USPS Faces Urgent Overhaul After $9 Billion Losses

The U.S. Postal Service (USPS) is exploring a significant overhaul following a staggering annual loss of $9 billion. Newly appointed Postmaster General David Steiner indicated that the agency must enhance its efficiency, highlighting a persistent “significant systemic annual revenue and cost imbalance.” To address these financial challenges, Steiner emphasized the necessity to pursue new revenue opportunities and advocate for public policy changes that would improve the USPS business model.

USPS has reported a $9.5 billion loss in the previous year, accumulating over $100 billion in losses since 2007. Despite attempts at restructuring and legislative reform, the financial outlook remains bleak. In 2022, the U.S. Congress provided the Postal Service with approximately $50 billion in financial relief spread over a decade. However, the USPS is pressing for further reforms, including modifications to retiree pension benefit funding rules, diversification of pension assets, an increase in the statutory debt ceiling, and enhancements to workers’ compensation administration.

Price Increases Proposed for Postal Services

In a separate announcement, USPS proposed price increases for various products, excluding first-class mail. The proposed hikes include a 6.6% increase for Priority Mail, 5.1% for Priority Mail Express, 7.8% for USPS Ground Advantage, and 6% for Parcel Select. Amber McReynolds, who was re-elected as chair of the Postal Board of Governors, stated that “long-standing and unnecessary restrictions” are hindering USPS’s financial performance. She underscored the “urgent need for executive and legislative action” to ensure the postal service’s long-term financial sustainability.

The economic pressures facing USPS have drawn political scrutiny as well. Former President Donald Trump characterized USPS as a “tremendous loser for this country” and suggested a potential merger with the U.S. Commerce Department, a proposal that faced opposition from Democrats who claimed it would contravene federal law. Under pressure from the White House, former USPS chief Louis DeJoy resigned in March 2022. DeJoy had been leading efforts to restructure the financially troubled agency for nearly five years, managing to reduce forecast cumulative losses over a decade from $160 billion to $80 billion.

Mail volumes have also seen a decline, dropping 5% in the twelve months ending September 30, 2023, marking the lowest levels since 1967. Earlier this year, the price of first-class mail stamps increased from 73 cents to 78 cents, while USPS opted against further increases scheduled for January 2024. Since early 2019, stamp prices have surged 46%, rising from 50 cents.

In a bid to manage costs, USPS has reduced its workforce by 10,000 employees this year through a voluntary retirement program, reflecting ongoing efforts to streamline operations amid persistent financial difficulties. The future of the U.S. Postal Service hinges on its ability to adapt to the changing landscape of postal services and implement necessary reforms to ensure its viability.