Despite the CARES Act providing for a loan of $10 billion to USPS to continue operations amidst the covid-19 outbreak, representatives from USPS convey that this may not be enough to alleviate the financial burden that USPS is experiencing, and that in the worst case scenario they may become insolvent by the summer. Before covid-19 the USPS was already operating at a loss, and back in August of 2019 they shared that in their 3rd quarter that they operated at a loss of $2.3 billion: https://about.usps.com/newsroom/national-releases/2019/0809-usps-reports-third-quarter-fiscal-2019-results.htm?mod=article_inline

Throughout this statement, USPS says that “We continue to face imbalances in our business model that must be fixed through legislative and regulatory change". So much of this is because rates have to go through The Postal Regulatory Commission and letter rates are fixed to the cost of postage irrespective of how far away or rural an address is. Additionally, a major financial burden has been the result of the 2006 Postal Accountability and Enhancement Act: https://www.congress.gov/bill/109th-congress/house-bill/6407. This requires "the Postal Service to calculate all of its likely pension costs over the next 75 years, and then sock away enough money between 2007 and 2016 to cover most of them" (https://theweek.com/articles/767184/how-george-bush-broke-post-office). This is something that no other service provider or company has to do. Only 6 years later in 2012, and USPS already started defaulting on this.

Many people have called the PAEA a "poison bill" meant to intentionally burden USPS to the point where it can no longer operate, and so that it has to be sold to private companies who others feel are more cost efficient.

The idea of USPS going under is concerning to many for a variety of reasons, including:

1. Even USPS handles a significant portion of private-company deliveries, with Amazon just last year saying that despite expanding its in-house delivery options, USPS is involved in roughly 1/3 of all Amazon deliveries.
2. The USPS has a mandated universal service order, meaning that it cannot refuse to deliver to an address in the United States even if it is rural to the point of costing more to deliver than USPS would make off the delivery. Private companies have no such obligation, and can refuse delivery service to areas where it is not profitable. This is especially important for rural citizens when it comes to social security checks, medications, and mail ballots.
3. With roughly 1/4 of Americans voting by mail, the potential of USPS going under by July raises concerns about how mail ballots would be handled come November.

On one side you have people arguing that mail, and by proxy USPS, is an essential service and should be bailed out, and that the PAEA should have the clause for retiree health benefits done away with. Others argue that USPS is an inefficient organization and should be sold off to companies such as UPS, FedEx, and Amazon since they could do what USPS does, but better and with greater financial stability.

What are your thoughts, PaRD?

This post was edited by Handcuffs on Apr 5 2020 12:34am

Get rid of PAEA and then they can see where the issues are. Until then, anything they do is a band-aid on a bone sticking out.

"Cover your pension costs" - Reasonable
"You have 10 years to cover your pension costs for the next century" - Unreasonable

There's a reason no private company has to do this, it's stupid.

Part of the problem also involves a lot of the "far out rural locations" having had their Post Offices closed. So where before you'd have the mail delivered to a central location that then delivers to a 30 mile radius, now you have the nearest major city having to break that 30 mile radius which may start 30 miles away from them already into multiple routes. But they insisted these closures were a "good thing".

In many of the most rural locations where there's still a central office, they don't necessarily deliver. It's box/pickup only. There's not a very high cost there.

The thing is, $51,390 is the average annual salary of USPS delivery drivers. The comparable salary of say Amazon delivery drivers is right around $35k. There's higher pay and greater benefits. Yet on the flipside, even in deserts say around Phoenix, the delivery carriers don't even have A/C in their vehicles, so they have a hard time employing people.

Pay is high, equipment is not decent enough to actually justify the pay, and they gutted the system a couple decades ago with assurances that it'd "save costs".

And frankly, the pension status of USPS should be no different of that of any employee of any private corporation. 401K with employer match of up to 6% of their income.

Are there not many private firms in the US that would match 9 or 10%? What about management positions (not director) in a company, like being on $90k

As I'm sure most of you know, Trump has been saying he wants to privatize the post office for a while now. Trump has made no attempt to hide his disdain for Amazon and CEO Jeff Bezos. What I think Trump really wants is to be able to create a new privatized version of the post office, unhinge it from the restrictions that prevent it from behind competitive so it can cut into Amazon's business. That's going to be a painful bridge to cross, but it probably needs to happen eventually. Both my parents have been USPS employees for decades. I've talked to them about the situation on and off over the years.

First issue is this notion of "free rural delivery". We live in a world where everyone has grown up expecting that they be able to put a mailbox at the end of their driveway and that someone will come and put their mail into it for free. This expectation would not fly in a world where the business of delivering a letter was privatized. Right now, it only costs 55 cents to mail a letter from Florida to California. That transaction is done at a loss for the USPS. That's why Amazon/UPS/Fedex won't deliver letters (they only deliver packages).

How is the government going to sell the public on the idea that they are going to have to pay market value for a slip of paper to me sent through the mail? What would the new letter system look like? One consideration in that question is the fact that older Americans use postal services at a higher rate than young people. Younger people are more used to paying bills online and getting direct deposit. There are still so many 60+ people who are used to going to the post office and mailing out their bill payments just like they've done for their whole lives. We've always known that the longer we wait, the less reliance there will be on the USPS for the general public. 25 years from now, the privatization bridge would be less painful to cross.

