Why the U.S. Post Office Continues to Struggle Despite Constant Price Increases

The United States Postal Service (USPS) has for years been bleeding money, despite constantly raising postal rates and still failing to meet its financial mandate. This intricate issue involves political pressures, labor unions, and bureaucratic inefficiencies. Understanding these complexities is crucial for comprehending the ongoing struggles of America's oldest federal agency.

Political Mandate and Financial Challenges

The USPS is mandated by Congress to break even over time, a requirement that is both challenging and ambiguous. Congress sets the financial requirements but does not determine postage rates, which are regulated by the Postal Regulatory Commission (PRC). This independent agency, appointed by the President, sets rates based on cost assessments.

However, inflation and changing consumer behavior mean that even slight increases in postal rates can be insufficient to meet operational costs. USPS would require substantial public support to increase rates significantly beyond their current targets, as the servicing of remote areas and cost-efficient operations are key factors in their low-profitability.

Subsidy from the Government

Contrary to popular belief, the USPS does not rely solely on government funding. Its primary source of income comes from the sale of postal services, generating about 75% of its total revenue. However, the USPS must also meet legal obligations imposed by Congress, which mandate the pre-funding of pension benefits for postal employees. This legal requirement, often described as one of the largest unfunded liabilities in the government, stands at hundreds of billions of dollars.

The Pre-Funding mandate, which began in 1994, requires USPS to set aside money decades in advance to cover future pension obligations. This is particularly poignant given that many postal workers will retire before the funds are officially used. The complexity of this mandate often results in higher postage rates, as USPS must cover the shortfall.

Bureaucratic Inefficiencies and Union Involvement

Beyond financial mandates, USPS faces significant bureaucratic challenges. The powerful union representing postal workers, the National Association of Letter Carriers (NALC), has a significant influence on procedures and policies. This union often argues for higher wages and better working conditions, which can sometimes conflict with operational efficiency.

Furthermore, USPS struggles with inefficiencies due to its legal obligation to hire lifetime employees. This means that low-performing workers are difficult to fire, leading to a less competitive workforce. Additionally, higher-ranking management often emphasize cost-effective office environments over operational improvements, leading to conflicts. In the past, postal workers actively contributed to ensuring mail delivery through undemanding schedules and additional duties. However, modern apathy and a loss of common sense have contributed to an unsustainable system.

Conclusion

The U.S. Post Office's ongoing financial struggles are multifaceted and involve political, legal, and operational complexities. While customer support for higher postal rates is essential, reforms and a more efficient operational structure are necessary to ensure the long-term viability of this important public service.