The Economic Standard: USPS Need Changes as Fiscal Chaos Deepens

On November 10th, the U.S. Postal Service Board of Governors revealed that the United States Postal Service (USPS) lost $4.9 billion in 2021. This most recent financial statement solidifies the 15th consecutive year the postal service has suffered a year-end loss of more than a billion dollars.

This is a major problem and should be a concern for consumers nationwide. Americans should trust that the USPS can be sustainable long-term ⎼ without government bailouts or diminishing universal service. The USPS’s long-term unfunded liabilities have accumulated for some time, now hovering around $188.4 billion in the red.

To reach this point of fiscal decay, the data make clear that USPS business model has lost focus of its primary mission to deliver mail. Instead, in the absence of clear regulatory guardrails, USPS has leveraged the privileges and subsidies from their universal mail service to misallocate its resources to compete in the parcel market.

A recent analysis, coauthored by Dr. Robert Shapiro of Sonecon, LLC, illuminates how the USPS has put delivering mail on the backburner while prioritizing unregulated parcel products, which are more costly to deliver – all while shifting these added costs to its monopoly First-Class mail. In essence, the Postal Service uses the resources at its disposal to compete against private parcel delivery companies and to grow their market share, regardless of the time and monetary cost to universal mail service. This approach is reprehensible, and the governing bodies of the Postal Service should be held accountable.

It is worth noting that The Postal Service Reform Act of 2021 also remains under consideration by Congress. However, this legislation is woefully insufficient to provide the degree of accountability and transparency needed to manage this government enterprise properly. As a public service, honesty is crucial and necessary.

USPS has been allowed to hide behind its monopoly privilege and to receive government bailouts for too long. Having a public enterprise competing against private companies with the government’s support and funding also damages the market by reducing market incentives to invest and innovate.

The Postal Service’s forays into competitive markets have resulted in dire consequences for its largest share of customers. Among these consequences are mail delivery service cuts, service slow-downs, and increased prices. Despite cutting corners on operations, USPS’ FY2021 financials demonstrate that it remains unable to keep up with rising systemwide costs. Its current business model is not sustainable.

Under the “Delivering for America” plan, a First-Class letter may take up to five days to arrive instead of the previous two or three days. Add to that the simple fact that mail is getting more costly for consumers by rising faster than the inflation rate. To be clear, mail delivery will be slower than it was in the 1970’s. Why should American consumers and regulators accept that?

The public deserves to know what their money is funding and how USPS is using its resources. The USPS needs to be more transparent. It is time to open the books to the public.

The was published in The Economic Standard.

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