But maybe we don't have to wait 25 years. Maybe this economic crisis is enough to rip the band-aid off right now. Since this is going to be a big transition for the country in a lot of ways, maybe this is a time when they can get away with letting the post office fold and just make people adjust. The Republicans first stimulus bill didn't have any USPS bailout in it. Then the Democrats countered with a bill that did include the post office. The final bill that passed didn't include them. Reading between the lines, we can conclude that Trump thinks that this is his chance to kill them. After it dies, a lot of people are going to be pissed. The democrats coming out now and saying "let's save it" allows them to appeal to voters by saying "we were trying to save it, you can blame Trump for the fact that it died". It's a clever tactic, but the reality is different. Not only is privatizing the post office the right thing to do, it also happens to be inevitable.

Which brings us to the problematic question: Exactly how do you handle the privatization? How do you account for all the federally mandated functions that the USPS is currently fulfilling? I mean, it's even mentioned in the constitution. And over the years, the government has used it to guarantee essential functions. There's been no clear message about what the new system would look like, all we hear about is how inefficient and unsustainable the current model is.

This post was edited by Kayeto on Apr 5 2020 05:32am

There's a reason no private company has a pension anymore as well.

9% 401k match is pretty rare. The standard match match is probably more around 3-4%, with 6% being a pretty decent one but certainly not unheard of.

What you're asking does not make sense. First: The retirement program for a postal worker guarantees something like $15k/year. On top of that you have a "matching system" but the matching system isn't based on anything real like the stock market. It's a guaranteed increase in the value of the investment. AND it's up to what, a 10% match is it? On top of that, they still qualify for SSI. So there are several issues here:
1. The employee is being paid more than their private market counterpart to start with.
2. They receive a guaranteed lifelong salary when they retire, which their counterparts absolutely do not.
3. The private market 401K plans are all based around the stock market. To the point where you can micromanage what funds or stocks you want it invested in. And if the market tanks when you retire and the value of your 401K is 1/10th of what you invested when your rollover timeline ends? Tough shit. And no, I've not seen a single company that does 9-10% match. Top companies do around 6 or 7%, and that requires that you invest to begin with.
4. The idea that postal workers will receive the equivalent of SSI twice, and on top of it a form of "government run 401k" that does nothing to bolster or stimulate the economy but is guaranteed to gain value, at a much higher top end match rate is insane.
5. Companies are not in direct control over retirement earnings. It's through third party financial firms. And the match is not a requirement. It's an incentive to work for them.
So in effect, what you're talking about is that rather than the government position being that of a "civil servant" that carries certain employment guarantees that are more secure than private market (contract as opposed to right to work, union rather than right to work, etc.) it is instead a scenario where the government is COMPETING for employees, and they're paying more, and giving retirement benefits that NO company gives any longer. "Pensions" that include any form of lifelong salary simply don't exist, at least, not until you get at upper management/CEO level, and even then, it's mostly stock/dividends. Now you can say that Post Office employees are not "government workers" but the retirement packages, health package, and insurance packages are all government level, and are MASSIVE perks over what any private industry workers get. Which is part of the problem. Companies that pay out such unreasonable and unsustainable pay and/or retirement? Go out of business. That's why "pensions" as a general rule, haven't been a thing for a long long time in the private sector.

And I was specific about the criteria. Delivery people. That's not management, that's not anything else. When the average delivery person salary for amazon or ups or other private companies is $35-40K industry-wide, and it's $51K for USPS, and of all of them USPS is the only one losing money, there's a lot of issue there.


@Kayeto you do realize that USPS won't go away. Much of the city-based package delivery, and even a decent percentage of rural package-based delivery from UPS, Amazon, and FedEx is handled through the USPS. There's hundreds of millions worth of contracting there. As it turns out, the delivery infrastructure of the USPS is still quite superior to any other carrier. And part of that has to do with not enough drivers for the fleets, because the private market can't compete with the government for workers, because no matter how rich you think they are, it'd amount to an extra half a billion a year for one little job type to even match the payscale difference, and with retirement benefits, it's to the tune of several billion per year averaged over the next 50 years. It's unsustainable. So as it stands right now, the private carriers can't sustain their own business models without the help of USPS because USPS is overpaying their drivers. On the flipside, none of the USPS employees can have their retirement packages simply taken away, because they're under federal contracts, and if the USPS is simply "axed" it's the government in violation of their contract, and they still have to pay out.

Do the difficulties become clear?

Edit:


This is not entirely true. The USPS does NOT have to deliver to all locations. As I referred to before, some post office locations simply don't deliver. It's all box-based. However, they ARE required to give a free box per address to each of the addresses where they fail to deliver. So rather than the $45 per 3 months or whatever it is to rent a box, the box acts as your address, but it's up to you to pick the mail up at the post office.

This post was edited by InsaneBobb on Apr 5 2020 07:27am

Interesting. Guessing 401k is like a tax deductible pension account. A lot of good companies here will match anywhere between 8-12%. Even ones that don't will usually do something like 9 or 10% pension contributions if you have been employed with them for a minimum of 2 years.

Agree that defined benefit schemes in the public sector have got to go. Police constables are still retiring over here at 50 w/ guaranteed salaries of £50,000+