The Insanity of the United States Postal Service

Quote: AZDuffman

It cannot raise its prices? Is that why a stamp still costs $0.13?

I refer you to :

https://en.m.wikipedia.org/wiki/Postal_Accountability_and_Enhancement_Act

Of 2006.

"PAEA was the first major overhaul of the United States Postal Service (USPS) since 1970.[4] It reorganized the Postal Rate Commission, compelled the USPS to pay in advance for the health and retirement benefits of all of its employees for at least 50 years,[3] and stipulated that the price of postage could not increase faster than the rate of inflation.[5][6] It also mandated the USPS to deliver six days of the week.[7]  According to Tom Davis, the Bush administration threatened to veto the legislation unless they added the provision regarding funding the employee benefits in advance with the objective of using that money to reduce the federal deficit.[2] When he signed the bill on December 20, 2006, Bush issued a signing statement that says that the government can open mail under emergency conditions, though Waxman asserted that the government cannot do this without a search warrant.[8] "




This is why the postal service has been losing money the last 10 years, preparing benifits, forced service 6 days a week, and price controls....


You can't tell it to operate like a private service and say , "but you must deliver mail to everyone 6 days a week no matter how much that delivery will lose " ....

If you can't see how this is a problematic buisness model.....

Quote: AZDuffman

Quote: Gandler

Except it has strict legal limitations on its pricing (maximum its allowed to charge), which is why it cannot compete with services that charge more.

Its expected to be run like a buisness, but cannot raise its prices, recipe for disaster....

It cannot raise its prices? Is that why a stamp still costs $0.13?

lol

I predict he'll soon backtrack on this one since they've clearly raised their prices. 😂😂

In any event, the USPS is an example of another Government entity that disproportionately benefits those who live in rural areas, and, it should come as no surprise, many Republicans are against their own best interests on this one.

Gandler does make pretty good points, though. As I understand it, there was a time (and might still be) that UPS and FedEx would use the USPS to deliver items to out of the way areas that UPS and FEDEX would lose money going to.

I'd really be interested in which states lose the most money for USPS based on state of origin and destination state, but I don't know if it's tracked. Maybe they would just be wasting money to track it, considering they couldn't just completely cut an entire state/area out. I'd also be interested in states/cities that are profitable in terms of origination and/or destination.

Page 10 of this:

https://about.usps.com/strategic-planning/five-year-strategic-plan-2020-2024.pdf

It should come as no surprise, says that rural areas and small towns are not self-sustaining. And, let's face it, if you're charging less than eight bucks to take something somewhere...and just the added time for the person delivering it (wage) is already more than that...that's not going to be a profitable delivery. Of course, it also says some urban areas are not self-sustaining, either.

They are also having trouble keeping up with the changing commercial environment, from Page 12:

Quote:

Mail revenue losses have been due to declines in
mail volumes. The greatest volume decline has
been experienced in First-Class Mail, our most
profitable product, where volumes have declined
by more than 40 billion pieces, or 43 percent,
since 2007. Marketing Mail, which comprises the
majority of our mail volumes, declined by more than
27 billion pieces (26 percent) from 2007 to 2018,
mainly due to the increasing diversion of advertising
spending from Marketing Mail to digital media
(the internet, email, mobile, or social media).

And, from Page 13:

Quote:

Additionally, approximately 36 percent of
retail locations are retained (as required by law) despite
being unprofitable. As a result of a combination of these
factors and price caps on 67 percent of our revenues,
we lost over $62 per delivery point served in 2019.
This is due to the fact that the significant and growing
institutional costs driven by the USO and our large
retirement-related liabilities are incurred regardless of
the volume delivered.

Ouch.

Basically, they have to keep unprofitable locations open as required by law AND they are delivering less, 'Junk Mail,' which was their most profitable item. COVID certainly isn't going to help because, as I understand it, a few locations in different types of business are going E-Mail only for promotional type stuff.

---

So, the heart of the problem is that you simply have an entity that cannot make optimal decisions for itself, from a profit standpoint...because they're literally not allowed to do so.

Obviously, the correct business decision would be to 86 all unprofitable retail locations and to terminate delivery to all addresses that are deemed generally unprofitable. They would probably be fine if they did that, but again, that's going to have a disproportionately negative impact on rural folks. Screw them, though. Give them what they want...no mail...or more expensive mail.

