E-mail Isn’t Killing the Post Office

Revenues at the U.S. Post Office are doing just fine, thank you

True or false: The U.S. Postal Service is struggling financially because e-mail and the Internet have rendered it obsolete.

False.

Yes, this independent agency of the federal government has reported losses—billion-dollar losses—in recent years. But technology is not the cause.

Rather, in 2006, then president George W. Bush signed into law the Postal Accountability and Enhancement Act [PDF], which mandated that the USPS set aside 75 years of health-care costs for its retired employees over the ensuing 10 years.

“No other corporation or government agency that I know of has to prefund their retirees’ health benefits [like this],” says Philip Rubio, assistant professor in the Department of History at North Carolina A&T State University, in Greensboro. “We’re talking about postal workers who haven’t even been born yet.”

Critics of the 2006 legislation say it’s a poison pill, forced on an agency that has accommodated itself to change many times over—from railroads and telegraphs to airmail, AOL, and Amazon.com.

David Partenheimer, a spokesperson for the USPS, told IEEE Spectrum that the agency has asked Congress to restructure the health-care prepayment system and return the US $11 billion in overpayments it has already made to the Federal Employees Retirement System. “We receive no tax dollars for our operations, and that is something we don’t want to change,” he says.

illustration first-class and standard (“bulk”) mail
Illustration: Gavin Potenza
First-class and standard (“bulk”) mail are the USPS’s two cash cows. Since 1997, first-class mail has brought in a reliably steady US $33 billion to $38 billion per year. If there’s a Facebook or an e-mail effect, it’s a small net negative buried in bigger numbers. Standard mail’s piece of the pie actually goes up from $12 billion to $15 billion from 1997 to 2001 and from $17 billion to $20 billion from 2002 to 2007. Packages have brought in a comparatively paltry $1–$2 billion annually throughout.

Despite the fact that the backbone of the USPS’s business remains strong, in 2007 the agency’s annual losses go off the charts. By law it had to begin socking away the health-care costs of its retired workers through the year 2081. “The post office is really the victim of an invented crisis,” says Rubio. “The Internet poses a challenge. But it also poses opportunities and possibilities. The real problem is the law Congress passed in 2006.”

Click on the image to enlarge.

 

Advertisement
Advertisement