Don't look now, but the post office just turned a profit

This is something akin to seeing a Pegasus in your horse stable one morning. I’d assumed that this was pretty much never going to happen again, but against all odds the United States Postal Service has recorded a profit. And no.. this is not an article from The Onion. (Government Executive)

The U.S. Postal Service turned a profit in a financial quarter for the first time in five years, though President Obama still proposed the agency slash 12,000 employees in his fiscal 2017 budget.

USPS posted a net income of $307 million in the first quarter of fiscal 2016, the first such gain since the fourth quarter of fiscal 2011. Profits grew $1.1 billion over the same period last year, when the Postal Service lost $754 million. Operating revenue ticked up 3.3 percent to $19.3 billion between Oct. 1 and Dec. 31, 2015, driven largely by a record volume of package delivery.

As noted, the increase is almost entirely due to package delivery. In terms of mail service by private citizens, that’s pretty much a given I suppose. The days when the post was the primary conveyor of intellectual goods (i.e. “letters”) is pretty much over and we shouldn’t expect to see it come back unless an EMP knocks out the grid for a few years. (And even then, stamps will probably be hard to come by.) Bulk mailings and junk mail aren’t all that profitable. But packages can’t be sent in an email – yet – so that’s where the money is in this business.

The USPS isn’t without competition so how did they climb back into the black? Newsweek noted back in November that they were starting to get their head above water but more work remained.

It’s also true that the Postal Service faces challenges; albeit not as often pictured. The major one has nothing to do with the mail and everything to do with congressional politics.

In 2006, a lame-duck Congress mandated that the Postal Service pre-fund retiree health benefits. No other agency or company in the country has to pre-fund for even one year; the Postal Service must pre-fund 75 years’ worth of these benefits in advance. That $5.6 billion annual charge is the “red ink.”

Without this unique and unfair burden, the narrative would be as follows: Here’s a government entity that, with no taxpayer money, and faced with a still soft economy plus the growing reach of the Internet, once again earned a billion dollar-plus operating profit.

It’s our old friend, mandatory, baked in retirement plans and benefits which swamp any profits which the business might take in even if it were run in the most efficient manner possible. Congress could probably step in and ease some of that burden but then they’d be taking on the unions along with a few other headwinds. Does that sound likely to happen in an election year? This brief spasm of profitability is based largely on a somewhat stronger economy, with more people buying and shipping things. All it would take is another even modest downturn in the economy and the USPS would be right back in the red.

This calls for some cool headed thinking, a rational plan and some consensus in Congress on a path toward a solution. In other words: the Post Office is pretty much screwed.

US Post Office