Quote: Mission146

In any event, the USPS is an example of another Government entity that disproportionately benefits those who live in rural areas, and, it should come as no surprise, many Republicans are against their own best interests on this one.

Gandler does make pretty good points, though. As I understand it, there was a time (and might still be) that UPS and FedEx would use the USPS to deliver items to out of the way areas that UPS and FEDEX would lose money going to.

I'd really be interested in which states lose the most money for USPS based on state of origin and destination state, but I don't know if it's tracked. Maybe they would just be wasting money to track it, considering they couldn't just completely cut an entire state/area out. I'd also be interested in states/cities that are profitable in terms of origination and/or destination.

Page 10 of this:

https://about.usps.com/strategic-planning/five-year-strategic-plan-2020-2024.pdf

It should come as no surprise, says that rural areas and small towns are not self-sustaining. And, let's face it, if you're charging less than eight bucks to take something somewhere...and just the added time for the person delivering it (wage) is already more than that...that's not going to be a profitable delivery. Of course, it also says some urban areas are not self-sustaining, either.

They are also having trouble keeping up with the changing commercial environment, from Page 12:



And, from Page 13:



Ouch.

Basically, they have to keep unprofitable locations open as required by law AND they are delivering less, 'Junk Mail,' which was their most profitable item. COVID certainly isn't going to help because, as I understand it, a few locations in different types of business are going E-Mail only for promotional type stuff.

---

So, the heart of the problem is that you simply have an entity that cannot make optimal decisions for itself, from a profit standpoint...because they're literally not allowed to do so.

Obviously, the correct business decision would be to 86 all unprofitable retail locations and to terminate delivery to all addresses that are deemed generally unprofitable. They would probably be fine if they did that, but again, that's going to have a disproportionately negative impact on rural folks. Screw them, though. Give them what they want...no mail...or more expensive mail.

Thank-You for being a conservative who actually addresses points.

All of what you said is true.

But, one of the biggest issues is the 50-year prefunding. No other government agency (forget private sector) does anything like this. I don't think most people on here realize how much that alone devastated their budget.

Being forced to operate 6 days a week, and operate (many) money-losing routes and post offices because every American is guaranteed postal service even in a town of 3 is another huge reason...

But, then on top of that all not allowing price increases beyond that of inflation means that unprofitable routes and offices become completely unstainable.

Again, you can't tell a government agency it has to run itself like a business, but mandate that it prepay 50-years (again I don't think most on here realize how much of a deal this alone is), forced days of service, and not allow price changes (again yes only with severe limits, inflation...) I don't think most conservatives on here understand all of this....


Then like you said, add on the fact that less people and companies are using the service (which is actually not nearly as big of a factor as all of the above reasons), but its one more slit that is not helping.

Quote: DRich

I really wish Face was around to add his input on what is going on at the post office.

Nothing to add. Everything that's out already is pretty much exactly what happened.

Quote: Gandler

Thank-You for being a conservative who actually addresses points.

All of what you said is true.

You're welcome, but please don't call me a Conservative. I'm a Libertarian. Conservatives think I'm Liberal, Liberals think I'm Conservative, so I guess I'm kind of used to it. I'm Liberal when it comes to personal freedoms and Conservative on the scope of Federal Government as well as on Government spending.

Quote:

But, one of the biggest issues is the 50-year prefunding. No other government agency (forget private sector) does anything like this. I don't think most people on here realize how much that alone devastated their budget.

Being forced to operate 6 days a week, and operate (many) money-losing routes and post offices because every American is guaranteed postal service even in a town of 3 is another huge reason...

But, then on top of that all not allowing price increases beyond that of inflation means that unprofitable routes and offices become completely unstainable.

Again, you can't tell a government agency it has to run itself like a business, but mandate that it prepay 50-years (again I don't think most on here realize how much of a deal this alone is), forced days of service, and not allow price changes (again yes only with severe limits, inflation...) I don't think most conservatives on here understand all of this....


Then like you said, add on the fact that less people and companies are using the service (which is actually not nearly as big of a factor as all of the above reasons), but its one more slit that is not helping.

