Naylor, 2021). This would be achieved over ten years and hopefully
set the agency up for long-term success. However, doing so would
make some parts of USPS less efficient for its customers.
Dejoy has encouraged raising the stamp price from 58 cents to 60
cents, and potentially higher in the future (Heckman, 2021).
Although marginal, Dejoy has been vocal about raising the stamp
price higher than the inflation rate, which worries customers
(Heckman, 2021). In doing so, Dejoy estimates that USPS will make
$44 billion more, but this will also cause many not to be able to afford
Postmaster General the service as time goes on. Since USPS is supposed to be a public
Dejoy, leader of service that all Americans can enjoy, this raised many complaints.
USPS. Especially with the shift away from first-class mail towards
Wikimedia package delivery, USPS will need to raise the prices to keep up with
their competitors (Heckman, 2021). In doing so, USPS can be more
likely to remain a sustainable sector of the economy rather than
relying on government bailouts.
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Political Perspectives on this Solution
In general, conservatives are in support of Dejoy’s plan, as they
believe it would help USPS become more financially stable. The plan
is backed by many leading Republicans, especially former President
Donald Trump.
On the other hand, liberals are more skeptical and are worried
about the repercussions this will have on customer satisfaction. In
the past, USPS has kept the cost of mailing a letter the same as
inflation to make it affordable for all Americans. Raising prices may
USPS tries to make it more difficult for some to afford something as simple as
deliver 96% of all mailing a letter.
first-class mail
Limiting the Scope of USPS
within three days.
Another solution Dejoy has proposed is to loosen USPS mail
delivery standards. Currently, USPS tries to deliver 96% of all first-
class mail within three days. Under this new method, this would fall
to 70%, with 20% of all correspondence not arriving until five days
(Naylor, 2021). Doing this will lessen the burden on burnt-out
employees but make it worse for customers who expect their
packages to be delivered in a timely manner. This solution also
makes it more difficult for USPS to compete with other mailing
services, like UPS or FedEx, as they guarantee packages to be
delivered at a faster pace.
Finally, Dejoy has pushed to limit hours or close less busy post
offices and distribution facilities (Naylor, 2021). Dejoy has claimed
this will only be “a small percentage.” Still, people are concerned that
this action will disproportionately impact disadvantaged people as
many less busy post offices are in rural, hard-to-reach areas. This will
Worker burnout is a also make voting more difficult for those that live in these districts,
major concern of as they rely on access to mail-in voting to vote in elections.
USPS.
Res Media Political Perspectives on this Solution
Conservatives support this position because many believe that
USPS is not profitable as it currently stands and must change its
practices. Even if some services may be slightly limited, the overall
efficiency of the organization will improve greatly.
On the other hand, liberals generally disagree with limiting the
scope of USPS, as it has typically guaranteed fast and secure services
to all customers which will be reduced under this new model.
Liberals are also concerned with closing or reducing post office hours
to restrict mail-in voting.
Privatize USPS
A more controversial solution to helping solve the USPS crisis is
privatizing a part or all of it. Some small government fans and
libertarians believe that by downsizing the government, the overall
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government will be more efficient. Also, since governmental
limitations will no longer bind and limit the United States Postal
Service, USPS will become more profitable in the long run.
Limiting the number of restrictions USPS has and allowing it to
restructure as a company will lessen the financial struggles of the
institution. However, without these regulations, the institution will
no longer be as catered to the interests of the American people but
rather be structured the same as most corporations: to make profit.
Political Perspectives on this Solution
Conservatives support this position because many believe in
decreasing the federal government’s role in non-essential categories.
Although conservatives appreciate USPS as an American symbol,
privatizing the industry can help limit the severity of USPS issues
later. However, some conservatives believe that the benefit of USPS
is its reach to all American citizens and are concerned that by
privatizing the organization, the reach will become limited.
Liberals are against this position. Many leading liberal politicians
have been extremely vocal on maintaining USPS as is.
BUDGETARY CONSIDERATIONS
Consider how your policy solutions might impact the budget
more broadly when creating proposals. The answers for saving the
Postal Service may seem straightforward, but with the tightening of
the United States budget, public services usually are the first to get
pushed out of the debate.
In addition, USPS has not historically been funded by the federal
government. Although many proposals to better USPS aim to
The United States increase happiness, health, and wellbeing, these factors are hard to
Postal Service is quantify. Other recommendations include funding infrastructure
the only US improvements and increasing employee wages, which are associated
industry that with significant expenses.
appears in every
neighborhood and CONCLUSION
is a vital aspect of
all Americans’ The United States Postal Service is the only US industry that
lives. appears in every neighborhood and is a vital aspect of all Americans’
lives. However, much work needs to be done to ensure that the
agency runs smoothly. In addition, the issue is inherently bipartisan,
so it gives a rare opportunity to work across the aisle and create
robust solutions to benefit all Americans. Do not be afraid to work
and combine ideas with other delegates to produce meaningful and
comprehensive legislation.
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As always, this briefing only encompasses a portion of the issues
the National Park Service faces. Feel free to think outside the box for
solutions to solve this crisis that was not covered in this briefing.
GUIDE TO FURTHER RESEARCH
When researching, delegates should look closely into the different
perspectives of the issue and try to understand the policy reasons
from a macro perspective. I would encourage delegates to keep up to
date with news and consult the congress.gov/NPS website to see
which bills related to USPS and other public service agencies are
being proposed.
Due to unprecedented quarantine circumstances and the 2020
election in the past few years, the dialogue on USPS has become
prevalent in mainstream conversation. In addition, be sure to
research your senator and the state they represent. Senators may
have different stances based on the prevalence of rural areas in a
state. Remember to stick to reliable sources when conducting
research! Good luck.
GLOSSARY
CARES ACT –Known as the Coronavirus Aid, Relief, and
Economic Security Act, this is a $2.2 trillion economic stimulus bill
passed on March 27, 2020, in response to the economic fallout of the
COVID-19 pandemic
HR 3076 – Postal Service Reform Act of 2022– this law
repealed the requirement that the USPS annually prepay future
retiree health benefits
Postal Enhancement and Accountability Act – United
States federal statute on the United States Postal Service required
them to pre-fund employee health and retirement benefits
Postmaster General – the head of a country’s postal service.
The US’ current Postmaster General Louis DeJoy.
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