The United States Postal Service has been in trouble for nearly as long as many of us can remember. Various plans have been proposed to keep the agency in the black, but requirements to fund in advance the massive retirement benefits the USPS gives its retiring workers have consistently overwhelmed the amount of revenue they can generate. Last month, Congress finally passed the 2021 Postal Reform Act which offered a number of avenues for them to reduce costs while opening the door to new revenue streams. Joe Biden signed the bill this week and the Post Office immediately announced a significant increase in postal rates. This has some critics crying foul, but if it puts this perennial problem behind us once and for all it should be worth it. (Government Executive)
The U.S. Postal Service is once again seeking to raise its rates by historically unusual amounts, announcing the increases on the same day President Biden signed into law a bipartisan bill to erase much of the agency’s debts and allow it to pursue new lines of revenue.
The Senate approved the 2021 Postal Reform Act last month, but it took several weeks to get the measure to the White House for the president’s signature. The measure will require most postal workers to enroll in USPS-specific health care plans, shift most retirees to Medicare, take onerous payments toward health care benefits for future retirees off the agency’s balance sheets, allow USPS to provide some non-postal services and create new oversight and transparency requirements. Some stakeholders had hoped the financial relief from the bill would allow USPS to take a less aggressive approach to pricing, but postal management declined to do so.
“The requirement of that law stretched the Postal Service’s finances almost to the breaking point,” Biden said at a White House signing ceremony on Wednesday.
Thanks to reforms enacted last year, the Postal Service was able to erase a number of its outstanding debts by the end of 2021. This led some of the officials complaining the most loudly about these rate hikes to suggest smaller increases would be considered. But Postmaster General Louis DeJoy isn’t looking for a temporary fix that could send the USPS back into the red next year. He was tasked with finding a long-term solution, and this is part of it. The Service now anticipates having a positive revenue stream through at least 2031.
And how big are the rate increases we’re talking about here? First-class stamps will go from 58 cents to 60 cents. Package delivery fees will rise 8.5 percent. We’ve been over this here before but it bears repeating. In an era where the vast majority of our communications are done via email and text messaging, and many bills are paid online, the number of physical, pen and paper letters most people send in a given month has plummeted from the pre-internet era. No matter how tight your budget may be, stamps are generally not on the list of most people’s spending worries.
And what do we get for the price of those stamps? A human being gets in a vehicle and drives directly to your home to pick up an envelope you have left outside. They take that envelope back to a central processing hub and route it to its final destination anywhere in the country using additional vehicles and airplanes when required. Upon reaching the destination office, another human being takes your envelope and brings it directly to the door of the individual or business you sent it to.
And they do all of that for sixty cents. That’s simply insane. If you had to hire some sort of delivery person to take an envelope from Alabama to Utah in a few days’ time you would be paying thousands of dollars. With all of that in mind, I find it rather difficult to become overly outraged over paying two cents more for a stamp.
In an ideal world, we would have solved this problem by scaling back the USPS retirement plan to something similar to what most workers in the private sector receive. But they are too powerful to force any sort of reasonable negotiations on them and members of Congress are too frightened of their union to enact any tough reforms. So this was the solution we were stuck with. But if we can stop hearing about the Post Office going bankrupt every year from now on, perhaps we should just chalk this up as a win.