Getting rid of the prefunding plan would certainly help, but wouldn't be a cure-all. I think killing the retail locations that lose money would be the single biggest mechanism that could theoretically help them, though it seems the prefunding thing is the more likely scenario from the standpoint of Uncle Sam actually allowing it.

I agree that I don't understand why six days a week should be necessary, except in those cases where the money coming in justifies Saturday. Or, if Saturday is a profitable day for an otherwise unprofitable location, then let them close that location (other than for mail coming in) on whatever the worst of the weekdays is...or even multiple weekdays.

I imagine the Conservatives on here do understand it. Many of the posters on here (both sides of the political spectrum) seem to have a good handle on how business works. They might just not be fully aware of all of these different hangups. Also, maybe they see USPS as a, 'Liberal,' thing, or whatever. I don't personally care if there is a USPS, or not, other than I imagine companies such as DHL, UPS and FedEx have to compete with their (forced) low prices, to some extent.

The lack of junk mail compared to past years should actually be a HUGE factor, if you think about it. It's extremely efficient in the sense that many of these pieces of mail just go to every address. So, in many cases, you're getting paid to deliver something at an address that you would already be going to in order to deliver something else. I would imagine that minimizing distance between deliveries and getting paid as many times as possible to go to a single address once are always very good things.

Quote: Face

Nothing to add. Everything that's out already is pretty much exactly what happened.

Hey, nice to see you! Have you been doing alright? You don't seem like the kind of guy that can stand being cooped up...even less than I can, I would guess, so COVID must be playing hell on you.

Quote: Mission146

You're welcome, but please don't call me a Conservative. I'm a Libertarian. Conservatives think I'm Liberal, Liberals think I'm Conservative, so I guess I'm kind of used to it. I'm Liberal when it comes to personal freedoms and Conservative on the scope of Federal Government as well as on Government spending.

I don't want to debate labels, but I grew up a libertarian. It was always Republican Ron Paul. I consider libertarians conservatives/Republicans.

You can argue the libertarian party is a separate party. But, that is like saying the Green party is separate from the Dems, so Greens are not Democratic….

I think its fair to generalize liberations as conservative (less government, less regulation, etc....). But, that is getting obtuse, that is like me saying, I an a NeoCon, not a democrat (at the end of the day you have to join one side, or at least allow yourself to be generalized in one).

Quote: Mission146

Getting rid of the prefunding plan would certainly help, but wouldn't be a cure-all. I think killing the retail locations that lose money would be the single biggest mechanism that could theoretically help them, though it seems the prefunding thing is the more likely scenario from the standpoint of Uncle Sam actually allowing it.

I agree that I don't understand why six days a week should be necessary, except in those cases where the money coming in justifies Saturday. Or, if Saturday is a profitable day for an otherwise unprofitable location, then let them close that location (other than for mail coming in) on whatever the worst of the weekdays is...or even multiple weekdays.

I imagine the Conservatives on here do understand it. Many of the posters on here (both sides of the political spectrum) seem to have a good handle on how business works. They might just not be fully aware of all of these different hangups. Also, maybe they see USPS as a, 'Liberal,' thing, or whatever. I don't personally care if there is a USPS, or not, other than I imagine companies such as DHL, UPS and FedEx have to compete with their (forced) low prices, to some extent.

The lack of junk mail compared to past years should actually be a HUGE factor, if you think about it. It's extremely efficient in the sense that many of these pieces of mail just go to every address. So, in many cases, you're getting paid to deliver something at an address that you would already be going to in order to deliver something else. I would imagine that minimizing distance between deliveries and getting paid as many times as possible to go to a single address once are always very good things.

This is from USPS's stance on the issue (from their official site so take it as you will) :
https://about.usps.com/who-we-are/financials/annual-reports/fy2010/ar2010_4_002.htm


Prefunding 50 years is a HUGE deal, I don't think most people realize how unprecedent and absurd it is....

Also, before people blame this on a liberal big spending, pro-regulation conspiracy, this was a Republican bill.... Yes, Republicans, who say "operate like a business" except "price controls, forced service to everyone, prefunding benefits, forced days of service...."


