Increased Postal Rates Won't Save the Post Office

This past Sunday, the United States Postal Service (USPS) raised their postage rates. This was part of an effort to help the Post Office become self-sufficient, according to Postmaster General Louis DeJoy. Increasing mailing rates, however, is not enough to help the Post Office achieve their goal. 

The 1970 Postal Reorganization Act requires the USPS to be financially independent, but since 2007 the USPS has lost more than $100 billion dollars. As a remedy for the Post Office’s lack of profit for the last 15 years, they have received multiple government bailouts and financial assistance. In fact, just this year, Congress gave the USPS $100 billion of taxpayer assistance through the Postal Service Reform Act to help it recover from financial losses.

There is some reason to believe that the USPS recognizes that its inability to make profit–or at least break even–is an issue that needs to be addressed. In 2021, the USPS released Delivering for America, a 10-year plan aimed at transforming the Post Office into a self-sufficient, high-performing delivery service. The recent price increases are meant to “help with the implementation of the Delivering for America plan,” according to the USPS. While increasing prices can certainly aid in the Post Office efforts to achieve self-sustainability and high-quality services, they must be aware of potential setbacks and other remedies. 

The USPS must recognize that more government money may be counterproductive to their goals. Often, government funds are attached to required reforms. For example, the Postal Service Reform Act carried many new reforms to the Post Office’s operations and services. While the required actions stemming from the Postal Service Reform Act had some positive changes, other initiatives to give the Postal Service money for the sake of reform do not. Recently, Democrats have been hoping to give the USPS $6 billion to replace at least 75 percent of their delivery fleet with electric vehicles. Beyond being costly to taxpayers who shoulder the burden of such an initiative, transforming the delivery fleet could cause service and operations issues. Furthermore, this initiative could take the USPS’ attention away from improving their core services.

Above all, the USPS should reform its most costly operations and shed its most cost-ineffective assets. For example, USPS, with Congressional approval, should stop delivering six days a week to all addresses (an initiative NTU has endorsed in the past). Over the last decade, there has been a significant decline in USPS’ most profitable services, such as first class mail delivery. With less mail to deliver, it is not worth the additional costs to add six-day delivery. In fact, according to the 2018 report of President Trump’s Task Force on the Postal Service, the USPS could save $1.5 billion each year by reducing delivery to five days. In addition to reducing delivery days, the USPS can save money by getting rid of the most underutilized facilities and post offices. There are over 31,000 post offices across the country, yet in 2019, nearly 42 percent of post offices were not making enough money to cover their costs. For a fast and effective process of eliminating post offices, Congress could establish a BRAC-style commission in which independent experts recommend which USPS facilities and post offices should be closed, looking only at each post office’s use and value, not its location.

NTU welcomes measures by the USPS to become self-sufficient and high-performing. Solely increasing prices, however, will not solve the problem and relying on taxpayer money could even make the problem worse.