From wiki:
"Between 2007 and 2016, the USPS lost $62.4 billion; the inspector general of the USPS estimated that $54.8 billion of that was due to prefunding retiree benefits"

"According to Bloomberg, prefunding the health benefits of retirees "is a requirement that no other entity, private or public, has to make".[13] Columnist Dan Casey wrote in a July 2014 op-ed in The Roanoke Times that the PAEA is "one of the most insane laws Congress ever enacted".[2] Bill Pascrell, a Democratic House member from New Jersey, said in 2019 that it was rushed through Congress without due consideration, and referred to it as "one of the worst pieces of legislation Congress has passed in a generation".


Again, I don't think most people in this thread realize how expensive prefunding 50-years is.... It is literally unprecedented and borderline economically suicidal to force onto an organization….
And, again, this was all a Republican push, not some liberal conspiracy.....

Quote: Face

Nothing to add. Everything that's out already is pretty much exactly what happened.

This can't be the real Face. Who
are you really.

Quote: Gandler

I don't want to debate labels, but I grew up a libertarian. It was always Republican Ron Paul. I consider libertarians conservatives/Republicans.

You can argue the libertarian party is a separate party. But, that is like saying the Green party is separate from the Dems, so Greens are not Democratic….

I think its fair to generalize liberations as conservative (less government, less regulation, etc....). But, that is getting obtuse, that is like me saying, I an a NeoCon, not a democrat (at the end of the day you have to join one side, or at least allow yourself to be generalized in one).

I don't think there's much automatically Conservative about Libertarians because Republicans only pretend to favor small Government. In sum, they may favor reduced spending, but they still would have the Federal Government spend MORE than we would and mainly just disagree with Democrats on what the Federal funds should be spent on.

I'd argue that the LP is a separate party because it's literally a separate party. In general, we think both the Republican and Democratic parties mostly suck, but for different reasons.

To the last bit, many Conservatives/Republicans would claim that we are Liberals because of where we (mostly) stand on social issues. The entire problem with this country is this persistent belief that there must be a strict dichotomy...which is a stupid dichotomy even to the extent it does exist. Getting rid of the Electoral College and greatly curtailing what the Federal Government is in charge of would help a lot with that.

Quote:

This is from USPS's stance on the issue (from their official site so take it as you will) :
https://about.usps.com/who-we-are/financials/annual-reports/fy2010/ar2010_4_002.htm


Prefunding 50 years is a HUGE deal, I don't think most people realize how unprecedent and absurd it is....

Also, before people blame this on a liberal big spending, pro-regulation conspiracy, this was a Republican bill.... Yes, Republicans, who say "operate like a business" except "price controls, forced service to everyone, prefunding benefits, forced days of service...."


From wiki:
"Between 2007 and 2016, the USPS lost $62.4 billion; the inspector general of the USPS estimated that $54.8 billion of that was due to prefunding retiree benefits"

"According to Bloomberg, prefunding the health benefits of retirees "is a requirement that no other entity, private or public, has to make".[13] Columnist Dan Casey wrote in a July 2014 op-ed in The Roanoke Times that the PAEA is "one of the most insane laws Congress ever enacted".[2] Bill Pascrell, a Democratic House member from New Jersey, said in 2019 that it was rushed through Congress without due consideration, and referred to it as "one of the worst pieces of legislation Congress has passed in a generation".


Again, I don't think most people in this thread realize how expensive prefunding 50-years is.... It is literally unprecedented and borderline economically suicidal to force onto an organization….
And, again, this was all a Republican push, not some liberal conspiracy.....

Well, yeah, I believed you...my point was more along the lines of the fact that they actually have operating losses now. Simply put, they would be losing money even without this aspect, which years 2000-2002 and 2009-2010 just on the link you shared represent. Even moreso in recent years. If they can't at least break even on their direct operating costs, then all this retirement prefunding is doing is speeding up what is inevitable anyway.

Apparently, they haven't even been making all of the payments on the prepayment plan:

https://www.gao.gov/key_issues/us_postal_service_financial_viability/issue_summary#:~:text=USPS%20has%20lost%20%2469%20billion,to%20double%20its%20annual%20revenue.

The point is, if they can't even operate profitably, the question is one of when, not if.